Last October, Google started rolling out the new Google Shopping campaigns; an update to their Product Listing Ads (or PLAs). The new Google Shopping tool allows users to easily segment product feeds by categories and labels, changing targeting from ‘all products’ to individual items, so advertisers can see exactly what is performing and what is not.

Fast-forward to 2014, and on February 18^th Google released this capability to all AdWords users – allowing a PLA campaign that previously took hours to build, to be created in minutes. The new tool also means that users can see benchmark Click Through Rates (CTR) and Cost Per Click (CPC) made up of other advertisers’ PLA’s for similar products, thus enabling them to compare how their ads are performing against the competition. All of these new features are great for optimisation and adding new products, but how are PLAs performing?

How have CPC and CTR changed since 2013?

Looking over the clients at Mediaworks, some particular industries have shown a dramatic rise in CPC since the new Google Shopping tool became fully available.

The above graph shows that the CPC of standard PLAs has almost doubled in this industry since Google Shopping was released; CTR has slightly dropped but remains fairly stagnant.

In 2013, research published by Marin Software shows the CTR of PLAs increased by an average of six per cent, whereas text ads declined by 13 per cent. But don’t think this benefit hasn’t come at a price; Shoppers preferences to PLA ads, and more advertisers using PLAs has drove CPC up 141%!

Research suggests online shoppers are favouring product listing ads over traditional text ads. Plus, with the new changes to Google Shopping, advertisers can now create campaigns both quicker and easier than ever before. This is partly to blame for the increasing competitiveness of PLA auctions; leading to higher bids and CPC.

How can advertisers come out on top vs. the dramatic rise in CPC?

In paid search, we must ensure that we adapt new campaign updates, as KPIs can change dramatically. With the sudden increase in CPC, we need to go back to basics:

• Reduce Max CPC – If your CPC has increased dramatically, make sure your bids aren’t too high.
• Focus on quality score – A higher quality score can reduce CPC, so make sure your product feed is optimised with relevant titles and descriptions.
• Segment by device – Check how your ads are performing across other devices. For example, have you optimised for mobile? An increasing number of users are shopping on smartphones, so make sure your site is ready to offer shoppers a good user experience.

With a higher CTR, product listing ads are surely worth paying a bit extra to include in your campaign – contact us if you have any more questions about optimising your Google Shopping feed for the future.