Back in June 2017, Merkle | Periscopix published a blog on the European Commission’s antitrust ruling and what this meant for Google Shopping. Back then we had a few ideas on what may happen to Shopping ads, one of which was the introduction of other price comparison shopping services within the Google SERP. This change has been rolling out slowly over the past year, but more recently there has been a significant increase in advertisers opting to run their ads through a CSS outside of the Google owned service (google.com/shopping). This has been mainly down to the addition of new Comparison Shopping Sites (CSSs) into the market, changes to the auction behind shopping ads and the introduction of a promotional incentive scheme for CSS partners.
What is the Google Comparison Shopping Partner programme?
The partner programme allows CSSs to enter the AdWords auction on behalf of merchants. It also grants merchants running ads through a CSS partner access to the new CSS incentive programme, SpendMatch. The partner programme was set-up by Google to help other CSSs join the Google Shopping ads auction, which will therefore allow the ad format to become more competitive.
The SpendMatch incentive scheme is a huge perk to running your ads through a CSS partner. We don’t believe these incentives will last forever and the length of the programme is at Google’s discretion. This means early adopters of the new programme will make the most out of the change. Full details of the incentives you could receive are below:
These incentives will arrive in your AdWords account within the billing tab on a 30-day rolling basis after launching with a CSS.
How has the Google Shopping auction changed?
CSSs can now place shopping ads for merchants on the SERP in the following countries: Austria, Belgium, Czech Republic, Denmark, France, Germany, Italy, Ireland, The Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.
The first change comes in the way the ads appear on the results page. When an ad is placed by a CSS, the ad will show ‘By CSS’ as per the example below:
If a user clicks on the ‘By Periscopix’ link, they will be taken to the CSS’s site where they will be able to compare different products. Our initial findings are that the percentage of users clicking on the ‘By CSS’ link is, so far, minimal.
The second change has been to the auction behind the ads. As part of the ruling, Google Shopping needed to become a profitable stand-alone business. To adhere to this, Google decided to make a change to the way in which the shopping auction works. For Shopping ads in the European Economic Area (EEA) which are powered by Google’s own CSS, the CPC entered into the auction within AdWords is now broken down into two parts; the actual CPC and a margin. The margin is a fixed percentage of the CPC which is set by Google Shopping. Currently we believe this margin to be around 20%. The below explains how this works if you placed a bid of £1 into the auction:
Before the recent explosion of new CSSs entering the auction on behalf of merchants, this change wasn’t noticeable. However, one benefit of running ads through a CSS is the removal of this margin, which in theory means a merchant can make a saving of 20% on their shopping campaigns!
This sounds too good to be true, is it really that simple?
There are quite a few moving parts to consider when making this change. And moving over to a non-Google CSS doesn’t mean a 20% cost saving instantaneously. The amount of the margin you were paying before isn’t taken automatically off your bid, you need to change your bids proactively within AdWords.
1 – Choosing a CSS
When deciding on a CSS partner think about what pricing model they use and how much they charge. You can find a full list of available CSS partners on the Google CSS partner site, which is a good place to start. Next, you’ll need to think about how you can still make a cost saving when considering the fees charged by a CSS. And finally, think about how you currently manage your shopping campaigns and whether this will be impacted by signing up to a new CSS. Some CSS companies filter out your Shopping traffic into a new AdWords account and make bidding decisions for you, removing some of your control.
2 – The Google Shopping Tab
Next up there’s one factor which makes simply reducing your bids by 20% slightly tricky, the margin is not applied to the Google Shopping Tab. Sometimes forgotten about, the Shopping tab results in a small but significant portion of shopping campaign traffic. We’ve estimated this to be around 5-10% of impressions.
If we were to reduce our bids by 20% once transitioning to a CSS to save the margin, we would likely see impressions reduce with this. As the margin is not applied here, we would be reducing the bids on this page by 20%.
3 – Bidding Strategies
If you’re Shopping ads are powered by automated bidding, this is the final complication you’ll need to think about. Bidding algorithms take time to adjust to changes so don’t move over your traffic to a CSS during key trading times if you are dependent on automated bidding. The good news is that Merkle|Periscopix haven’t seen any negative impact on bidding strategies after a move to a CSS.
Even though there are a few different factors to consider, manipulating your bids to make a cost saving is definitely possible and is something we’ve helped many clients with since the start of our journey into becoming a CSS. In our opinion it’s also worth considering the other option, keeping your bids stable to see an increase in traffic. Either way, the main message is to move quickly to make the most out of potential cost savings whilst they last.
What results have we seen so far?
We’ve seen positive results across the board for the clients we’ve onboarded onto our CSS so far. And this is before we consider the incentives they’ve received through the SpendMatch scheme.
Case 1 – Reducing bids by 20%
For a large retailer we opted to split our shopping traffic 50:50 across the Google Shopping CSS and our own Periscopix CSS. By reducing our bids by 20% we were able to make a huge cost saving of 25%. CTR remained stable however traffic did reduce by 5%.
Case 2 – Keeping bids stable
Another option we mentioned earlier is keeping your bids stable. We tested this for a jewellery client and saw that traffic increased by 45% and we still saw a small saving on our CPCs. Again, in this case the CTR remained stable
An important observation to make it that CTRs have seen no significant drops since making the switch. We don’t believe having the ‘By CSS’ link in the ad is making any difference to consumers and which ads their choosing to click on. As more ads start to be powered by CSSs this change will become the norm.
What are our predictions for the future?
As we’ve mentioned, the SpendMatch scheme will unlikely be available in the long-term. The second thing to think about is the rate at which merchants are transitioning over to run their ads through a CSS and what they decide to do with their bids. The more merchants opting to keep their bids the same as they were pre-transition, the higher the average bid will be within the auction. Meaning that merchants still using the Google Shopping CSS will find it harder to remain competitive without increasing their bids. However, we also don’t know what will happen to the Google Shopping margin. Google may choose to lower this so that their own CSS remains a price competitive option.
All in all, it’s clear that the cost savings won’t be around forever and that the changes to the Google Shopping auction are here to stay!
How can you join the Periscopix CSS Programme? If you’d like to make the most of the benefits of running your ads through our CSS, we can help! Our aim is to be transparent and flexible so that our clients can make the most of the cost savings and incentives available while they last.
Authored by:
