Product listing ads get your products in front of shoppers, but they also cost money. If you don’t get a good ROI on product listing ads, then they may not be worth setting up at all.
A lot of ecommerce managers want a basic number to which they can compare their performance. The truth is that there is a lot of variation depending on the product, and what counts as good ROI is directly impacted by the product. For example, you can spend more per listing on expensive products with high-margins, while low-margin products need far greater product listing ad ROI to remain viable.
What we will do here is break down some of these basic stats based on product categories and then provide advice on how you can go about maximising ROI for any product listing ad.
Your ROI depends on the product and competition
There are a number of variables that determine the ROI of a listing and therefore its viability and profitability. Ecommerce managers need to be aware of these in order to calculate a listing’s ROI. While these can provide a useful snapshot, calculating ROI is not easy nor completely predictable.
There are inherent limitations when trying to calculate the return on your investment as this is not always measurable. For example, some products may be sold as loss leaders to gain attention and get customers coming back to your website over and over again. Upselling can be a great way to help loss leaders to generate a greater return.
The variables you’ll need to calculate ROI with a degree of accuracy include:
Click-through Rate (CTR) — How many users click from the listing ad onto the product page.
Conversion Rate — How many of these buy the product.
Average Order Value (AOV) —The cash value spent when the customer places an order.
Return on Ad Spend (ROAS) —The revenue generated in relation to how much is spent for the ad.
Cost Per Click (CPC) — The cost you pay the channel every time a user clicks through on a listing ad, based on keywords.
Here we’re going to look at Return On Ad Spend (ROAS) as this is perhaps the most telling figure when it comes to product listing ads (although the other variables all play their own part, too). Broadly speaking, the higher the ROAS, the more viable the product listing.
As you can see in the graph below, watches, jewellery, outdoor supplies and tools have some of the highest ROAS. Home supplies and beauty & cosmetics have some of the lowest ROAS. Does this mean that they are not profitable? Absolutely not.
Although ROAS can be a useful metric in calculating ROI, remember that it is simply based on advertising spend. It does not take into account other internal costs that go into those advertisements, much less the wholesale cost of the products themselves or the cost of delivering them to the customer.
So, while limited, ROAS can give us a useful snapshot.
High-quality product listings will deliver better than average ROI
When calculating ROI, you’re playing a game of averages. However, you can boost your ROI by creating listings that are above average. Better listings generate higher than average ROI no matter what the product or channel. So, how do managers go about creating high-quality listings that sell? You’ll need:
Most ecommerce customers will head straight to the search bar to try and find what they want. Make sure that your title is descriptive and well optimised so that it shows up on the results page.
In the world of ecommerce where customers cannot see what they’re buying for themselves, high-quality images are absolutely essential. They should be taken from multiple angles and be presented in a high enough resolution for customers to zoom in.
A picture may be worth a thousand words, but that doesn’t mean that your listing doesn’t need comprehensive and compelling copy. This should tell them everything they need to know about the product to make an informed decision to buy.
Alignment with filtered searches
Make sure that the product can be seen when appropriate filters are applied to a product search. These may include size, colour or style filters. Filters apply not only to searches on your own website but also through Amazon or Google Shopping. Field values for your own website will not necessarily be the same for these channels, which brings us to...
Increase ROI using channel specific optimisation tricks
Ensuring that filtered search values are specific to each channel’s criteria is one example of how to optimise product listing ads for different channels. However, this is just the tip of the iceberg. No matter how much traffic you draw to your ecommerce site, you’ll also want to ensure that motivated shoppers come to you through commonly used channels like Amazon and Google Shopping.
While you most certainly need to create product listing ads for both, you also need to understand the differences between the two to leverage them effectively. While both are useful, they are fundamentally different: Google redirects customers to your listings whereas Amazon is a complete online marketplace and the purchase is made through them.
The two have different search algorithms. Google’s emphasis is on ultra-specific long tail keywords while Amazon is dependent on shorter tail keywords. They also have different priorities. Clicks are more meaningful to Google while conversions are Amazon’s highest priority.
Amazon’s payment options are far simpler than Google’s. You simply pay for a monthly subscription or pay per-listing. Google requires a pre-planned bidding strategy in order to earn top ranking on relevant search terms. Mastering this requires an understanding of the competition within your market, strict control of your budget and an understanding of how to optimise your data feeds.
In order to maximise your ROI for Google listings, you’ll also need to leverage negative keywords in order to prevent your ad from showing up on irrelevant searches and costing you money for clicks from intent-poor customers.
Taking some time to understand the intricacies of each channel may take some time, but it can help you to optimise your ROI across multiple channels.
Ecommerce platforms delivering ROI boosts
No matter how well you know the distinctions between different channels, producing perfectly optimised product listing ads for each can be difficult and time-consuming. However, with the right tools, it can be quicker and virtually effortless.
The right ecommerce platforms can make optimising listings for each channel simple and boost your ROI while freeing up more time for the managers to focus on other strategic and creative aspects of campaign planning. When your platform is doing the heavy lifting for you in terms of optimisation, you have more time to spend on ensuring that your listings convert. You have more time to write great copy, source quality images and optimise titles.
When you know your product and the variables that contribute to its inherent ROI, and you have faith that your platform is taking care of your optimisation across channels, it’s much easier to generate consistent and profitable ROI.