Before 2018, if you wanted Shopping Ads as part of your demand strategy you could only buy through Google. Now Google is just one of 90+ partners and there is a significant incremental opportunity to be seized by savvy retailers looking to drive ecommerce success for their brand.
Following a €2.4 billion fine from the EU commission, Google opened its market to the competition and established Google Shopping as a separate company inside the Alphabet Group. Now known as Google Shopping Europe it must be profitable on its own terms, as well as take around a 20% margin out of an advertisers’ bid, aligning it much more closely to the model of other agencies and technologies buying on the platform.
Now the Comparison Shopping Services (CSS) Programme features over 90 providers that can act as buying partners for shopping ads. And the leading retailers in the market are leveraging different CSS partners to drive an incremental revenue opportunity by growing their share of high intent search.
The incremental opportunity
The primary misconception with Google Shopping Partners is that working with more than one CSS would lead to cannibalisation of your primary campaign. In fact, given the Shopping Ads auction is a second price auction, you can’t bid against yourself, and more retailers are taking advantage of the option to boost impression share and coverage by working with multiple partners.
Ensuring incremental value is achieved does take careful consideration as each partner will have both its strengths and its weaknesses. There are several factors to review and several key questions to ask to ensure you get the performance you want from your CSS.
Finding the right CSS Partner
For example, experience is key. If you are the first advertiser in your vertical working with your Shopping partner, it may take some time to learn what works. To scale performance up, CSS players need to be ready to help their partners through the early phases by sharing learnings on what tactics to consider to gain impression share. On the other hand, if they already work with many customers in a similar vertical to your own, your chance of success is going to be much higher.
Aligned to this is understanding how each partner operates for bidding and optimisation. This can often be a black box, (if you don’t ask), but most partners should be happy to share what tools and approach they are using.
Are they using standard or smart campaigns or perhaps a hybrid approach? Do they have any proprietary technology that can put them above other partners.? Also, if you expect to have some aspect of control and input on the strategy you should ask, can you handle our custom
requirements? Do your research to understand what the pros and cons are for each partner’s offering and what features may be “must haves” and those that you can do without.
Managed or self service?
Service will also vary from partner to partner. There is everything out there in the market from self-service to full management and QBRs. Understanding what you want upfront matters to ensure you get the relevant level of service for the results you are looking to achieve.
An example would be if you are looking for a managed CSS who will run a campaign on your behalf. In this instance, you want to find the strongest bidding expertise, most relevant reporting, and the right feed support to achieve your goals. Equally, if you are looking to obtain lower CPCs offered by a CSS on your direct campaign and a self-service approach, understand that these low-cost solutions also come with limited support, so you’ll need to do most of the work yourself.
For retailers, the commercial model is also a crucial element of achieving success in Google Shopping. The predominant models are CPC and CPA. While advertisers might understandably lean towards the lower risk of CPA, that only moves the risk onto the CSS partner to deal with and it can be hard to get the desired scale due the complex nature of this arbitrage model.
Having to factor in return rates and longer validation periods means CSS partners can sometimes see 50%+ of expected sales cancelled. With that in mind flexibility, and an open conversation about all the metrics ensures a higher chance of success for both sides.
Search agencies do have a role to play too
Many agencies continue to service their existing client base, but others have benefited in building CSS compliant sites to create another channel to secure new clients. Agencies typically have services extending across the full spectrum of search services including SEO and other paid media channels, and so can have substantial contractual commitment and service laid out for retailers.
However, the CSS opportunity does create a potential conflict for the agency. Especially if the agency has signed an exclusive agreement as the big benefit for retailers in the EU is to test several different partners and this could be seen as a threat to the agency’s lifeblood or even a breach of contract by the client.
With the market now largely accepting the concept of multiple CSS partners it’s become hard to defend against this strategy, either with contractual exclusivity or by even recommending against the strategy. So, some agencies who once considered this as a threat, now see this is an opportunity to help their clients grow.
In 2021, some agencies now work with their retailers to build out a series of partners to support the paid media plan. Coming into Q4 we have seen advertisers change their views from not wanting to work with any partner other than Google to then wanting to test five new CSS partners alongside Google. This is a huge shift. We also see the use of tactical CSS partnerships to support various categories within the product set (e.g., category based, margin focused, clearance SKUs only etc) or different stages of the customer funnel through leveraging remarketing lists.
As Google Shopping continues to evolve, it is likely testing of multiple partners will increase through the next year. With a plethora of data on all sides of the equation, greater sharing between CSSs, advertisers, and agencies is likely to improve retailer results and scale the channel. The key takeaway is that Google Shopping has major incremental revenue potential, if brands can find the right partner, be clear in their objectives and rigorously assess who they want to partner with.