Improve the performance of your Shopping campaigns with Smart Bidding

Target ROAS (tROAS) bidding strategy relies on advanced machine learning algorithms, which take into account a wide range of criteria to accurately predict each bid, based on the estimated conversion and conversion value. The main signals when determining the impact of the auction-time bidding on Shopping campaigns include the device, physical location, location intent, day & time, remarketing lists, ad characteristics, interface language, browser, operating system and actual search query¹. Most signals and signal combinations are exclusive to Smart Bidding.

A. Product attributes

Bids are optimised based on similar attributes across products such as price, brand, product category and condition. In other words, if you add a new product that is similar to existing products in your portfolio, its relevance and conversion likelihood will be estimated based on its attributes. Because of this, it is a recommended practice to fine-tune your feed data, as well as the product attributes that have the biggest impact on the ad rank of your Shopping campaigns.

There are  several important elements of product attributes. Firstly, accurate product content (such as rich titles, descriptions and high resolution images) is important for search relevance, while unique product identifiers are used to match against Google’s product catalogue to ensure product validity. Categorizing your products in 3 to 5 levels via the attribute ‘product_type’ following an arrangement similar to your website will help improve your impression share. Similarly, all attributes that let you include relevant information that describes your product will be highly valuable. For instance, if you are a merchant in the field of fashion and apparel, you should consider including attributes such as ‘age_group’, ‘colour’, ‘gender’, ‘size’ and ‘size_type’.

Last but not least, pricing along with accurate and competitive shipping rates are important, as these enable you to show the right purchase information to potential customers.

B. Price competitiveness

For a given auction, automated bids may be adjusted if the price of your product (or product set) offers an attractive deal compared to what other advertisers are offering. Therefore, you should check how competitive your product prices are in the Growth tab of your Merchant Center, as this will allow you to assess whether you should set a lower ROAS goal on price-competitive items or bid less on non-price-competitive ones. Given that Target ROAS and maximise value bid strategies take into consideration pricing factors when setting up the bid by knowing how competitive your product prices are, you can capture the increased demand easier.

Note that this information can be used as an input when making pricing decisions or setting merchandising strategy (for instance, by identifying categories or brands where your products are consistently priced too high).

C. Seasonality

During seasonal events, Smart Bidding takes into account holiday performance trends, while bids are adjusted automatically when the conversion likelihood increases. A key tip to use automation in your Shopping campaigns during peak is by reviewing if you are willing to accept a lower ROAS in order to increase sales volume. Also, review the previous year’s results and indicate the algorithm your expected increase in conversion rate.

As you may know, there is a potential trade-off between the volume and the return on investment you can achieve with your Shopping campaigns.

With this in mind, businesses that are using automation on their Shopping campaigns should find the right balance, based on their business goals, when they set their Target ROAS. To make it more explicit, let’s look at the following example:

• If sales volume is a company’s focus (i.e. higher conversion value), then a recommended approach would be to lower their ROAS target, as this will allow their Shopping campaigns to participate in a larger number of auctions and drive more conversion value; however, this might impact the Shopping campaigns’ efficiency.
• If a company wants to achieve higher efficiency and profitability, then it’s recommended to increase their ROAS target, as this will limit their Shopping campaigns from entering several auctions. This means higher cost effectiveness, but lower sales volume.

Key tip: you can find out what your current ROAS is by examining the conversion value / cost in your Google Ads reporting.