A Guide for Retailers: Essential Marketing Metrics for Google Shopping and How to Use Them
Every Google retailer is operating in a black box where Google Shopping has limited access to your business data. There is automation happening that isn’t aligned with your business goals but thanks to this disconnect, retailers experience a limited capacity to influence their Google Shopping campaigns inline with wider business goals and metrics. It will take us a lot longer to understand all this but let’s just start off with the key Google Shopping metrics.
In this blog, we’ll look at the best ways marketing teams can improve their understanding of each metric that best fits their business’s long and short term goals. For practical reasons, we have sub categorised the essential marketing metrics into two broader categories —
- Key marketing metrics
- Objective-based metrics
Thinking about metrics in this way helps to contextualise different metrics within the extensive retail ecosystem — including data that is not just native to Google, but pulling information from your entire retail business journey. When we can contextualise these metrics, we can understand better how to use them. Let’s get going.
Key marketing priorities
Measuring the success of your Google Shopping campaigns is key to improving them. Forming a complete picture of your data and calculating the best short and long term metrics for the job are crucial to that. In return, you’ll see an overall increase in revenue and profitability.
The best results are achieved when metrics are used together. Many brands focus solely on ROAS (return on ad spend), which is a great metric but one that falls short when looked at in isolation.
Let’s dive into the specific metrics to think about. Here are some introductions into the key marketing metrics that count and how to use them.
1. CTR (Click Through Rate)
CTR (click through rate) calculates the proportion of people who see an online shopping ad and then click on it. This is measured by the total measured ad clicks divided by the total measured ad impressions.
This metric gauges the all-important effectiveness of a product listing ad. For ads with a lower CTR rank, look out for whether you need more keywords to improve short-term targeting.
2. CPC (Cost Per Click)
CPC (cost per click) measures how much you pay when someone clicks on your Google Shopping Ad. This is determined by your max bid on the ad, your listing quality score, and your ad ranking amongst other competitors. It’s calculated by dividing the total cost of your clicks by the total number of clicks.
Setting a ceiling for what you spend on CPC is critical to avoiding overspend on ineffective ads or products.
3. ROAS (Return on Ad Spend)
ROAS is your eCommerce revenue divided by your ad spend. It measures how much revenue your business earns for every £1 spent on marketing or advertising. It provides a greater understanding of ad performance in the short-term but is less effective in the long-term due to Google only providing results from the past 30 days.
Furthermore, Google Shopping can only see half of the information, it has no way of understanding the costs already incurred by the business and therefore could never truly optimise your campaigns or your ROAS. Not to mention, Google Shopping allows you to set a Target ROAS, but provides no means of benchmarking that target — making it near impossible for retailers to work out what their target is and how to reach it.
4. CPA (Cost Per Action)
To calculate your advertising campaign’s cost per acquisition, you need to take your total advertising spend and divide it by the number of acquisitions generated. This metric is the best way to measure your SKU’s and general content’s conversion capacity. You need to be able to understand how your CPA impacts budgets spend so that you can determine which products drive a greater AOV with new customers. But, in order to do this, you need to leverage sophisticated machine learning that can analyse your campcsin(s)’s historical conversion data to recommend an optimal target CPA and automate the optimisation of your eligible bids.
To calculate the full costs associated with running a campaign, you’ll need the help of an AI platform like Upp, which will help you better understand the big picture. Upp helps you understand your data and makes recommendations on your
Objective-based metrics.
Having a variety of data will make all the difference to your overall profitability. Your Google Shopping campaign success goes beyond discovering which metrics can be useful to focus on in the short term — you need to look to the longer term. To do that, you need to devise metrics that are aligned to your campaign objectives more broadly. Let’s look at some long term metrics that will level up your data tool kit.
1. Margin
- Net margin is the revenue that’s left over after considering the additional indirect costs (rent, delivery, branding etc) that gross margin doesn’t calculate. It’s worked out by subtracting costs from your revenue and then divided by revenue.Net margin is the best metric to use for gaining a full picture of your business performance. This is why Upp’s Margin Hub takes it into consideration when determining your optimum marketing spend.
- Gross margin is the net sales revenue minus the cost of goods sold. This metric doesn’t consider the price of all other expenses involved in the retail journey like net margin does.
- Contribution margin — a product’s total price including all associated variable costs — allows you to discover the profit earned on each product sold. This gives you a holistic idea of your campaign’s impact on revenue and profit.
2. ROI (Return on Investment)
Next up is ROI (return on investment) — an efficiency metric that measures how much a marketing campaign is generating, compared to the cost spent running it. It’s calculated by minusing marketing costs from sales growth and dividing that by marketing cost. Even a campaign with a good ROI, though, might still have inefficiencies within the campaign.
3. Revenue
Revenue — sale price times number of sales — is the most popular metric used by marketing teams, which calculates the total value of all sales in a period. Remember, though, that any metric used in isolation won’t give you the best and widest picture of your performance.
4. Customer centric metrics
- Customer satisfaction: This is the figure that determines just that — how satisfied a customer is by your products or services. Satisfaction — obtained through the Likert Scale — will help you obtain returning customers and scale further.
- Customer acquisition cost: This can find the price of convincing a potential customer to buy a product or service — a significant metric in determining how costly and profitable your business is. Just divide your marketing expenses by the number of customers acquired in the period. What’s more, if you were to set customer acquisition as your retail goal within the Upp platform, it will analyse your account and SKU performance to determine which products will attract new customers.
- CLV (customer lifetime value): This is the total revenue that you expect to earn from the lifetime of a relationship with a single customer. The calculation is your average value of sale by number of transactions by retention time period by profit margin. CLV is effective in understanding the monetary value of your customer and allows you to focus on the long-term profitability of customer relationships. On top of that, you’ll also understand how much spend is needed to acquire new customers.
5. Product Visibility
It is important to remember that ROAS targets can often result in your product range having limited visibility — that is, Google Shopping often can’t appreciate that not all products in the same categories perform the same way. When it determines that a product is not performing well (against others in the same category) it will stop advertising them. Period. But, if your goal is to increase product visibility, a blended ROAS strategy can split products into campaigns by performance profile to ensure total visibility.
It’s imperative that once your product and customer performance data are available and accessible, you can be confident in interpreting and actioning it. Only then can you make informed decisions that increase conversions, generate leads, and drive engagement and profits.
Unfortunately, Google Shopping doesn’t provide a detailed enough look into all of that critical information, such as granular SKU level analysis of product data. Without access to all data, it becomes impossible to understand how to make essential adjustments and updates to each campaign.
To do this, you’ll need to have the right solutions in place. A solution like Upp’s will help you interpret your Google Shopping data, unearthing opportunities using simple actions, decreasing loss and driving growth.
Aligning your strategy and overarching goals
Having a complete picture over your Google Shopping campaigns with the right metrics at the right time and in the right ways is critical to maximising your business performance. Upp brings control, visibility and insight to maximise digital marketing performance and provide transparency across Google Shopping. Without increasing your Google Shopping budget Upp can —
- Increase product visibility
- Maximise profitable revenue
- Reduce customer acquisition costs
- Provide true ROI
Upp can help transform your marketing campaigns by understanding your campaign performance and making recommendations to ensure campaigns are achieving the best results based on your key metrics and objectives.
