Liam Patterson, founder and CEO of Bidnamic, explains why the Google Shopping carousel has become the new shop window, and the right approach can make the difference between making a sale and not.
We’ve been hearing about it for the past couple months, but what some never thought would actually happen, has. On 8 December, in the wake of the spread of the omicron variant, the Prime Minister sidled up to his lectern to announce the implementation of the government’s Plan B measures, and everyone watching must have felt a similar sense of dread.
With the orders to work from home, and rumours of another lockdown in January, there’s no doubt that those in-store purchases that were creeping back since the previous lifting of restrictions will snap back to largely happening online. It’s another call to any retailers that haven’t yet joined the world of online sales over the past year and a half to get on board.
During the previous lockdowns, the Bidnamic team has seen spikes in internet sales as a percentage of total retail sales, so retailers can expect the same should Boris make another sobering walk to the lectern following the holidays. But even though the online sales pie is getting larger, there is more competition out there looking to get a slice. With more retailers having already moved online, and data suggesting consumers are likely to maintain behaviours adopted during the pandemic, it's now more important than ever for them to make sure their products are being put in front of the eyes that are most likely to buy them.
Stand out from the crowd
It's no secret the pandemic has been the driving force that pushed many businesses online that otherwise wouldn’t be there yet, or at all. In fact, 280,000 businesses started selling online for the first time as a result of the pandemic, as mentioned in Google’s 2020 Impact report - a number that will no doubt have risen since it was published.
The shop window is being replaced by the Google Shopping carousel and people rarely stray beyond the first few results when they’re looking to make a purchase because they usually have a very specific idea of what they want. The increased purchase intent of Google shoppers has made the channel a favourite of retail marketers, but using the platform to find a competitive advantage isn’t as easy as it seems.
One way to use Google Shopping to their advantage is for marketers to change how they bid on the platform. Bid price, along with quality score and relevancy, is arguably the biggest factor in determining whether a product wins the auction system, and getting this right is critical to maximising profitability whilst outranking competitors.
Many businesses that started selling online during the pandemic have done so through marketplaces or third party sites. While this can provide the short-term gains some retailers are looking for, it ultimately ends with long-term pain for many. The costs and fees associated with selling through these channels can cut into the already thin margins that some retailers face. A properly managed Google Shopping campaign helps consumers find a business's products in their own virtual storefront by driving traffic and sales through their webshop. This in itself can lead to greater profits because consumers may be likely to buy more than just the specific product they were looking for when they buy directly through a business’s website, rather than through a marketplace.
While retailers can take advantage of the factors driving online sales in the present, they need to also capitalise on them to capture and retain customers versus simply focusing on initial purchases by targeting life-time value (LTV) customers. These customers have the highest value for retailers because they are familiar with the brand and trust them. This translates to a higher click-through rate as a result.
Many retailers will measure their campaigns by return on ad spend, which calculates a target cost per click based on the immediate value generated from that individual sale. This fails to take into account the higher profits that can be made from repeat purchases, lower return rates, and refer-a-friend schemes. An LTV approach allows you to win more expensive clicks, but provides greater returns, and with the cost of acquisition nearly doubling for some businesses, retailers would be wise to target customers with the long-term in mind.
It’s becoming increasingly difficult for retailers to find the right customers, particularly where they don’t have access to third-party data to shine a light on them, making a fully optimised Google Shopping campaign even more essential. In the end it could be the difference between making a sale, or missing out.
By Liam Patterson
Founder and CEO