Marketing on Google is essential for retailers to reach millions of customers around the globe. The largest retailers may spend up to $50 million a year on Google Ads to capture customers’ attention.
But the story doesn’t end there. A buyer may click the Product Listing Ad and land on the product page, but there is no guarantee that this will lead to sale conversion. However, a certain amount of money is already spent whenever a customer clicks on the product ad — whether or not s/he buys.
Large retailers may spend up to $50 million a year on Google Ads to capture customers’ attention.
The result can be a situation in which your ad spends are increasing, but revenue is not. This is a major problem among many Google marketers: despite spending huge money on Google Product Ads, they do not achieve the desired conversion rates.
Why don’t Google advertisers achieve desired conversion rate?
Conversion depends on many factors. First, the product itself must be good. But in online marketing, the quality of the product is directly related to the quality of the content displayed on the landing page. The more information available about the product, the better informed the customer can become. This, leads to a higher chance of a sale. Lowering prices have the potential to increase sales without compromising overall profit margin through lower CPC prices.
However, we have found another key factor that is influencing the purchasing behaviour of customers –
Price Competitiveness
Just as price is a major factor for winning the coveted Amazon Buy Box, we’ve discovered it has a big impact on Google Product Ad performance too.
How do we know Price impacts Google Product Ad performance?
We monitored price data for three Google advertisers daily over a three–month period. During this time, these were their ad stats –
- 125 million impressions
- $430,000 in ad spending
- $2.5 million in revenue
For this data, we compared changes in price competition for individual SKUs to performance metrics.
Key Takeaways for Google PLA advertisers
- Google Shopping advertisers can take advantage of lower CPC prices to increase bids on products when they become the cheapest on the market. Doing so can quickly and profitably increases market share.
- Google PLA advertisers can identify products that are candidates for price decreases.
- Lowering prices has the potential to increase sales without compromising overall profit margin through lower CPC prices.
Price intelligence moves the needle in online marketing. When you know your product’s price competitiveness, you can adjust your prices strategically. This also impacts your Product Ads performance through higher conversions and sales.
