If everyone is dealt the same hand in a poker game, the outcome will depend on how skilfully you play your cards. A similar line of thought can be taken with PPC. When we all have access to the same advanced algorithms of Google Ads, who will succeed?
Product pricing has started to factor into many conversations we’re having with clients for this reason. But this isn’t about initiating a race to the bottom. Instead, we’re recommending to start engaging in price monitoring as a way to gain a competitive edge.
What is price monitoring?
Price monitoring is comparing the price of your product to the prices of the same, or similar products from other retailers. Several of our clients have stockists of their products who often crop up in the auction insights. Therefore, in a simple case like this, we would be comparing the price between advertisers for the exact same product.
Pricing, discounts and conversion rates
Unsurprisingly, pricing plays a significant role in consumer behaviour and oftentimes will be a deciding factor on whether you make the sale over a competitor. With the shopping results effectively just a price comparison, it’s easier than ever for your consumers to clearly see any price differences and factor that into their decision.
Where this often poses a challenge for us is when stockists of our clients products are running discounts that our clients aren’t running themselves.
To illustrate this challenge, a quick Google search of my go-to foundation shows the product at full price (£39), whilst Cult Beauty have it discounted as low as £26.33. Even with shipping costs factored in, as a consumer, I’m choosing to buy from Cult Beauty.
The shift to a more price sensitive mindset over the past few years only exacerbates the impact that price differences have on conversion rates, reinforcing the need to monitor your prices against competitors.
Understand the 'why' behind performance
Price monitoring can give you the context behind your numbers. If you’re looking at weekly performance and your shopping results declined, it’s all too easy to panic and start making rash changes before trying to understand why this happened. With price monitoring in place, you can more easily identify when the ‘why’ is due to being undercut on price on the shopping results page.
Adding in this contextual information to your reporting can help alleviate the initial panic that set in when seeing results, but what will really put your mind at ease is having a strategy in place to navigate these periods.
In the next section we’ll look into how you can access price competitive data and more importantly, how you can use it to your advantage in your paid strategy.
Using Google Merchant Centre to monitor price competitiveness
The simplest method to see how competitive your prices are is by using insights from Google Merchant Centre (GMC).
By heading to ‘Growth’ then ‘Price Competitiveness’ within GMC, you can get a snapshot of whether your products are below, at or above the benchmark price for the same product being sold by others.
There’s plenty of different ways you can look at this data, with detailed insights at a product level, category level, product type level and brand level. However it is worth noting that there might not be a benchmark price for every product, which is because you’ll only see price competitiveness for products that are actually getting clicks in Google Shopping.
Whilst GMC is a good start to monitoring the price competitiveness of your products, it’s not the only option.
Users of Shoptimised, which we ourselves use, can access their price checker functionality which will compare your products en masse to others in the market based on the product GTINs. Other programmes like https://frigginyeah.com/, and wiser.com can also offer advanced price comparison functionality.
Using price competitive data in Google Ads
Having eyes on this data is nice, but it’s what you can do with it that is most exciting. In no world would we recommend a reactionary approach where you lower your prices whenever a competitor lowers theirs. This isn’t about devaluing your brand in a race to be the cheapest.
But you can use these insights to both capitalise on those products that are below the benchmark price, whilst also being proactive in your bid management.
Setting up your campaign using custom labels
Depending on the software you’re using for your price insights, you can set up custom labels which will allow you to categorise your products.
In the example we’ve pulled the data into categories based on the price competitiveness data. By analysing the performance of each we were able to segment these into 3 Custom Labels:
In doing so, we can then segment campaigns or use priorities to drive greater efficiency in your account.
Segmenting campaigns by price competitiveness
Depending on the size of your feed and performance, segmenting Performance Max campaigns is often a go-to strategy to get the most out of performance. Especially with a large product feed, it’s very easy for products to get minimal visibility because the algorithm is pushing top-performers.
But low-visibility doesn’t necessarily mean bad performers, and by splitting products into separate campaigns you are giving more products a better chance at driving results. While there are plenty of strategies to take when segmenting your campaigns, it needs to make sense for your data.
Segmenting campaigns by price competitiveness is one way to go, and will give you better control over what products you want to really push. If, through monitoring your price data, you find your most price competitive products to perform with much greater efficiency than your more expensive products, splitting out those products could be a starting point.
Conversely, if your most expensive products are taking up a big chunk of spend for a much lower return, splitting these out will allow you to push and pull spend when it makes sense to do so.
Once your custom labels are in place you can easily segment your campaigns in this way, or if you want to monitor performance instead, you can add the custom labels as listing groups to have visibility on the performance splits between each price competitive category.
Managing bids and campaign priorities
If you’re still using standard shopping, then setting up your custom labels will allow for manual bid management at a product group level - note this is only applicable if you’re using manual bidding.
You can also use your custom labels to set campaign priorities. By doing so you’re determining the importance of each category and setting the bids accordingly.
In our example, we’d want Google to prioritise our cheapest products with the highest conversion rates so would set this campaign to high priority, followed by our neutral products on medium priority and our most expensive products as low priority.
If we don’t have a product to match a search in our high priority products however, it will move on to our neutral products, and again for our most expensive products.
Price has become such an important factor in shopping performance, with the impact on conversion rates becoming much more stark since Performance Max was introduced.
But there are still ways to make your activity work smarter which avoids reactive price lowering or product exclusions.
Ensure you’re in a strong position by structuring your campaigns to focus on your most price competitive products first. Typically these products will have high conversion rates and stronger overall performance, so maximising visibility will allow you to keep driving results.
At the same time, not spending too much into your least price competitive products can keep efficiencies on track and ensure you are making your budget work as hard as possible.
Using your price competitiveness data in your campaigns is one way to gain a competitive edge over competitors. And in a world where all advertisers have access to the same advanced algorithms, finding a competitive edge is crucial.