How I Increased Google Shopping ROAS by 282%
Google Shopping ads used to be really easy. Just throw up a product feed and turn it on, basically. The CPCs were so low that the campaign was pretty much guaranteed to be profitable.
Facebook ads used to be like that too.
But as more people enter a successful platform, CPCs rise and you quickly find out whether your campaigns are any good or not.
The reason most marketers struggle with Shopping ads today is because they're not properly segmenting the traffic by quality. That forces them to bid low on high-quality keywords and bid high on low-quality keywords. It's a whip-saw effect that will chew up all your profit.
But after reading this, you'll know how to fix it. And you'll see the stunning results I got with this method, increasing ROAS by 282%.
In this post I'm going to teach you:
- how to maintain three highly profitable campaigns with only an hour of work a month
- how to properly segment your Shopping campaigns
- how to get around the "keyword issue"
- how to make sure you don't overbid on low-quality traffic
How to Properly Segment Your Shopping Campaigns
There are three very important segments you need to isolate in order for this to work: past visitors, high-quality keywords, and low-quality keywords.
Segment 1: Past Visitors (Or, Shopping Retargeting)
The past visitors segment is essentially a retargeting campaign but it's really important you target these people separately within Shopping ads. The reason is simple: anyone who has already been to your site is MUCH more likely to buy than someone who hasn't.
And that means you should bid a lot more for that person's click than you would for a cold click. In order to do that, you should create a separate Shopping campaign that restricts the traffic to an audience of past site visitors.
The easiest way to do that is to duplicate your existing Shopping campaign and simply change the audience. Here's how to duplicate the campaign:
Once the new campaign is created, rename it to something like "Shopping-Retargeting", then click into it and change the audience as shown in the video below:
There are two really important changes you must also make now. First, go into the campaign settings for the new Shopping-Retargeting campaign and change the campaign priority to High:
This signals to Adwords that you want this Shopping campaign to take precedence over other Shopping campaigns. That way if a past site visitor is going to be served an ad, it will flow through this campaign.
The second change is to raise the bid on this campaign so you capture as much of this traffic as possible. I'd recommend setting the bid for this campaign somewhere around $2-$4 per click.
Pro tip: as shown in the video above, make sure you select "Targeting" as the audience rather than "Observation". Observation will only create a reporting segment in Adwords. But Targeting will actually restrict the traffic to the the audience you identify.
Now, if you want to keep this simple, you could target all past site visitors for the past 180 days. But I recommend going further to really nail this.
Break out separate ad groups within this retargeting campaign based on how far people get into your sales funnel. You could have an ad group for abandoned carts, initiate checkout, pageviews 3+, past buyers, etc.
To accomplish this, simply copy and paste the original ad group for each segment and change the audience for each new ad set. Be sure to exclude the audiences that are lower in the funnel for each ad group. For example, the audiences for an abandoned cart ad group would exclude those who initiate checkout and buyers. The ad group for initiate checkout would only exclude buyers. See below:
Your finished campaign would have ad sets that look like this:
Notice how the bids are structured so that the deeper into the funnel the person gets, the higher the bid is. You could even bid higher for add to cart and initiate checkout since those people came so close to buying.
I also recommend having an ad group that targets past buyers since past buyers are likely to become second-time buyers.
Segments Two & Three: High-Quality vs Low-Quality Keywords
The second and third segments should target keywords based on how likely they are to convert. These would include branded search phrases as well as highly-focused keywords that closely match your products.
For example, if you sell hypoallergenic baby toys, the phrase "hypoallergenic baby toys" is probably a high-quality keyword that will convert well for you. On the other hand, "baby toys" is probably a lower quality keyword that doesn't convert well.
But as we know, Shopping campaigns do not allow for keyword targeting. They DO, however, allow for negative keyword exclusions. Here's how you use this to your advantage:
- Duplicate your existing Shopping campaign
- Rename the original campaign to "Shopping-HQ Keywords"
- Rename the duplicate campaign to "Shopping-LQ Keywords"
- Change the campaign priority of HQ to Low
- Change the campaign priority of LQ to Medium
- Use past keyword search data to compile list of HQ keywords and LQ keywords
- Add LQ keywords as negative keywords to the HQ campaign
- Add HQ keywords as negative keywords to the LQ campaign
- Adjust bid of LQ campaign down
- Adjust bid of HQ campaign up
Most of those steps should be pretty straight forward except maybe number 6. That step might sound complicated but it's not as bad as you might think. You would simply use the data from your existing shopping campaign to compile each list of keywords.
Navigate to the Keywords tab and then Search Terms. Look back for a good chunk of time if possible, like 6 months or a year:
It might be easier to export the search term data but the idea is you first sort by conversion value to find keywords that are consistently making you money. Those are your HQ keywords and you want to add them as negative keywords in the LQ campaign.
That way the LQ campaign won't be able to trigger the HQ keywords.
Next, sort the search term list by total cost and look for keywords that are dragging down your profit. Those are your LQ keywords and should be added as negative keywords in the HQ campaign.
The HQ campaign should have a much higher bid, say $1.50 or so. The LQ campaign should have a much lower bid, say $0.50 or so.
Now why did we assign the LQ campaign a higher priority than the HQ campaign?
Because we want to make sure Google uses the lower bid for all searches unless it's high quality. The lower bid will keep the LQ campaign from chewing up our profit. Here's a visual representation of this entire process:
How Hard Is Maintenance?
Surprisingly easy, actually. Once a month you would repeat the keyword exercise, except this time, you'll also review the search terms from the LQ campaign to see if you can identify HQ keywords that deserve a higher bid. If you find some, simply add those phrases as negatives to the LQ campaign, which will force them into the HQ campaign.
I can tell you from experience, the maintenance shouldn't take more than an hour a month.
How It Works In The Real World
I used this same strategy to take a floundering Shopping campaign from 67% ROAS to 256% ROAS. Here's what happened to the various metrics:
Or another way to view it, comparing 30 days before and after:
Before: Spend-$2,937 Sales-$4,892 ROAS-67%
After: Spend-$1,223 Sales-$4,363 ROAS-256%
This strategy works extremely well when followed correctly.
Shopping Campaign Mastery
I know that implementing this might seem daunting for some. If you're intere
If you follow these steps, over time you'll end up with three extremely profitable Shopping campaigns. The setup does take a bit of effort but the maintenance is incredibly light. That's how I've designed all the campaigns in my advanced evergreen e-commerce marketing course to be: highly profitable and easily maintained.
Even so, I know that implementing this approach might seem daunting for some. For a managed solution, book a Strategy Session to discuss your e-commerce advertising.