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Google Shopping: Optimize Paid Ad Spend Using Pricing Data

Paid advertising is big business. According to Adthena, Google Shopping ads accounted for 76.4 percent of all U.S. retail search ad spend in Q1 2018. This percent of search spend also contributed to 85.3 percent of all clicks across Adwords or Google Shopping campaigns in the first two months of 2018.  

The bottom line is that retailers are spending more on Google Shopping ads than traditional text ads, and those ads are generating clicks from interested consumers. There’s money to be made here, but also money to be wasted if the right balance isn’t struck on paid advertising. 

What is that balance? Identifying which products deserve paid ads and which ones don’t. How is that doable? Pricing data can guide the way.

Google Shopping ads accounted for 76.4 percent of all U.S. ad spend.

How Pricing Data and Paid Ads Relate 

There is a correlation between a product’s price and its value in paid ads. It can be broken down like this: 

  • Low Prices – Which of your products are priced low in relation to the competition? Take a look, and you’ll likely see that these low-priced products already draw a healthy dose of consumer interest, in organic search, word of mouth, and your other advertising channels.
  • Competitive Prices – On the contrary, examine which products are priced closely and competitively to your fellow retailers. You’ll see that these products could benefit from differentiation in advertising to gain more consumer interest, including through paid spend.  

What does this mean? Low-priced products likely do not need to be promoted through paid ads. More competitively priced products, though, could benefit from the added investment to gain more attention in a saturated market.  

Man holding credit card buying online

Pricing and Paid Ads in Practice 

This concept was recently applied by one Wiser customer, who leveraged pricing data to optimize paid ad spend throughout its business. This national retailer realized that it was overspending on some Google AdWords while underspending on others. So, it turned to pricing data to find a solution. 

The solution came in two forms: First, pricing data showed which products were already the lowest priced in the market. These products didn’t need paid ads as they already appeared through organic search. Paid ads were redundant. 

Second, pricing data helped highlight which SKUs deserved more paid ad spend. The national retailer has millions of SKUs, so it’s easy to overlook certain products that—with the help of paid ads—could attract more clicks from eager consumers. Looking at the prices of these products shows which are competitively priced and could benefit from the extra boost in traffic through paid ads.  

The Outcomes of Using Pricing Data 

The tactic of using pricing data to determine how to optimize paid ad spend has several outcomes. The two biggest, naturally, are:

  • Greater return on ad spend 
  • Fewer missed opportunities and wasted ads 

Looking back at the national retailer, this company realized both outcomes. The retailer used pricing data to identify products that performed well in organic search and reduced paid ad spend there. Then, it used pricing data to identify which products out of its million-plus SKUs benefited from paid ads and increased spend in that area.  

The result was more optimized paid ad spend that had a higher return on investment than the retailer’s previous strategy.  

Pricing data highlights where you are overspending or underspending on ads.

Optimize Paid Ad Spend with Pricing Data 

Pricing data and paid advertising go hand in hand in the retail industry. It pays to know how products’ prices can affect the success of paid ad campaigns.  

Wiser’s pricing intelligence helps you understand the competitive landscape of pricing and make educated decisions when it comes to your business. That could be regarding paid ad spend, automated repricing, competitor behavior, and much more.

Matt Ellsworth

Matt is the Sr. Manager, Marketing & Demand at Wiser, the leading provider of actionable data for better decisions.

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