This talk presented at SMX Munich 2021 explains how marketplaces are implemented in Google Shopping and then provides tactics for evaluating marketplaces like Amazon – or any large competitor – and identifying where it is safe to drive budget against them. --- Mike combines years of retail operations experience with domain expertise in digital marketing. He delivers highly relevant insights with a bias toward business outcomes rather than campaign outcomes. In retail, Mike has done everything from warehousing and delivery to purchasing and catalog management. In marketing, he has worked in paid acquisition with a special focus on Google Ads and executing digital maturity strategies. Mike has also managed software products in both campaign data visualization and campaign automation, in addition to leading numerous innovation projects.

1. Google Shopping and Marketplaces
How to Defend and Expand Market Share
SMX München 2021

2. About me
mike.ryan@smarter-ecommerce.com | +43 699 14111 309 | /in/mikeppc
Mike Ryan
Product Mgmt Lead, smec
● 10 years experience in retail operations
● warehousing, delivery, purchasing, electronic catalog
● sold everything and moved to Austria for love
● reinvented myself in marketing and product
/in/mikeppc
#SMX

3. Agenda
I. Three key ecommerce trends
II. The marketplace business model
III. How marketplaces can use Google Shopping
IV. Implications and actions for retailers

4. Three key ecommerce trends
/in/mikeppc
#SMX

5. Trend #1
The EKG Years

6. COVID-19 triggered unprecedented ecommerce growth
● Frequently cited figures include up to 5 years of growth in a few months
● Amazing, but what happens next?
(source) (source) (source)

7. The EKG effect
● 2020 already captured a lot of the ecommerce growth that would have occurred this year
● This swing makes YoY comparison and revenue goal-setting challenging at best
Source: eMarketer
32%
6%

8. Trend #2
The big get bigger

9. Increased consolidation
● The biggest players were already outpacing the market before COVID
Source: ecommerceDB
32%
6%
19%
DE average
12%
UK average

10. Trend #3
Dream of Californication Marketplacification

11. Ominous signals in the early days of COVID-19
(source)
(source)
(source)
● In my assessment, only one of these headlines stands the test of time: the “Collapse of the Middle”

12. Marketplaces don’t seem to be slowing down at all

13. The combination of diminished year-over-year growth,
increased consolidation, and marketplacification
creates a big squeeze

14. The marketplace business model
/in/mikeppc
#SMX

15. Marketplace KPIs differ from retail
1. Gross Merchandise Volume (GMV)
GMV is used for sizing the marketplace and describes the total sales occurring,
e.g.: unit sale price x number of units sold – it is not the marketplace’s revenue.
2. Take Rate (Rake)
This is the portion of GMV captured by the marketplace, commonly through
commissions, fees, ad revenue, etc. – it is not the marketplace’s profit.
3. Buyer-to-Seller Ratio (Liquidity)
Balancing supply and demand creates an attractive marketplace for both buyers
and sellers. Otherwise growth and network effects are not possible.

16. How marketplaces can use
Google Shopping
/in/mikeppc
#SMX

17. merchant.com/de
Standalone MC
merchant.com
Marketplace MCA
Catch-all Seller 1 Seller 2 Seller 3
Old:
One MC per domain &
country combination
New:
Marketplace MCA for all of
merchant’s European activity
EEA/CH
Marketplace
Consider this when restructuring:
● A change in parent domain (from merhcant.com/gb to merchant.com) can cause temporary downtime
● Changing MCA ID of a merchant account can trigger temporary disruptions to bidding technology
● Strongly advised to proceed outside of key dates
EEA/CH
seller accounts

18. Solution 1:
Standard Marketplace MCA creation

19. Solution steps
1. Create an independent standalone Merchant account in Google Shopping
a. You can ask Google to do this or move forward on your own
b. Google will need to use an email address not associated with any MCs currently. They can add users after
creation.
2. Once the standalone MC is created, ask to get the account moved to your CSS and converted into a Marketplace
MCA:
https://support.google.com/google-ads/contact/css_marketplace_requests
3. You will receive confirmation of your Marketplace MCA creation and a ‘catch-all’ account.
Standard Marketplace MCA creation

20. Pros & cons
Benefits
● Less downtime as the new account would be created while the current account is live
Drawbacks
● No item history since you would upload your items on a fresh account and set up new campaigns
● EU account would have to be launched first since you can only claim/verify one domain in Google Shopping
Standard Marketplace MCA creation

21. Solution 2:
Custom Marketplace conversion of an existing MC

22. Solution steps
1. Selection of target MC and approval for custom conversion to Marketplace setup
(e.g. merchant.com or merchant.com/de)
2. Account converted into a catch-all by Google engineering and a Marketplace MCA is created to house it
3. If applicable, the site domain is adjusted by merchant in order to align with new global domain
(legacy accounts still retain URL claim exemption)
a. If the new global domain remains unchanged, it’s best to convert the root domain MC (with no country code) so
you won’t have to change the URL here
b. Once the domain is updated, the global seller MC accounts can be created for each seller
4. Seller accounts can be linked to their respective ads accounts or campaigns to run Shopping
Custom Marketplace MCA conversion

23. Pros & cons
Benefits
● Retention of current item history
● You would simply build on the existing portfolio
Drawbacks
● Temporary impact on bidding tech
● Temporary downtime if there is a URL modification (estimated maximum: 3 business days)
○ This won’t be the case if the global domain remains
Custom Marketplace MCA conversion

24. Final structure
Google
Shopping
merchant.com
Marketplace MCA
Catch-all Seller 1 Seller 2 Seller 3
CSS
merchant.com
Marketplace MCA
Catch-all Seller 1 Seller 2 Seller 3
EU Rest of the World
● Limit of 20k sub-accounts possible
● Item quotas: 40m for catch-all, 150k per sub-account, 50m per Marketplace MCA

25. Best practices
● Marketplace sellers should each have individual sub-accounts within a Marketplace MCA structure
○ However if there are many low-volume sellers, they can be put into a catch-all account
● The catch-all account should aim to have around 1% of the marketplace’s activity (clicks).
● This guidance is not strictly enforced since it takes time to build out the seller infrastructure, but you will need to
take into account your item quota limits on the catch-all account.
● Here is your guiding principle:
○ Create your individual sub-accounts for sellers and use the catchall for longtail, remembering account item quota
limits
○ If the catchall hits the limit, break out more sellers

26. Implications and actions for retailers
/in/mikeppc
#SMX

27. Retreat
Watch/
Explore
Invest Defend
low OVERLAP RATE high
high
OUTRANKING
SHARE
low
A framework for evaluating your Shopping competitors
● Bubble radius equals Impression Share
● The actions in each quadrant depend on your
resources and ambition level
● Consider limiting the number of competitors
you will visualize
● Scatterplots are better at tackling more data
● Be wary of the default settings bubble charts in
Google Ads UI
MAXIMUM STRENGTH
COMPETITOR
WEAKEST POSSIBLE
COMPETITOR

28. Retreat
Watch/
Explore
Invest Defend
low OVERLAP RATE high
high
OUTRANKING
SHARE
low
A framework for evaluating your Shopping competitors
● Bubble radius equals Impression Share
● The actions in each quadrant depend on your
resources and ambition level
● Consider limiting the number of competitors
you will visualize
● Scatterplots are better at tackling more data
● Be wary of the default settings bubble charts in
Google Ads UI
?

29. Revealing Amazon’s auction power
Targeted experimentation
● Pretty high outranking power
● Low overlap & low impression share
● Suggests strong bidding on a narrow product
segment
● But Amazon doesn’t come to play...
source: proprietary – ask me for access

30. Revealing Amazon’s auction power
Targeted experimentation Total dominance

31. Revealing Amazon’s auction power
● up to 66% imp. share
● up to 70% overlap rate
● up to 85% outranking
● highly aggressive loss leader strategy across a
broad spectrum of products
Total dominance

32. From SMX London, May 2020

33. So, does query funnelling actually work against Amazon?
What about device campaign splits?

34. German Office Supply Retailer, January 2021
Amazon and eBay Competitive Strength per Query Class
● Amazon is notably weaker on more specific queries
relative to generic queries
○ -8% impression share
○ -28% outranking share
○ -14% overlap rate
● The retailer is stronger on more specific queries
relative to generic queries
○ +48% impression share
● eBay appears more targeted at mid- and low-funnel
Shopping auctions but with weak impression share

35. German Office Supply Retailer, January 2021
Amazon’s Competitive Strength per Ad Group by Query Class
● Significantly more ad groups are viable against Amazon in the mid and low funnel of Shopping
● Amazon seems to apply a brute force strategy – a strength and a weakness

36. German Office Supply Retailer, January 2021
Amazon’s Competitive Strength per Ad Group by Device
● This retailer sends less ad groups to mobile & tablet due to a B2B focus
● A significant share of desktop ad groups exist in a less competitive space – due to Amazon over-optimizing
for mobile and/or the retailer optimizing more effectively on desktop

37. UK Electronics Retailer
The way forward: test & learn
● Ad groups with a low impression share and
high ROAS were identified
● Both imp. share and click share grew
compared to the control
● ROAS was of course lower for these ad groups
but still surpassed the target

38. Detour…
Any SKAG fans in the room?

39. UK Health & Beauty Retailer, January 2021
Amazon’s Competitive Strength per SKAG
● Plenty of opportunity in “Explore” quadrant
regarding low-overlap ad groups
● Further research required: what amount of the
“Invest”-quadrant ad groups are retailer brand?

40. What about pricing and margin?

41. “Your margin is my opportunity.”
—Jeff Bezos
Fortune Magazine, 2012
Words of a shark

42. Price competitiveness across assortment
German Home & Deco Retailer
Offers where our prices are higher
than those of our competitors
Offers where our prices are lower than
those of our competitors
assess price difference and
potentially optimize for better
margins
optimize for more
competitive prices
= 1 Same price as competition
< 1 Our pricing is above the competition
> 1 Our pricing is below the competition

43. Competitiveness across assortment
German Fashion Retailer
Offers where our prices are higher
than those of our competitors
Offers where our prices are lower than
those of our competitors
assess price difference and
potentially optimize for better
margins
optimize for more
competitive prices
= 1 Same price as competition
< 1 Our pricing is above the competition
> 1 Our pricing is below the competition

44. Competitiveness across assortment
German Sports Retailer
= 1 Same price as competition
< 1 Our pricing is above the competition
> 1 Our pricing is below the competition
Offers where our prices are higher
than those of our competitors
Offers where our prices are lower than
those of our competitors
assess price difference and
potentially optimize for better
margins
optimize for more
competitive prices

45. Get serious about your pricing…
before Google does

46. And dynamic repricing is on its way
Reminder: Google has their own marketplace
● Buy On Google is currently limited, but it has the power to redefine how the SERP handles
● Since Google already built the repricing tech, it’s no stretch to say this could come to Shopping as well

47. And margin?
ROAS stands in the way

48. “I suppose it is tempting, if the only tool you have is a
hammer, to treat everything as if it were a nail.”
—Abraham Maslow
The Psychology of Science, 1966
The Law of the Instrument

49. Instead of a hammer, we have ROAS.
But not everything is a ROAS problem,
nor is ROAS fit for purpose.

50. B
C
A
Performance incrementality is inevitably curved
You know the problem
ADVERTISING SPEND
CONV.
VALUE
ROAS
All we can do is “bend the spoon”
Inexhaustive list of variables:
● channel saturation
● feed quality
● landing page quality
● audience lists
→ measurement and tracking
● auction/query strategy
● pricing strategy
● budget deployment
● device management
● geo strategy

51. Measurement and tracking
What is the first, best step we can take?
ADVERTISING SPEND
CONVERSION
VALUE
ROAS
● how accurately is ROAS modelled
to profit?
● what steps can we take to improve
that modelling?
Margin of Error

52. Trim the fat – eliminate margin of error by tracking profit
What is the first, best step we can take?
ADVERTISING SPEND
CONVERSION
VALUE
ROAS ROI
● how accurately is ROAS modelled
to profit?
● what steps can we take to improve
that modelling?
● what steps can/should we take to
replace ROAS?

53. Summary
● 2021 and 2022 could be biq squeeze years due to an EKG effect
● Marketplaces are growing fast – and they work differently than classic retail models
● Marketplace MCA implementation is tedious and risky, but perhaps Google solve this
● Consider which technology and capabilities will allow you to differentiate
● Retailers are likely more able to be nimble and targeted than marketplaces
● Everyone in the market should start working on their price and margin now

54. Mike Ryan
mike.ryan@smarter-ecommerce.com
/in/mikeppc
Thank You
Reach out any time