Marketing on Google has become necessary for online retailers to help them reach millions of customers around the globe. The largest retailers might spend up to $50 million a year on Google Ads to get customers’ attention.
But the story doesn’t end there. A customer may well 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 they end up buying it.
Largest retailers might spend up to $50 million a year on Google Ads to get customers’ attention.
The result can be a situation where 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 Is That?
Conversion depends on many factors. First, the product itself should 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 there is about the product, the better informed the customers are. This, in turn, 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.
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:
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 This?
We monitored price data for three Google advertisers daily over a three–month period. During this time frame, these advertisers combined for:
- 125 million impressions
- $430,000 in ad spending
- $2.5 million in revenue
For this data, we compared changes in price competitiveness for individual SKUs to performance metrics.
- Google marketers 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 increase market share.
- Marketers can also identify products that are candidates for price decreases.
- Our research shows that lowering prices has the potential to increase sales without compromising overall profit margin through lower CPC prices — hence reduced marketing costs.
Price intelligence is an integral part of online marketing. When you know the level of price competitiveness for the product market, you can easily adjust the prices strategically. Doing so impacts the Product Ads, which ultimately increases conversions and sales.