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Budgeting for Success: How to invest in Google Text & Shopping Ads

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With ever-growing opportunities to promote businesses via Google, it can be difficult for Digital marketers to know on which Google Ads product to focus their efforts. If budgets are limited, Digital marketers must carefully consider their allocation of spend – should they push their budget into Shopping campaigns or stick to more mainstream text-based PPC activity?

In truth, this quandary is only really of concern to ecommerce brands and retailers with stock to sell online. But there are still Pros & Cons that such marketers need to be aware of.

The benefits of spending with Shopping

Ultimately, Shopping campaigns have steadily grown to be a major source of traffic and sales. As a result, more than 50% of all Google Ads spend has shifted from traditional text adverts to Shopping ads. That is a massive shift, which reflects how effective shopping campaigns can be.

graph of ad spend for google shopping vs text ads by category in the US

Source: Adthena Search Advertising Report, 2018, Benchmark performance across 40m ads.

Shopping campaigns are therefore excellent for products where users have a good understanding about what they are searching for. But they will not prove as effective for new or unbranded products where there is no search volume.

Budgeting for Google Shopping Success

Typically, advertisers spend more of their PPC budget on text ads despite the fact that PLAs outperform their text counterparts in almost every metric. Some of the biggest advertisers in ecommerce are showing a clear preference for product listing ads based on their spending habits – and have already made the switch.

The brightest minds in ecommerce are convinced about the value of PLAs — and they’re putting more of their budgets where they get better results with less competition. Moreover, Brands can bid on products for a relatively low cost per click (CPC) usually ranging from €0.15 – €0.45. Compare that to text ads and the cost is likely to be 4x or 5x more for an all important Top 3 position. The relatively lower CPC of Google Shopping allows marketers to drive relevant traffic directly to product pages efficiently.

Still, the success of a Shopping campaign almost always comes down to purchase price– shoppers can filter according to price, so price competitiveness is ultimately the key for items to appear in listing results and convert. Alternatively, retailers are using promotional techniques including free delivery, discount codes or even complimentary add-on products – to gain an advantage over competing pricing.

Shopping ads should not be left alone – optimization is required to get the best ROAS.For example, once enough data has been acquired it is often possible to identify poor performing products or brands that could be excluded from the campaign moving forward, to make it more efficient. Likewise, bids could be increased on products where returns are favorable.

Generating leads with Text ads

Text ads are incredibly customisable depending on the goal of the campaign. With ease, different ad variations can be tested, helping to improve ad performance and protect spend levels. For example, to drive more phone calls, Digital marketer can feature phone numbers more prominently with a ‘click to call’ button.

Traditional text ads are often used for lead generation campaigns. Text ads also can be used to target a wider range of audiences – not just people searching for product-related terms. Digital marketer therefore can promote products OR services at various stages along the customer journey – from Research – to Sale – or Enquiry.

For retailers Text Ads might be better used to focus on key product lines & brand, increasing awareness, or promoting new products that consumers may not yet be directly searching for. However, the average cost per click is usually a lot higher than that of a Shopping ad – depending on the sector and its respective competitiveness. Therefore, Text Ads can prove to be a very expensive digital marketing activity if not clearly underpinned by measurable commercial objectives.

How should a brand spend money?

As with any digital marketing strategy, the chosen approach should reflect the situation and objectives of the business concerned –

  • For e-commerce brands, Shopping campaigns will normally deliver a better ROI for the spend. The uplift in Shopping Ad usage is undeniable.
  • If driving more Leads from a websiteis the priority – or the need to target a wider, less purchase oriented audience – then Text ads will prove the most effective type of Google campaign.

Digital marketers will often refer to a target ROAS (return on advertising spend) when analyzing the effectiveness of ad campaigns. This target ROAS will depend on the product’s margin and therefore an “economical” cost per sale. Retailers will be aiming for ROAS of 800% plus, however a Brand owner/manufacturer selling higher-margin products may be able to work with a much lower target. Calculating this target before committing to significant spend is important. – for example – will use machine learning to optimize and manage towards this target ROAS.

The Bottom-Line

Budget permitting, the investment could be split across both, of course. With only so much advertising “real-estate” on that all-important 1st page, Digital marketers increasingly adopt a quality over quantity mindset – and because money typically remains an issue for any client or smart retailer…

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