Last Updated on January 21, 2021
Google Shopping Ads are great for driving traffic that converts.
They do they require some effort to get started, but after Google automates most of the work involved in creating and showing these ads to the right people.
But this automation is also the reason why advertisers feel like they don’t have much control over what shows up where.
So in this comprehensive guide, I’ll show you how you can take back some of that control over your Shopping Ads.
I’ll cover everything from setup to optimization and share additional resources that allow you to refine your Shopping campaigns even further.
Let’s get started!
What Is Google Shopping?
Google Shopping is a comparison shopping engine, which is a service that allows retailers to advertise their products to searchers in a visually appealing way.
This means if someone searches for a product that you sell, Google will show relevant Shopping ads for your products, and those of your competitors.
If the user clicks on your ad, Google will take her right to the product page.
The image above shows product ads (formerly known as Product Listing Ads or PLAs) for the search query “jordan one white ” on the top of the page.
Each Google Shopping ad includes an image, the product title, the price, the name of the retailer and sometimes some retailer-specific information like shipping costs or reviews.
Google Shopping is currently supported in over 40 countries. It’s not the only comparison shopping engine, but by far the most popular one.
Why Should You Use Google Shopping Ads?
Many people still start their product search on Google. So advertising on Google allows you to be right there where your potential customers are.
In these search results, there are text-based Search Ads, where you have to write the ad copy and add keywords manually.
But also Shopping Ads, where Google does a lot of this work for you. Its algorithms will automatically pull the data from your store, craft ads for your products, as well as match them with relevant search queries.
While Shopping Ads can take more time initially (to set up everything), they require a lot less ongoing effort afterward.
This is the main reason why I advise stores to start with Google Shopping. There is less that can go wrong compared to Search Ads, which means you’re less likely to blow through your ad budget with nothing to show for.
Reason 1: The Only Way To Rank on Top of the Google Search Results
Another big difference between Shopping and Search Ads is visibility.
Check this screenshot of a typical Google search results page to better understand what’s going on:
As you can see, there isn’t much room left for organic results.
But Search Ads are also getting pushed further down the page.
Shopping Ads get the premium spot in the search results as their visual format attracts most of the clicks.
More clicks mean more profit for Google, but it also seems to be working for retailers.
An increased number of retailers are moving ad budgets from Search to Shopping Ads. According to research done by Merkle, ad spend has increased by 38% on Google Shopping compared to last year, while it decreased by 12% for Search Ads.
Google Shopping now accounts for 65% for all Google Ads clicks and for 89% of non-branded Google search ad clicks of retailers.
Shopping Ads have also been more profitable in the same period, netting advertisers 12% more revenue per click than Search Ads on the desktop for non-branded keywords.
Reason 2: Show vs. Tell
If you were looking to buy new Nike Air Max shoes, would you rather click on the Nike Search Ad or one of the Shopping Ads?
While Nike did a good job with the Search Ad, it simply describes the product. Shopping Ads show actual products. And if one of them is exactly what you were looking for, chances are pretty high that you’d click on one of those.
These product ads can also help when consumers aren’t exactly sure what they’re looking for. Many of them use it as a research tool to learn about different product types, models, colors, prices, as well as the stores they can purchase them from.
Reason 3: Intent vs. Interruption
For most of its history, advertising was interruption-based.
Meaning that you were doing something else, like watching a YouTube video, when a video ad pops up:
When this ad by Purple showed up, I had no intent to buy a new mattress. But I might at a later point in time. And maybe this ad will help them be top of mind when I do.
Compare that to Shopping Ads, which are intent-based. Meaning that the ads show when people are actively looking for a solution.
If I’m searching for “Nike Air Max 270”, it’s a great time for retailers to run ads about that exact shoe:
For these types of ads, click-through rates and conversion rates are a lot higher.
That’s reflected in the cost of a click on one of those ads. A view of a YouTube Ad might cost a few cents, while a click on a Product Ad can easily cost 10x more.
If all of this has peaked you interested, let’s have a look at how Google Shopping actually works.
How Does Google Shopping Work?
As discussed before, Google Shopping Ads are very different in how they work than regular Search Ads.
First, Google’s algorithms process a special file called a product feed (more on this later) that contains all of your store’s product data (things like titles, descriptions, images, price, etc.).
Google uses this data to match your products with relevant search queries as well as to create the actual ads.
People will see Shopping Ads that are relevant for their search queries, showing an image of the product, with the price and additional information (such as reviews).
If someone likes what they see, they click on your ad which will take them to your website.
In return, Google charges you for that click.
Let me show you a simple example. You sell mobile phone accessories and launch a Shopping campaign to increase your sales.
- You provide Google with your product data in a product feed
- Someone searches for “iPhone 11 wireless charger” in Google
- Google’s algorithms select an iPhone 11-compatible wireless charger from your store, create a Shopping ad for it, and show it to the searcher along with other ads
- The searcher sees the ads and clicks on yours
- The searcher is taken to your products page
- Google charges you for the click
How Much Do Google Shopping Ads Cost?
Similar to Search Ads, you pay each time someone clicks on one of your Shopping Ads.
Let’s look at the typical cost of these clicks.
The image above shows the Google Shopping’s average Cost Per Click (CPC) for each of the different niches.
Overall the average CPC is $0.66, a little bit higher compared to a Google Ads average of $1.16 for ecommerce stores.
While clicks cost much less, the average conversion rate of Google Shopping (1.91%) is also lower than the Google Ads average for the ecommerce industry (2.81%).
As Shopping Ad clicks are cheaper, the Cost Per Action (CPA) is also lower, $38.87, compared to $45.27 for all Google Ads clicks.
While these statistics here show the averages for Google Shopping, the REAL performance of your Shopping campaigns is in your hands.
Out of the box, Google Shopping campaigns may perform worse than regular Search Ads, but with the right tweaks, there’s plenty of room for improvement.
How to Add Your Products to Google Shopping?
Your first step to start advertising on Google Shopping is to turn your store’s products into Shopping ads. This process consists of four elements:
- Your store and products
- Your product feed
- Google Merchant Center Account (GMC)
- Google Ads Account
All these parts are connected and help Google Shopping Ads to work efficiently.
I like to call this whole process the “Google Shopping Puzzle” as it can be a puzzle for someone going through this the first time.
In the next sections, I’ll show you how to add your products to Google Shopping.
Pro tip: If you need more detailed instructions, check out our in-depth Google Shopping setup tutorial.
Step 1 – Creating Your Product Feed
The product feed is the heart of your Google Shopping campaign. In essence, it is is a big spreadsheet that contains your product data.
Google is pretty strict about what information to include and what format to put it in. That’s why it is pretty easy to mess up something when creating it.
When that happens, Google will disapprove those products and you’ll not be able to advertise them. But if you fix the errors by adjusting your product data, you’ll be able to advertise again.
Basically, there are two approaches to creating your product feed for Google Shopping Ads: generate the feed by using an app, extension, or tool, or do it manually by creating a spreadsheet.
If you are on one of the major ecommerce platforms (Shopify, WooCommerce, Magento, etc.), you can download an app to speed up your product feed set up.
Let me share with you the best apps for each platform:
Google Shopping app – link – Despite the poor ratings, the official Google Shopping app for Shopify works like a charm (they made plenty of changes to it recently).
Pro tip: Stay away from choosing the “Smart Shopping” option when configuring the app (more on Smart Shopping later).
While Google automates a large share of the work, the apps and extensions I’ve listed here help you to export your product data feed and usually they will tell if there’s something wrong with it.
If the product feed you get from your ecommerce back-end isn’t in great shape, you might need to make some extra changes before uploading it to Google Merchant Center.
This in-between zone is covered by product feed management tools. Here are a few examples:
Step 2 – Setting up Google Merchant Center
After your feed is ready, you can create a Google Merchant Center account.
When you are done with that, you have to claim and verify your store’s domain to prove that you own it. You can do this using Google Analytics, Google Tag Manager, or adding a meta tag to your website.
Uploading Your Product Feed to Google Merchant Center
You’re now ready to upload your product feed to Google Merchant Center.
If your store’s platform is connected to Google Merchant Center via its API (it is if you’re for example on Shopify), then you don’t have to upload your product data feed as the data is automatically sent to GMC.
If so, then you can skip this section.
If not, you have to do this manually. Click “Products” then “Feeds”.
To add a new product feed, click this big blue + button. You’ll be guided through the whole process.
When you’re done and Google has processed your feed, head over to Diagnostics to see its health.
When first uploaded, most product feeds have a few errors at least.
Don’t be scared by this, but follow the instructions to clear the most urgent ones (the red ones). Don’t put this off because neglecting to provide any fixes could result in an account suspension.
To guide you through clearing those errors, I’ve created an in-depth guide to fix Google Shopping product feed errors efficiently.
In addition to uploading your product feed, you have to supply Google with your shipping and/or tax details.
Configuring Shipping Settings
Google needs to know the shipping costs to make an accurate price comparison with other vendors.
You can configure this in Google Merchant Center.
To do that, click the wrench icon in the top bar, inside select “Shipping and returns”. There you can create a new shipping service where you can define your shipping costs. Anywhere from a flat rate, depending on the order size or integrate with carrier pricing like FedEx or UPS.
Configuring Tax Settings (US Only)
Configuring sales tax only applies if you are selling within the US. If you’re not, you can skip this part.
To find this menu, click the wrench icon in the top bar, and select “Tax”. There you can set up different tax rates depending on the state you’re located in and selling to.
I’m no tax expert, so be sure to check the local sales tax regulations in the states you’re doing business in.
Step 3 – Creating a Google Shopping Campaign
Once your products are approved, the next step is to create a Google Shopping campaign inside of Google Ads.
To do this, you’ll need a free Google Ads account.
In your Google Ads dashboard, you can create a new Shopping campaign by clicking the plus sign on the “Campaigns” screen.
On the next screen, select the “Create a campaign without a goal’s guidance” option and then “Shopping”.
Standard Shopping vs. Smart Shopping Campaigns
After selecting Shopping as your campaign type, you can choose to set up a Standard or a Smart Shopping campaign.
Before you choose, let me give you a quick explanation of the difference between the two campaign subtypes.
|Standard Shopping||Smart Shopping|
|Networks where your ads appear||Search Network||Search Network, Display Network, Search Partners, YouTube, Gmail|
|Bidding||Manual and automated||Automated only (Maximize Conversion Value with optional Target ROAS)|
|Level of control||High||Low|
|Remarketing||Optional if you add the Audiences||Included by default|
|Use if||You’re starting out||Standard Shopping doesn’t work 🙈 or you’re interested in running your campaigns on autopilot|
In addition to Product Ads in the search results, Smart Shopping also shows ads on the Display Network. That means they can appear as banner ads on other sites or even on YouTube.
This results in more exposure for your ads. But it might be to people that aren’t actively looking for your products (remember our Intent vs Interrupt from the previous section).
Another difference between Standard and Smart Shopping campaigns is the bidding strategies that are available to you.
In Standard Shopping campaigns, you’re able to set the max CPC for each product. But with Smart Shopping, all of that is automated. You have to use the “Maximize Conversion Value” strategy, a bid strategy that automatically optimizes your CPC rates via machine learning to increase your conversions.
This lack of control on the bidding side also persists in other parts of Smart campaigns.
You won’t have any insights into search terms or audience data, and Google will provide little to no data on placements.
Because Smart Shopping is a black box, you can’t do much to improve its performance.
If you’d like more control and don’t want to lose out on valuable campaign data, consider going with a Standard Shopping campaign.
In what follows, I’ll use Standard Shopping. Read our Smart Shopping guide if you’d like to learn more about that campaign type.
Finish Your Campaign Setup
After you’ve selected your campaign type, you’ll have to adjust the general settings for your campaign.
This includes giving your campaign a name as well as a budget ($10/day is a good start), bid strategy (pick Manual CPC for now), and the locations where you want to show your ads.
To learn more about each setting in detail, have a look at this article I wrote on Google Shopping setup.
Step 4 – Creating Google Shopping Ad Groups
Next in the setup, you have to select an ad group type.
You pick between two options: Product Shopping or Showcase Shopping ad groups.
Let’s look at the difference between those two ad group types.
Product Shopping Ads vs. Showcase Shopping Ads
Product Shopping ad groups are the most commonly used Shopping Ads. They are the “standard” Product Ads we’ve been talking about in this article.
For these ad groups, you don’t have to create individual ads as Google’s algorithms will take care of that for you based on your product feed.
These Product Shopping ads work best for specific search terms, like “HP Elitebook”. When people use these types of search queries, they have a pretty good idea of what they’re looking for.
Showcase Shopping ads show up for more general, broad product-related search terms like “laptops”.
This different kind of Shopping Ad allows stores to group together a selection of related products for more generic search queries. These help searchers in discovering the product they are looking for while selecting from a wide variety of sellers.
Here is what a Showcase Ad looks like:
On the left side of the screenshot, you can see the initial view of Showcase Shopping ads that contain an image showing multiple products from the seller, the store’s name, a short description, as well as a link to its website.
On the right side, you can see what it looks like after someone clicks on the ad. It expands shows more product and store information: a branding image on the top, as well as an additional description and multiple products at the bottom that use a similar format to product ads.
While this ad type works on both mobile and desktop devices, most Showcase Shopping ads show on mobile only.
Because these ads look a little different from Standard Shopping Ads, they require more work from your end for each of your ad groups.
To get the most out of this type of ads, I recommend taking a look at this Showcase Shopping ads guide I created recently.
Finish Creating Your Shopping Campaign
After you’ve decided on your preferred ad group type (we will be using Product Shopping ad groups moving forward), fill out the additional settings and hit “Save” at the bottom of the page to create your campaign.
After your new Google Shopping campaign is created, you’ll have one campaign, one ad group, and one product group.
That’s a solid start, but to get great results, you’ll need to do more. Read on to discover the best practices.
But before we do that, I want to clear up something that confuses a lot of people.
What Is Google Shopping Actions?
Although Google Shopping Actions and Google Shopping have very similar names, they actually are quite different beasts.
While Google Shopping is an advertising channel, Google Shopping Actions works more like a store.
Google Shopping Actions functions as a marketplace in practice, even though Google doesn’t like to call it so.
Through the program, users can purchase products straight from Google, who is hosting the cart and processes the payment.
After that, Google sends the details of the order to the retailer who then ships the product to the customer.
Google advertises these products on Google Search, Google Shopping, Google Image Search, Google Assistant, and Google Express (mobile app and website) with YouTube as an upcoming platform.
A big difference with regular Google Ads is that Shopping Actions does not charge per click. Instead, it charges a store only when it makes a sale through Google Shopping Actions.
Currently, Google Shopping Actions is available in the United States and in test mode in France.
While all the following may sound great at first, it’s cumbersome to set up, adds more complexity to your business, and the early results of my clients haven’t been very promising.
So, for now, my advice is to stay away from Google Shopping Actions.
Google Shopping Ads Best Practices
To get profitable results from your Google Shopping campaigns, you need to do more than just setting them up.
You need to discover the parts that work and put more budget behind them while cutting back ad spend in the parts that aren’t generating results.
So, in this section, we’ll explore different best practices for Google Shopping that can take your Google Shopping campaigns from losing to making money.
Google Shopping Campaign Structure
Using a good structure for your Google Shopping campaigns is one of the biggest optimizations you can make.
Improving the structure sounds a bit abstract, so let’s take a look at what this actually means.
Continuing the example from before, we have set up a campaign that looks like this:
- One campaign
- One ad group
- One product group
This means that we’re bidding the same amount per click no matter the product or search query.
So the first step to increasing control over your bids is to create new product groups using product attributes.
Google Ads gives you a bunch of default criteria you can use like brand, product type, or even the Item ID.
This is a good start. But it becomes really interesting when you start to manage your campaigns based on information like sales volume or margin. You can add that information to your campaigns through custom labels.
You can also use those same product attributes as inventory filters to set up different campaigns for a specific brand or product type. Mimicking your websites’ structure is often a good way to organize your campaigns.
When that’s done, you’re ready to implement one of the most effective Google Ads best practices, something called search query level bidding.
With this approach, you run multiple, almost identical, campaigns with the same products that allow you to target specific search terms with your Shopping campaigns.
In the screenshot above, you can see two Google Shopping campaigns. One targets branded search queries, while the other one only shows for on generic search queries. This allows you to have separate bids.
Notice the difference in CPC, number of conversions and the conversion value in that screenshot.
Pro tip: You need to tweak your Google Shopping campaign priority settings for keyword filtering to work efficiently with the Search Query Level Bidding structure.
Improving the structure of your Shopping campaigns will increase control.
But increased control comes at a price. More granular campaigns will take more time and make it a little more complex to set up and manage.
Google Shopping and Negative Keywords
If you use negative keywords, you prevent your ads from showing up for irrelevant and low-quality traffic that hurt the performance of your campaigns.
By doing this, you can increase your CTRs, conversion rates, and eventually your ROAS.
There are a couple of ways you can find negative keywords. The easiest of those is to sift through your Search Terms Report.
This Search Terms Report shows you all of the search queries your ads have appeared for including their performance.
When going through this report, you’ll want to look out for types of negative keywords.
- Irrelevant terms: Search queries that clearly are a waste of money.
- Competitor terms: Branded search queries that include your competitors’ names. It may be tempting to try and outrank them at first. But these ads often are ineffective and drag down your performance instead. Either add them as negative keywords or analyze whether it is profitable for you to rank for these terms.
- Products not sold: these are searches for products you aren’t selling (yet). You can either exclude these keywords or use them for market research.
- Very generic terms: This group contains very generic terms (e.g., shoes) that usually have very low CTRs and conversion rates. If you want to improve your profitability, I recommend excluding them as negative exact match keywords. Otherwise, feel free to (carefully) experiment with these queries.
Want to know more about how to find negative keywords and add them to your campaigns, check out my in-depth guide on negative keywords.
Optimize Your Product Titles
As mentioned before, your Google product feed is the heart of the Google Shopping campaign.
This also means that any improvements you make by providing more relevant information will increase the CTR and improve your campaign performance.
Fortunately, there are plenty of optimization techniques you can use to improve results.
You could, for example, increase your ad click-through rate by including the most popular product-related search queries in your product titles.
In our own research we found a 147% increase in impressions, and a 67% increase in clicks, just from optimizing our product titles!
Discover more tips in this video:
Optimize the Price of Your Products
In case you’re getting low CTRs and low click shares on some of your products, it could mean that their pricing isn’t as competitive as what other stores offer.
If you’re advertising the exact same products, it’s not hard to imagine that people will click on the ad with the lowest product price.
The easiest solution is to drop your prices. But not all of us can afford, want or even are allowed to do so.
Instead, here are things you can do to make better use of product pricing in Google Shopping.
- Identify the products that perform poorly (CTRs, conversion rates, impression shares, etc.) and check if the price might be an issue.
- Take a look at the prices of your competitors for those products and see whether there are big differences in the pricing
- If there is a significant gap, are you able to bridge it in any way?
- If not, consider lowering your max CPC for this item as it will be hard to compete and advertising on it might be wasteful
Pro tip: Google considers the total purchase cost, so if you can’t lower the actual product prices, make sure to check whether you can do something to decrease or eliminate the shipping costs.
Optimize Your Product Images
Product images are a crucial part of your ads.
Some stores come up with slight variations of a product image, allowing them to stand out and increase the CTRs of their Google Shopping Ads.
While this can be a rather expensive process (especially if you have hundreds of products), sometimes doing simple things like rotating a shoe (like in the screenshot above) can already make a difference.
Bidding in Google Shopping
Since Google Shopping charges for every click, you want to make sure that each click contributes to your results.
But how do you make sure that you’re not wasting money on your Shopping campaigns?
Obviously, keeping your max CPCs low prevents you from spending too much overall.
But if your bids are too low, Google won’t show your ads that often.
So, you have to find a good balance between staying cost-efficient and receiving decent traffic on your Shopping ads.
But how much money should you start with?
We’ll explore this question in the next section below.
Always Start Small
If you’re new to Google Ads, or you’re launching your first Shopping campaign, I always recommend to start out with very low bids.
The reason for this is simple.
When starting out, you will always make mistakes, and since every mistake costs you, it’s better to keep your ad spend in check.
While starting with a low bid can’t really hurt your campaign, an initial high bid could spend the budget you had set aside for testing.
To ensure that your Google Shopping campaign is profitable, you need to first focus on the QUALITY of your traffic, not the QUANTITY.
High-quality traffic means good CTRs, low bounce rates, decent conversion rates, and better profit margins.
Once you are sure that your Google Shopping Ads traffic is high-quality, then you can scale your campaign by increasing your bids.
Pro tip: If you’re curious about how your campaign can scale, check out Google Ads Bid Simulator.
Sacrificing Control vs. Time
When deciding how much you want to pay for each click, you have two options: use manual or automated bid strategies.
Manual CPC gives you the most control as you can a specific bid on a product group or even product level.
If you have hundreds of products, manual bidding can be a time-consuming process as it requires you to manage and optimize your max CPCs based on data coming on.
That’s why Google has introduced automated bid strategies that utilize algorithms and machine learning to automatically adjust your bids based on your goals and historical data.
Here are some examples of automated bid strategies you can use for Google Shopping campaigns:
- Enhanced Cost-Per-Click (eCPC): Based on the likelihood of conversion for each click, eCPC either decreases or increases your manual CPCs with the goal of increasing conversions.
- Maximize Clicks: Uses your budget to set bids automatically to get as many clicks as possible on your ads.
- Target Return On Ad Spend (Target ROAS): The goal of this strategy is to maximize your conversion value while reaching your desired target ROAS.
When talking about automated bidding, I find it important to mention the obvious conflict of interest that Google has.
On the one hand, they claim that they will get you the best possible results from your ad budget.
But on the other hand, they are a business looking to make as much money as possible.
So it’s up to you as an advertiser to keep this trade-off in mind as you go along and do things that are suggested by Google.
Pro tip: Start out with Manual CPC and gather baseline data. If you want to go automated, then experiment with Enhanced CPC first (as it allows for the most control among automated bid strategies), compare your results to the baseline, and evaluate other automated strategies in the same way.
Bidding strategy can become a complex topic, so if you’d like to learn more, check out my in-depth guide on bid strategies in Google Ads.
Google Shopping Bid Adjustments
The products you are selling, your industry, as well as your target audience and location, can all influence how much a click is worth to you.
If you are selling lawnmowers, it might not be profitable to show Shopping Ads to people living in apartment buildings in the middle of the city. It might be more profitable to target suburban locations instead.
The same can happen with:
- The hour of the day
- The day of the week
- The device searchers use
- Your target audience
With the help of bid adjustments, you can adjust your CPCs (up or down) according to your needs, which helps you in spending your budget more effectively.
You can set bid adjustments for your Shopping campaign for Locations, Ad schedules, Audiences, or Devices.
You do this by setting a percentage value for bid adjustments.
For example, if you want to attract more mobile visitors, you may decide to set a +20% bid adjustment, which increases your standard bid by 20% (e.g., from $1 to $1.20).
Using Audiences for Google Shopping Ads
Using Audiences, you’re able to target people that have been on your website but left without a purchase.
This is called Remarketing Lists for Search Ads (RLSA) and allows you to increase (or decrease) your max. CPC based on what other information you have about a certain visitor.
Someone that has abandoned her cart might be a lot more valuable than a product page visitor. Through Audiences, you’re able to adjust your bid accordingly.
To use an Audience in your Google Shopping campaigns, you need a minimum of 1,000 people in that audience.
That’s quite a lot of people. So while you could create a specific campaign to exclusively target these visitors, very often these Audiences are added to existing campaigns.
To see this in your Google Ads account, navigate to the “Audiences” menu that you can find on the left side of the page.
In case you don’t have any audiences yet, click the plus icon in the middle to add a new one.
When adding new audiences, you can add them in two ways: targeting or observation mode.
Targeting: only targets people that are part of the audience that you select. You’ll only use this option if you’re creating a specific campaign to target these audiences.
Observation: this option doesn’t limit the reach of your campaigns, but you’re able to increase or decrease the max CPC based on people being part of this audience.
In case you don’t have at least 1,000 people on the lists you’ve added, then you’ll get a notification from Google.
If you have enough traffic, these warnings should go away.
Pro tip: this section has covered the basics, to learn more check out my guide on Google Shopping optimization.
What to Expect From Google Shopping Ads?
If you’re new to Google Shopping, it’s always hard to know what to expect from your first campaign.
So, in this section, I’ll show you what to expect when starting out, what is possible, and how to get there.
What To Expect
When you are starting out with Google Shopping, you won’t get the best results with your campaigns out of the gate.
But that’s perfectly fine as there’s always more room for improvement.
With time, you’ll have access to more data, which you can use to optimize your Shopping campaigns.
But before doing that, let me show you what you can expect from Google Shopping Ads when you are just starting out.
As you can see in the image above, there’s a HUGE difference between how the campaigns of various advertisers perform in Google Ads.
While low-performing advertisers have an average CTR of 1.91%, the best ones (in the 90th percentile) have nearly 5x their click through rates.
As you are just getting to know Google Shopping, you should expect your CTR to be somewhere near the 25th percentile, use > 2% as a rule of thumb.
In the screenshot above, you can see that the average advertiser has a conversion rate of 1.42% for Google Ads while top performers are hitting over 3%.
So what do these metrics mean for you? Let’s see through an example.
Let’s say you are selling $50 sunglasses with Shopping Ads.
As you’ve just started out, let’s take the lowest-performing metrics that I’ve mentioned above as well as the average Shopping CPC.
This means that you’ll have a 1.91% CTR, a 1.42% conversion rate, and you pay $0.66 per click (Google Shopping average).
Let’s say that 50,000 people have seen your ad in the first month, of which 955 have clicked through to your website.
That means a total ad cost of $630.3 as well as 14 conversions resulting in $700 in revenue.
If we factor in the product cost, $20 per pair of sunglasses or $280 in total, we come out in the red.
$700 in revenue minus $280 in product cost and $630.3 in ad spend, means a loss of $210.3.
This shows the importance of having the fundamentals in place before starting with ads. (To see if your store has potential with Google Ads, check our quiz!).
Let’s see how you can turn this around.
What Is Possible With Google Shopping Ads
After a while, you’ll get better at running ads. You might have learned new techniques, followed a great course and learned which parts are performing well.
We’ve used the lowest benchmarks to start with, but let’s say that your results have improved, and you’re now at the upper end of the benchmarks.
That means a 9.5% CTR, a 3.05% conversion rate with the average CPC staying at $0.66.
Continuing with the $50 sunglasses example and 50,000 ad impressions a month, 4,750 people have now clicked on your ad, resulting in a total ad cost of $3,135.
Due to the increased CTR and conversion rate, you’ve netted 145 sales through Google Shopping, which means a revenue of $7,250 as well as a product cost of $2,900.
But, in this case, your revenue outweighs your expenses with your gross profit being $1,215 ($7,250-$2,900-$3,135=$1,215), a profit margin of 17%.
There is not a lot of room, but you can see that these improvements can really move the needle.
Benchmark Against Competitors
Another way to figure out what’s possible is to see how your Shopping campaigns are performing compared to those of your competitors.
You can find part of that information in the Competitive Metrics columns in Google Ads:
If you’re looking at your Google Shopping campaign, you can add the “Benchmark CTR”, “Benchmark Max. CPC”, “Benchmark product price difference”, and the “Average product price” columns from the “Product Groups” overview.
Don’t focus blindly on these metrics, rather use them as indicators to see how you’re doing.
The great thing about Google’s benchmark metrics is that they are available for every product group you have in your Shopping campaign, so you can get insights for each.
What Does it Take to Achieve Success With Google Shopping Ads?
To achieve what I’ve described above, you need two essential resources: time and an advertising budget.
You need time to set up Google Shopping (converting your products into product ads), as well as to maintain and optimize your Shopping campaigns.
And don’t forget: the more granular you go with your campaign, the more time you need to spend managing them.
As we’ve discussed before, Google Shopping costs you money. So you should have some money allocated to run Shopping Ads. If it’s your first time around, try to set aside at least $300-$500 as your learning budget.
You’ll use this money to learn how Google ads work, as well as see what the visitors from Google Shopping do on your website.
Mastering Google Shopping Ads
My goal with this article was to provide you a detailed overview of what Google Shopping Ads are and what it takes to make them work for your business.
By learning how Google Shopping Ads work, how to set them up, and optimize them, you have taken your first steps towards launching your product ads.
However, your Shopping journey doesn’t need to stop there.
I’ve included further resources for all essential parts of Google Shopping Ads in this article (all the links and downloads sprinkled throughout this article), which you can use to learn more about each topic.
If you’d like to learn even more, check out Google Shopping Success: our premium course on Google Shopping.
In a series of video lessons, the course will take you through the exact steps you need to create a Shopping campaign from scratch right to having your first sale coming in via product ads.
Our main goal with the course is not only to answer the questions of “what”, and “how,” but also the “why” too, explaining the real reasons behind each step you need to take in your Google Shopping journey.