Presented at SMX Munich Summer Session on Sep 2, 2020 The Google Shopping auction is one of the toughest competitive environments in performance marketing. It's even more dynamic considering the current global economic volatility and the heavy-handed strategies of huge players like Google and Amazon. I'll share a current analysis and forward-looking projections addressing exactly these themes. How are Shopping channel metrics looking right now? Which scenarios might we see in the holiday peak season? What's coming next in 2021?

1. Through the 2020 Looking-Glass
Google Shopping Trends in a Year of Global Crisis – Q4 and Beyond

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. KPI development in Europe
II. 2020 holiday outlook
III. Looking further: Google’s product strategy
IV. Implications for retailers & brands

4. KPI development in Europe
/in/mikeppc#SMX

5. Look familiar?
● Merkle reports that in Q2, advertisers were
unable or unwilling to spend on high CPCs
● Lockdown measures meant radical changes
consumer behavior – yielding increased clicks
→ What about Europe?
Merkle DMR, Q2 2020
source: Merkle

6. At the aggregate level, lockdown measures produced a bubble in
Shopping conversions – and the future is unclear

7. KPI Benchmarking
● Funnel metrics are all elevated YoY, but a bubble is clearly visible
● Conversions peaked fastest, most broadly, and highest
Funnel values
7

8. KPI Benchmarking
● CTR has increased slightly over time, but remains subdued YoY
● Conv. rate saw an immediate YoY uplift, then slowly deflated
Funnel rates
8

9. KPI Benchmarking
● At an aggregate level, CPC largely trended down YoY during the COVID-19 lockdown
● Learn more at smec Market Observer (free data studio report, no email wall, no sales blah blah)
Ø CPC
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10. Know how to measure
We recommend the following views on your data:
● Daily development
○ what is happening right now?
○ watch for spikes and collapses – reactive
● Last 14 days vs. previous period
○ how is my strategy playing out?
○ look for effectiveness and adaptations – active
● Year-over-year
○ how does this compare to business-as-usual?
○ use this to (try to) plan ahead – proactive
Measuring and benchmarking are more complex than ever
10
This heatmap displays seasonal cost development for top-level product types

11. 2020 holiday outlook
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12. It’s fair to expect the biggest Q4 ever for ecommerce,
but it might also be the bumpiest ever

13. The changing the shape of Europe’s holiday peak
● Black Friday increasingly consolidates demand
● This Holiday-as-an-event mindset will likely be
dampened in 2020
○ Newly-online shoppers
○ Less viable as an offline strategy
○ Extremely stressful to supply chains
○ Partly diluted by Amazon Prime Day?
source: Google Trends

14. 2020
2020 prediction in a nutshell
Time
ConsumerActivity
2019
● There will be more shoppers online than ever before, resulting in a broader and higher seasonal peak than 2019

15. The tricky part:
You might not see those beautiful holiday conversion rates

16. 2019: how it looked
2019 exhibited a classic peak-season pattern:
● Pre-season/onset: Conv. rate dropped while
impressions grew, a likely indicator of increased
browsing
● Consumer volume and intent peaked from late
November through the first half of December
1
2
1
2

17. 2020: how it might look

18. 2020: how it might look
2020 could be a season of extremes:
● Impressions are starting about 15% higher and
conv. rate about 10% lower
● Volume is likely to peak sooner, higher, and more
broadly due to behavorial changes
● Conversion rates might generally stay down YoY
but experience an intense spike
● This spike might end earlier depending of the
capacity of supply chains and delivery services
● Public health and policy will be huge wildcards

19. 2020: implications & actions
Precision and execution will be key:
● Query targeting to appear in the right auctions
● Audience lists must be in tip-top shape
● Device-specific bidding is a must
● Get your feed in fighting condition
● Opt in to Showcase Shopping for high funnel
● Switch to DDA sooner rather than later
● Be there with your budget – don’t get limited
● More competitors than ever

20. Looking further
/in/mikeppc#SMX
Google’s product strategy

21. Google wants to simplify Shopping and move toward
end-to-end control of the environment

22. Merchant & consumer adoption of Shopping
Time
Rateofadoption
INNOVATORS
EARLY
ADOPTERS
EARLY
MAJORITY
LATE
MAJORITY
LATE
ADOPTERS ● To grow, Shopping needs to
efficiently tap late adopters, i.e.
SMB merchants
● To hold ground against Amazon,
Google must also run demand gen
on the Shopping property
● Here they face large brand,
logistics, and CX hurdles
SHOP
PING
1
2
3
1
2
3
22

23. Merchant & consumer adoption of Shopping
Time
Rateofadoption
INNOVATORS
EARLY
ADOPTERS
EARLY
MAJORITY
LATE
MAJORITY
LATE
ADOPTERS ● To grow, Shopping needs to
efficiently tap late adopters, i.e.
SMB merchants
● To hold ground against Amazon,
Google must also run demand gen
on the Shopping property
● Here they face large brand,
logistics, and CX hurdles
SHOP
PING
1
2
3
1
2
3
23

24. Free clicks, anyone?

25. What happened?
● The Surfaces Across Google program is expanding
to include the Shopping tab
● Impressions will be determined via algorithm,
clicks will be free
● Spun as a COVID-19 action, but widely interpreted
as a move against Amazon (1, 2, 3, 4)
Not unprecedented
READ MORE >>
image credit: Google Ads Help Community
25

26. Much ado about nothing?
● The click share of the Shopping tab is unknown,
but many estimate it around 10% (not me)
● The best real estate in the tab will be still be paid
● While the conv. rate might be higher, the AOV
might be lower
Direct reporting is limited
image credit: Google Merchant Center Help
READ MORE >>
26

27. Smart Shopping: the path of least resistance?

28. Smart Shopping Campaigns vs. Standard Shopping
Smart Shopping
Campaigns
Standard Shopping
Campaigns
Placements
Google Search ✓ ✓
Shopping Tab ✓ ✓
GDN ✓ ~
Formats
Shopping Ads ✓ ✓
Display Ads ✓
Local Inventory Ads ✓
Dynamic Remarketing ✓
Dynamic Prospecting ✓
Smart Shopping
Campaigns
Standard Shopping
Campaigns
Settings
Location modifiers ~ ✓
Device modifiers ✓
Campaign Priorities ✓
Remarketing Lists ✓
Negative Keyword Lists ✓
Ad Schedule ✓
Reporting
Placement ~ ✓
Audience ✓
Search Terms ✓
Shopping Performance ~ ✓
Due to fundamentally different placement & format mix,
these campaign types are not comparable
28

29. 2015 vs. Now
Flashback 2015* Now (using SSC)**
29
AREAS OF ACTIVITY
Campaign setup/management 5.0%
Reporting 10%
Coffee 80.0%
Strategic goal-setting 5.0%
?
AREAS OF ACTIVITY
Coffee 5.0% Campaign setup & mgmt 5.0%
Bid management 45.0%
Reporting 10.0%
Negative KW 10.0%
Strategic
goal-setting 5.0%
Modifier
Management 10.0%
Device-specific
changes 10.0%
*not real data
**also not real data :-)

30. A lack of competitive differentiation
● The default/Google-recommended lack of segmentation is highly problematic and puts too much pressure on ROAS
30

31. Detour: ROAS & KPI surrogation
● ROAS is a readily available, easily calculated, and
standardized
● But it is connected to top-line revenue instead of
bottom-line revenue
● It is not the same thing as profit
“Return on Ad Spend. It is a navel-gazing,
advertising-centric metric. It is not a business metric.”
—Avinash Kaushik
Head of Strategic Analytics, Google
31

32. A lack of competitive differentiation
● What happens if the majority/all merchants switch
to Smart Shopping?
● How is it possible to differentiate in the future?
● How will Google manage the auction when
everybody uses the same approach?
● Bear in mind that channel saturation is rising
Opposing S-curves
TIME
RATE
DifferentiationAdoption
32

33. A lack of competitive differentiation
● Google could assume full control of the auction,
i.e. no bidding
● Deep learning models would work with sampled or
modeled valuations
● (Possible) result: “fair”, as-is flow of conversion value
Truthful auctions?
source: DeepMind UK @ arXiv (PDF)
READ MORE >>
33

34. Breaking News
source: Neil Andrew

35. Can Google out-Amazon Amazon?

36. Buy on Google is on its way – fast
● Marketplace Pulse reports >100% YoY growth in BoG sellers
● Zero-commission model is a huge USP to sellers and will ease entry to EU markets
36

37. Buy box: what you need to know
● Placement based on price, shipping, and CX
● KPIs include win-loss analysis with root causes
● Automated repricing has been spotted in the API
○ Rule type “Win Buy Box” allows automated
discounting within a range
○ Future rule types or strategies are left open
Reporting, recommendations, and repricing
37

38. Adopting early and executing well could give you a
lasting competitive advantage

39. Your mission, should you choose to accept it
● Be a reliable partner to Google
● Build or buy a compatible order
management system
● Support Google’s mission to deliver low
prices and great availability
● Prevent order errors like stockouts and
shipment delays
● Cultivate great reviews

40. Implications for retailers & brands
/in/mikeppc#SMX
And agencies too ;-)

41. Key takeaways
Right now, time-based comparisons are risky at best
Q4 will bring massive volume – with core targeting challenges
Google will present revenue opportunities that will test your independence

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