Savvy ecommerce professionals know that Google Shopping is critical for generating revenue in today’s online shopping world. In 2016, Google Shopping ads accounted for 16.1% of all ecommerce sales. For comparison, that figure was only 9% for 2015.

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Google Shopping Footprint Increase (via Sidecar)

Ecommerce merchants are catching on. In 2016, expenditures on Google Shopping ads increased by 25%. Text ads, on the other hand, grew by a measly 3% during the same time period. Now, the average ecommerce merchant who uses AdWords is spending more on Google Shopping ads than text ads.

I happen to love sushi, so if I were to build my own ecommerce store from scratch, I would create a store that sells sushi-making supplies: the knives, the bamboo mats, the rice paddles and spreaders.

But I can’t just put up a store and hope that the sushi chefs of tomorrow will come. To get my store off the ground, I’ll need a smart advertising strategy.

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Why Google Shopping Ads Stand Out

From the consumer’s point of view, Google Shopping ads provide value. When a buyer googles a purchase-related query, they receive ads with product images and pricing—much more useful and enticing than plain old text ads.

My prospective customers will be able to see the high-quality sushi knives I offer and compare prices.

Prospective Customers See Images and Pricing In Google Shopping Ads (via Google)

Typically, Google serves ads at the very top of the search page, meaning that Google Shopping ads are a very valuable piece of online real estate.

Meeting the challenges of rising CPC

But since Google Shopping ads have exploded, online retailers face new challenges. The cost per click (CPC) has skyrocketed, while competition is fierce. If ecommerce merchants aren’t careful, they can end up burning tons of money on Google Shopping without seeing significant returns.

In some industries, the average CPC can exceed $.70, which can make it difficult to see ROI. Since many users who click on Google Product Listing Ads aren’t yet ready to purchase, there are additional challenges. I may well be serving up ads to someone who is vaguely interested in the sushi making process, but nowhere near ready to start ordering bamboo mats.

In order to optimize Google Shopping ads, you need to understand how they differ from traditional text ads.

You’re still relying on search queries to generate views, but you can’t directly control which queries your Product Listing Ads show up for.

Based on your product attributes—title and description—Google’s algorithm will determine the relevance of your ad to the searchers. Without a good campaign structure in place, you can end up spending money to serve ads to people who aren’t ready to purchase.

William Harris, Ecommerce Consultant of Elumynt adds,

“The biggest reason I see people fail at PLAs is because their feed was sloppy. If you’re telling Google the wrong information, it’s very hard to make sure you get the sale.

You can’t rely on the default All Products campaign

Google’s default campaign with All Products product group will not provide optimal results, as it offers no method for customer segmentation. With this setting, you will pay the entire inventory and end up paying for useless clicks.

All Products Product Group with No Segmentation (via SCUBE Marketing)

Nevertheless, it’s possible to segment a Google Shopping campaign. For example, instead of lumping all of my sushi-related product offerings into one bucket, I can segment products—and spend more for the products that perform better.

By segmenting products, I can invest more in the high-selling sushi knives and less in other products that aren’t producing the same revenue volume.

A good campaign structure can have a significant impact on performance

When investing in a Google Shopping campaign, the key is to structure the campaign in a way that allows you to remain in the driver’s seat.

Structuring a campaign is almost like ad targeting.

Instead of just throwing away a lump sum on Google Shopping, you can separate different elements of your account.

A strong campaign structure will segment products and prioritize them accordingly. Campaign segmentation and priorities won’t affect your search relevance, but allow you to devote more resources towards certain products or product categories.

Powered by selectively increased ad spending, your best-selling products will get seen more often by the people who want to buy them. Done correctly, you’ll see your overall return jump significantly.

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How Segmentation Improves ROAS (via SCUBE Marketing)

So if I were to run a sushi supplies campaign, I could bid separately on bamboo mats and sushi knife sets. I could also factor my inventory availability into my bids.

Although there is no one perfect model for how to structure a Google Shopping campaign, there are best practices.

When determining which techniques are right for your business, consider these questions:

• Profit distribution across products: Do you know which products contribute the most revenue to your business? What are they?
• Inventory volume and fluctuation: What’s the inventory volume of every product? Include both your current inventory and projections for the near future. Does your inventory change frequently in terms of variety or volume, or does it remain relatively consistent throughout the calendar year? If you have to accommodate seasonal changes or many new and limited-time items, this will affect your strategy.
• Data management preferences and ability to affect feed: How hands-on do you want to be in the data management process? Would you like to manage your entire feed or select products only? Consider also how much manpower you can devote to managing campaigns. Can you easily add new columns of data once a campaign is underway?

Once you’ve answered these basic questions, it’s time to consider segmentation methods.

Here are eight ways to segment a Google Shopping campaign:

Segmentation using the standard product feed attributes

Google Shopping allows advertisers to input a range of product feed attributes into product listings. This allows you to segment your campaign and allocate resources in accordance to your strategy.

Method 1: Product categories

One of the broader segments in Google Shopping is a product category. You can narrow it down to sub-category. For stores that don’t sell brand name products or don’t want to focus to the granular level, this is an effective segmentation method.

This method enables you to track each category, customize your bids and total spending for every product category.

Think about how to do this strategically.

Some categories will carry big-ticket items and some complementary items. Some categories will have products for a completely different audience.

Applying this method to my sushi store as an example, we will offer a number of different categories of products: plate sets, cutlery, rolling mats, etc. Naturally, I’d want to showcase the highly priced knife sets over cheap chopsticks.

Prioritize High-Value vs. Low-Value Product Categories (via Google)

When utilizing this method, it may be necessary to exclude certain items in creating your product groups. If your product group is toy for toddlers, you don’t want toys for older children to slip in.

Method 2: Product brands

Many ecommerce merchants begin segmentation efforts by segmenting products by brand.

The reason it’s popular is you gain a higher level of granularity, especially when you work with a variety of brands and your brands have a different performance. For example, sushi knife brands are very different. They range from inexpensive household brands to professional brands costing thousands of dollars.

Sushi Knife Brands (via Google)

This is a simple yet highly effective method of segmentation.

By using this segmentation strategy, you can track conversion rate by brand, which can help further refine your strategy. If one brand is consistently performing well, this is a simple way to prioritize all products in the brand category.

Method 3: Product ID

You can create product groups based on brand or product type. But by customizing your campaign by Product ID (included as an attribute in the product feed), you can target your campaigns down to the specific product.

Even specific differentiators such as the color of a plate can be factored into the strategy. Many advertisers do this for top-selling individual products.

The advantage to this strategy is that you can easily and individually target your top sellers. Anthony Capetola, Marketing Manager at Sales & Orders adds.

“It is with this structure and only this structure that you can bid uniquely on each individual product, separate the real converters from wasteful spending, and discover hidden sales via a pretty much unknown attribution model in Google Shopping.

However, doing this for too many products can create way too much data to track. If your ecommerce business sells thousands of items, breaking down every product in this way is virtually impossible. This method is also very difficult to execute if your inventory shifts regularly.

Segmentation by product ID usually works best when used for a limited number of products that are consistently available.

Segmentation using the custom product feed attributes

Google offers advertisers the option of adding up to five different custom labels per item. By using custom labels, you can choose how to subdivide items. Here are some possible ways to divide products:

Examples of Custom Labels (via Google AdWords)

Below I will cover a few specific methods for segmenting your products using custom labels.

Method 4: Best performers

Most ecommerce merchants find that some products consistently produce more revenue than others. You should consider prioritizing and tracking your best performers in Google Shopping campaigns. With this method, you can make sure your best-performing items remain front and center.

To do this, you should use the custom labels. For performance-based segmentation, you can implement two different custom labels, Margin and Selling Rate.

The Margin category might have two basic categories:

1. High margin
2. Low margin

Similarly, every product can be placed into one of two selling rate categories:

1. High sellers
2. Low sellers

Obviously, you’ll want to prioritize high margin items and high sellers when it comes to allocating your budget.

Let’s imagine that my sushi supplies store offers five different sushi plate sets. But one particular set is selling at a particularly high rate. It just makes sense for me to spend more advertising the high-performing plate set over the others. By using custom labels in this way, I can do that.

Sushi Plate Set (via Google)

Trust your customers. If something is selling at a particularly high rate, there’s a reason.

Method 5: Promotion

You can prioritize items in your inventory that currently have a promotion. After all, it’s no secret that buyers love a good deal. By prioritizing these items, you can bid higher and allocate a higher proportion of your budget to promoted items. This will lead more buyers to your promotions.

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So if my sushi supplies store runs a deal offering free shipping for Ninja Chopsticks for kids, it would be a good idea for me to prioritize the kids’ chopsticks and drive buyers to that product.

Ninja Plastic Chopsticks Free Shipping Special (via Google)

Another advantage of this approach is that it’s easy to track performance for specific products for the duration of a promotional campaign.

Segmentation using query data

The best PPC campaigns are aware of the different stages of the buyer’s journey. Some buyers are ready to purchase, and they should be prioritized in your bids and budget. While your ads for other buyers will still be displayed, you won’t pay as much per click for these users, hence improving campaign efficiency.

So, how can you tell which buyers are ready to make a purchase? Oftentimes the buyer’s search history will be revealing—including the type and number of words in the search term.

There are three basic stages of the purchasing process: Awareness, Consideration, and Decision. During each stage, buyers behave differently. Here are some examples of different query types presented in our visual tool called Paid Media Cube:

Mapping Three Buyer’s Stages To Paid Media Cube (via SCUBE Marketing)

This method is different from the other methods I discussed above because it focuses on query (rather than product attribute) segmentation.

This means you can segment “All Products” product group or specific product attribute segments into the buyer’s journey stages using search queries. A few things you need to know about this method:

• You’ll need to check search query reports regularly to segment your traffic
• You’ll need a campaign for each stage
• You’ll need to use negative keywords to exclude the overlapping queries between different campaigns
• You’ll need to adjust campaign priority settings (discussed below) accordingly to prioritize impressions for respective campaigns

Let’s explore each buyer stage in Google Shopping.

Method 6: Awareness Stage (aka Short Tail or Generic) Queries

A buyer in the Awareness stage is just beginning to browse.

They may recognize a pain point, but they’re still looking at a broad array of solutions.

Usually, these buyers will enter in search terms that are very broad, like “sushi supplies.” Sometimes search terms may only be a single word.

Broad Search Queries Result In Broad Product Listings (via Google)

To segment the awareness stage queries, use negative keywords to exclude all brand and product specific queries.

This will keep your queries broader and with lower priority, so you can limit the exposure on lower converting keywords but still get data for further campaign improvements.

Some advertisers who have significant budget constraints, even choose to exclude short-term queries altogether.

Method 7: Consideration Stage (aka Brand or Mid-Tail) Queries

When a buyer enters the Consideration stage, they’re more knowledgeable.

They may have some specific products or brands in mind. Their search terms will be more specific: “sushi roller mat” or “Tetsujin sushi mat.”

Brand And Product Specific Search Queries Result In More Specific Product Listings (via Google)

To segment these queries, exclude known generic queries, 1-2 word queries, and product specific queries.

Method 8: Decision Stage (aka Long-Tail or Product Specific) Queries

Buyers in the Decision stage are just about ready to pull out their credit cards. They have a clear idea of what they want. These buyers enter search terms that are highly specific: “Tetsujin bamboo sushi mat.”

Decision Search Queries Result In Broad Selection Of Product Listings

(via Google)

You should prioritize the buyers in the Decision stage, who are more likely to make an immediate purchase.

To do this, segment buyers based on their search terms using negative keywords. This time, you need to exclude queries from both the Awareness and Consideration stages. That means, exclude known generic queries, 1-2 word queries, and generic brand terms.

You will be left with product specific queries.

Google offers many different options for segmenting your product listings. But in order to receive the most out of my sushi supplies campaigns, I can’t just keep chopping up my products into segments (sorry—pun intended!) In order to see the best results, I should strategize.

How all segments work together: examples of successful segmentation

So, what does a Google Shopping segmentation strategy actually look like?

You found different methods for segmenting your campaigns. Think of your segments as ingredients for making a sushi maki roll. The taste you are going for will influence the ingredients you choose. Your structure depends on your strategy and KPIs.

Think about the big picture and develop a logical structure for the areas important to you. Your structure will have two levels:

• Campaign, where you will control the budget and priority of the bids.
• Product Group, where you will control the bids at different product groups.

Campaign Level Structure

Start by segmenting products into general categories. As a sushi supply storeowner, I’d need to separate the top seller products, the cutlery (high-end products), the entry products (rolling mats and chopsticks), and all other products.

Depending on your products and the amount of data, you may need to break down your categories into sub-categories. More on that in the product group level structure below.

Here’s how the campaign level structure could look like for my sushi supply business:

Campaign Level Segmentation For Sushi Supply Business

(via SCUBE Marketing)

The reason we are doing this is each campaign has a specific purpose. We can break them down based based on importance:

• High Importance: This represents campaigns segmented at Product ID or Custom Label level. That means you are handpicking products to track separately, set dedicated budgets, and control the bids. You don’t do this for all products. Only the products that make sense to handle separately. This includes products that are both high ROI and high search volume.
• Medium Importance: The level uses broader segmentation attributes such as custom labels, brand, or category attributes to specify target product groups. Products included in this tier will be mid-priority.
• Low Importance: This is All Products aka “Catch All” campaign. The purpose of it is to generate impressions for all products in your feed (excluding the ones you are actively targeting above). This campaign will have a low maximum bid. Monitoring the products in this tier can reveal useful information about your customers. You may choose to elevate some products to their own campaign, or to exclude a product entirely.

With this method, all of your products will be covered and you will be able to prioritize your campaign budgets and bids accordingly.

Understanding Campaign Priorities

Don’t confuse budget allocation and bidding with campaign settings. Campaign priority works well when products overlap in different campaigns. When products overlap, priority settings help you control which campaign bid Google Shopping should use. There are three campaign priority options:

• High
• Medium
• Low

Every campaign needs a priority level and maximum bid. See an example below.

Three Campaign Priority Options (via Google AdWords)

Product Group Level Structure

When you campaign level structure is clear, segment each campaign deeper into product groups level. Here are four examples of relational tree for campaigns above.

Top seller products campaign (example below) goes only two levels deep. First we segment our top sellers using a custom label. Then break them down by Product ID.

Note that you can’t go deeper than the Product ID level. If you are interested in a deeper campaign structure, think about the previous levels you can segment your product by.

Product Group Level Segmentation For Top Seller Products Campaign

(via SCUBE Marketing)

Cutlery campaign is three levels deep. First, we break down our products by Category. Then go deeper into the Product Type attribute. Finally, break the Product Type attribute into Brand. See example of what the campaign looks like below.

Product Group Level Segmentation For Cutlery Campaign

(via SCUBE Marketing)

Entry products campaign is only levels deep. First, we break down our products by Category and break them down into the Product Type attribute. See example below.

Product Group Level Segmentation For Entry Products Campaign

(via SCUBE Marketing)

Finally, All Products campaign is two levels deep as well. All products are segmented at the category level. This is enough to gather the data for making further decisions.

Product Group Level Segmentation For All Other Products Campaign

(via SCUBE Marketing)

Google Shopping Success: Final Thoughts

Google Shopping ads offer exciting opportunities to aspiring ecommerce merchants like me. By optimizing my ad campaigns, I can drive targeted traffic to my product pages.

But structuring a campaign definitely isn’t as easy as munching on a California roll. If I want to take my sushi supply store from dream to reality, I need a good structure based on my KPI goals and segmentation strategy.

Only then can I start improving my Google Shopping listings and generate revenue from my ad campaigns.