We analyze a lot of online retail businesses. We work with 30 new retail businesses a year, have 20-30 ongoing retail businesses that we perform marketing and consulting for and we talk to another 100 retail businesses a year that we end up not doing business with. Through this analysis, one trend we’re starting to see is that in many (not all) industries, Google Shopping is getting crowded. We also see that after the elimination of the right side ad space in Google search results that Google Shopping ads have taken a hit in performance. Why? Who knows, our best guess is that in an over crowded page of ads the shopping ads look more relevant, now that there are less ads on the screen, searchers are looking for more contextual results within the vertical search feed.
What We’re Seeing…
- Google Shopping feed cost per acquisition (amount of money it takes per sale to be converted) has increased on clients we’ve analyzed by 25% – 100% depending on the industry.
- The number of competitive ads for shopping feeds has increased, depending on the market by 25-60%
- The average order value from a Google shopping ads is 10% – 33% lower then an order acquired through other traffic sources.
- The conversion rate for a shopping ad on mobile is extremely low
We hypothesize that the increase of competition is due to the increased availability of third party software that makes it simple for non-technical marketers to easily submit well optimized shopping feeds to Google. 2 to 3 years ago, submitting shopping feeds to Google was a major pain point for our DIY (do it yourself) marketing clients. Companies like GoDataFeed have disrupted this space to accomplish this.
What Else Can We Do?
Good question. We’re still testing results, but here are a few suggestions we feel can move the needle.
- Stop fighting Amazon: I keep hearing people say they think amazon is going to lose momentum. Good luck with that. Amazon continues to canabalize traffic from ads and search results in every market, so why fight it, why not invest into it. Amazon Ads and Amazon page optimization are great ways to participate within the Amazon channel. Margins will be tighter on Amazon, but it’s better than losing those sales to the competition.
- Try other marketplaces like Jet.com: We’re going through our initial trials and tests with client placements on Jet, so we’ll have more data to share in the upcoming months, however, a general ecommerce strategy that has worked for us for 10 years is. “when a traffic source gets too competitive, find an emerging source with less competition”. It sounds simple, but so many retailers miss out on this concept and pay high CPAs (cost per acquisition or cost per sale). Give marketplaces a shot.
- Go Big on Social Media Marketing: Social is becoming more about brand storytelling and driving value to customers or potential customers. Not every channel can be profitable for your brand, but every business can find 2 channels to grow revenue through. Facebook Ads still convert profitably for just about every direct to consumer brand. Instagram ads (video with subtitles) seems to be performing very well as well. This product will continue to evolve, so it’s currently an early adopter market.
There is always something new and something else you can do to find profitable traffic. Our encouragement for you is to keep trying. Keep doing what you need to do to diversify your traffic. Every traffic source that works well today will likely take a hit in 24 months. You have to innovate and stay out in front of your competitors.