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ARTICLE
At Google Shopping, we acknowledge that the measurement of Shopping campaigns’ success can vary from one merchant to the other. However, there are some common KPIs that many companies are using, like the Return on Ad Spend (ROAS) and the Ad Cost of Sales (ACOS), the reversed ratio. For many retailers, these KPIs alone are enough to measure the online success of their products and the performance of their Shopping campaigns. Despite this, the ROAS is not always the ideal indicator on whether a product is important & incremental to your business or not. Let’s look at the following example:
As you can see in the table below, when it comes to ROAS it seems like Smartphone A performs better than Smartphone B, as the ROAS is higher. However, if we look at the profit margin and the stock level, Smartphone B may be strategically more relevant to the business than Smartphone A. Therefore, it might make more sense for the retailer to sell Smartphone B and prioritise it over Smartphone A, as it would be more beneficial for their overall business. Based on this reasoning, the framework Shopping for Business Objectives was developed.
Shopping for Business Objectives (or “SFBO”) is a framework designed to help merchants find the best Shopping campaign strategy and structure for their business objectives. The way companies build their campaigns should reflect a defined and relevant Shopping ads strategy. “SFBO” can help you design your Shopping campaigns strategy based on your company’s multiple objectives that are key to growing your business.
Let’s think about “SFBO” with a laundry analogy:
Each year you spend many hours doing multiple loads of laundry. You have different tasks to manage: not only washing, but also sorting, drying and tidying. In business terms, these would be the objectives that you are trying to address. However, achieving these goals requires a lot of time and effort, so you decide to automatise the process by purchasing a smart laundry prototype. Apart from the fact that it can help you put the clothes in the hamper, this machine can automatically sort the clothes for you by colours or item types for tailored treatment, it can suggest the best programme and length, and can even let you know when human action is necessary. Since it is a recurring task, the machine learns along the way what the best frequency is for your laundry and can adjust the hamper loading to save water and soap. With this automated process, the goal to sort, wash, dry and tidy these loads of laundry in one year can be achieved quicker, with less effort and in a more structured way!
Now that you see the benefits of being helped with machine learning, we recommend that you leverage the same principle for your Shopping campaigns. You’re probably wondering how. The answer is by using the “SFBO” framework, which takes into account the optimisation of bidding strategies and maximising the impact of automation and Smart Shopping campaigns (SSC).
I want to increase my profitability:
I want to manage my stock better:
Combined goals - I want to increase my profitability & manage my stock better:
Example of Shopping campaign's structure with “SFBO” and recommended bidding strategy:
If you are interested in testing this framework, be aware that the ROAS value could go down and the overall costs could increase as the new Shopping campaign structure will bid more aggressively on products that have a higher priority and are more incremental to your business. Therefore, it's important to keep track of your KPIs and assess whether the “SFBO” framework is helping you meet your business objectives and maximise the impact of your Shopping campaigns.
It is possible to combine as many business goals as needed to implement an individual successful Shopping campaign structure. Other frequently used business KPIs - apart from margin and stock level - are return rate and new customer acquisition. There are a variety of possibilities depending on your internal data set and strategic business objectives.
Key tip!
We recommend you don’t over-segment the product portfolio and the Shopping campaigns’ structure, as the more data the campaign collects, the better it works.
If you’d like to learn more, you can reach out to your Google Shopping (CSS) team to discuss specific “SFBO” related recommendations for your company’s Shopping campaigns.
This article was published by Google Shopping (CSS). Google Shopping is Google's CSS and a Premium CSS Partner.
