How the Google Shopping app maintains a Shopping campaign with Google AdWords is complicated and below is a large amount of information. If you like, you may just read the Summary at the bottom. Otherwise...

Appropriate Google Shopping expectations

Google Shopping is a great way for online merchants to showcase their products and allows shoppers to compare pricing and shipping offered by merchants offering the same or similar products. With the many changes made by Google in the Organic Search Results to drive showing relevant content to users using their search engine, online retailers are now expected to pay for the exposure they once had for free.

One of the most prevalent misconceptions regarding pay-per-click (PPC) advertising campaigns, the type used by our Google Shopping app, is that they drive sales. While it is the anticipated goal to have these ads to assist your store in generating revenue, the ads can only drive traffic to your product pages. Once consumers land on a product page, it is the content of the those pages, the overall design and usefulness of the website to the target audience and any conversion techniques you employ that is truly responsible for driving sales. The Google Shopping app will send consumers to the single product page from the advertisement, so be sure you employ cross-sell and suggested companion product tools to increase the final order size.

The Google Shopping campaign will not immediately perform well, especially during the beginning weeks and months. The app needs to analyze and adjust over time so that the actions performed by consumers clicking through to your store can be watched, collected and used to modify the Shopping campaign settings. Google AdWords, which conducts the ad auctions, is also analyzing the past ad performance for your ad campaign and the navigation behavior of the consumers clicking your ads. AdWords will also use these statistics to set an expectation of the relevance your ads will be to the consumers performing searches.

The performance of the Google Shopping ad campaigns relies on your store content & a monthly budget befitting both the amount of traffic you wish to receive and the quantity of competing retailers also using Google Shopping. Advertising on Google Shopping depends on many factors that have been summarized below from many Google content sources so that you are better equipped to understand what the Google Shopping app can do, and be aware how storefront and product data quality can improve the app results.

What the Google Shopping app will do

The Google Shopping app bids higher on categories or products that generate more relevant traffic and a Return on Investment (ROI) when orders are placed. Conversely, the app bids lower on categories or products that don't generate as much traffic and ROI. The app will need to collect many days and weeks worth of history of those visitors that were shown ads on Google Shopping. Whether they directly clicked-through to the product page, or were seen visiting your store later, called view-through traffic, while the Google Shopping tracking cookie is still present in their web browsers. Note that the Shopping campaigns are pay-per-click (PPC), so your daily ad budget is only debited when the ads are clicked and they spend some time on your website. Anyone navigating to your store web pages after only seeing the Google Shopping ads will be free visits. Google does not charge for invalid clicks, which are bounced visits or visits they deem as coming from an automated or otherwise suspicious source.

It can take a while, from 3 weeks or more, to gather enough data to make bidding adjustments to a single item after it is first available to advertise or has received content updates. Automated bidding and optimization is done at the ad group level by our app where there's enough data to quickly adjust bidding. For this reason you may not see the Google Shopping app providing improved consumer traffic to your store until the 3rd or 4th month of advertising.

Monthly advertising budget considerations

Bidding is adjusted every 24 hours based on the available budget that is portioned out across the monthly billing cycle. The minimum allowed budget to set for the app at $200 is used over a 30 day period does not go very far. Such a low budget often leads to little to no advertising for about half the cycle, and the daily budgets are exhausted in a very short window after activating the campaign each day.

Merchants that sell a very unique or exclusive product line may be able to receive an acceptable ROI with a Shopping Campaign budget of $500 or less. Merchants that sell common products that are offered by other retailers, as Google Shopping also provides local business advertising, will need to be more competitive for ad placement which will require larger budgets.

An explanation for daily overspends

Google AdWords policies allow for spending up to 20% more of the daily budget amount each day.

This is due to the nature of the AdWords platform which is made up of a great many ad auction servers. Since AdWords ad server reporting can be delayed by up to 18 hours, AdWords will not know it should have stopped including your campaign in ad auctions until some overspend occurred.

Additionally, the daily number of ads AdWords shows, known as impressions, depends on how much historical data they have on your ad campaign click-through-rate (CTR), and how many clicks must be received to use up the daily budget. For example, when your daily campaign yielded 1000 ad impressions which received only 62 clicks, it has a click-through-rate of 6.2%. When about 60 clicks were needed to use up the daily budget, AdWords uses this info the following day. Yet that next day your campaign is averaging a CTR of 3.0%, AdWords will adjust and work towards showing 2000 ads to attempt for the 60 clicks required to exhaust the funds.

• If your Shopping campaigns have a historically low CTR, AdWords will normally show a larger number of ads since the budget is used when consumers click the ads and are directed to your store. AdWords wants to use the entire daily budget and will keep showing your ads to do so. More often than not, there is almost always some small level of overspend.
• If your Shopping campaigns have a higher CTR and perform better, AdWords can use a lower number of ad impressions to use the allotted funds for that day and is less likely to overspend.
• Sometimes when there's increased interest in the products you sale due to recent events, there can be overspend as AdWords was not expecting the jump in consumer enthusiasm.

When our Google Shopping app notices the overspends, it will adjust the daily budgets as needed for the remaining days of the billing cycle. The daily budgets may need to be set low for a couple or more days as there could be more overspend by AdWords again. If the app needs to keep daily budgets low for several days, it will try to use most the remaining budget on the days of the week that perform best historically for your products. The lower your monthly budget is, the more frequently the app must lower daily budgets or pause the ad campaigns and it will seem that our Google Shopping app is not functioning at all.

Google Shopping ad auctions, max bids and quality scores

When a consumer performs a search for a product or a search term related to products on the Google home page or while on Google Shopping website, an ad auction becomes available on various auction servers. AdWords then analyzes the search term and finds the Shopping campaigns targeting with the same or related keywords or content. Then the a server needs to consider the advertisers vying for placement and decide which ad auction bids to accept and display.

First there’s the bid amount

• The bid is set by the Google Shopping app based on the product retail price, past performance of the product category and if it is set for priority bidding.
• This is not the amount a click on your ad will cost, this is the maximum bid the app will pay for a consumer to click on the ad and be directed to the product page.
• To ensure good value for both the advertiser and the consumer using Google services, top bids are not what's used to prioritize product search results display. There are other more important factors that the auction server considers for that acceptance and display order.

Expected click-through rate (CTR)

• This is a prediction of how often your ad will get clicked when shown for a keyword.
• To determine this rate, AdWords takes into account how well your Shopping campaign auctions have performed previously, that is how users responded to your ad by clicking on it or not in the past. Note that this is why Shopping campaigns need multiple months of history of CTR activity to generate this evaluation.
• The longer you use the Google Shopping app with a good CTR, the better the performance of your ad auctions and the daily budgets are used more effectively with consumers more likely to convert into customers.

Content is your highest priority

• The dynamic product ads use your product Name/Title (not the web page HTML <title>) and product Description to generate the ads. Read through our Product Data Editorial Best Practices page for guidance on how you should be updating your products content.
• Only the first 75 to 200 characters of the description will be seen by the consumer, depending on the device type they use. Avoid using general promotional information or brand advocacy in product descriptions, as these belong on product group category pages. Briefly describe the most important aspects of that one product in the first 2 or 3 sentences.
• Includes relevant and original content that helps the consumer understand the value of the product. Add lists of features later on as Google wants human readable sentences that adhere to their Editorial Guidelines.
•  Your store website should be easy to navigate, all web page elements are intuitive and important buttons like the Add to Cart are immediately noticeable. As an example: Having your Add to Cart buttons the same bright color as the majority of your site design often camouflages them instead, leading to user frustration and even store abandonment.
• Your store About Us and other none product pages should articulate your business thoroughly and provide content that encourages visitors to consider your store website as an authority and trusted source of related information. Online stores that just list products that do not provide additional relevant content to inform and empower consumers do not normally perform well. Take the time to update your website periodically and work with your staff and copy editors to make improvements after evaluating visitor analytics.

Finalizing the ad auction decision

• Using the above criteria AdWords assigns an ad rank, the ad relevancy is calculated by considering the product title and description in the dynamic ad to determine how well it relates to the search query. Ad relevancy is a prime factor in the auction consideration, enabling users to see products that are relevant to the search entered.
• Ads with the best ad rank will have the most prominent placement, regardless of the max bid. Google prefers ad relevancy over profit as users who more often find what they want will return to use Google search tools. An ad with the highest quality score and the lowest max bid will win the auction and be first displayed.
• An ad with a very high maximum bid, but a very low quality score will always lose to the ad with a high quality score and a tiny maximum bid. If there are enough ads competing in the auction, the ad with the huge maximum bid may not even be displayed; Quality & consumer relevancy matters most.

Summary

The Google Shopping app can only increase your store's exposure to consumers on the Google Shopping service. The quality and relevance of your product titles, descriptions, price and shipping fees, along with the ease of use and relevance of your website to the target audience will drive:

• The ad auction quality score that decides if the bid is accepted and prioritizes visibility order.
• What entices consumers seeing the ads to click the ads and visit your store.
• Create brand recognition so consumers may visit your store at no cost to you later.
• Drive consumer engagement on your storefront pages to encourage repeat orders and store advocacy in social media.
• Influence consumer trust in your website as a source of authority so they are confident in purchasing from you.

Google AdWords and our Google Shopping app will both use your historical ad campaign activity to adjust settings and try to get your ads in front of the right potential customers. However, if your monthly ad budget is too low to be competitive for your product categories, performance will be sporadic and difficult to analyze & calibrate with the small amount of data that would generate.

You can also manually select individual products for more aggressive bidding. Learn more about priority bidding for best sellers or specific products.

Study the Google Shopping Product Data Requirements and Editorial Guidelines as bidding depends on the quality of your product content and how closely your data adheres to these policies. Review the following Google Youtube video for more information on improved product title naming conventions that has shown to help consumers understand the products displayed at a glance.