Margin-Based Ad Groups: The Secret to Better Shopping Campaigns

One of the biggest mistakes I have seen people make when setting up their Google Shopping campaigns is disregarding profit margin.

The seriousness of this mistake depends on how wide the price range of their products are. For example, I have accounts that have $2.00 and $2,000 products in the same ad group with the exact same bids.

Does that make sense to you?

When you fail to organize your Shopping Campaigns by profit margin or at least price, you loose out on some of your biggest eCommerce opportunities. Nothing feels better than getting a $2,000 + conversion after spending just $10 – $20 on a certain product in a Shopping campaign and this can be a frequent occurrence if you set yourself up for profit driven success.

Should I Use a Margin-Based Campaign Structure?

Whether or not you use a margin-based campaign structure in your account depends on how widely your prices—and more importantly, profit—differ between each product. If there is a wide disparity, you need to have a structure set up that makes margin based bidding possible.

Another thing to consider is whether or not you have historically had a lot of products with little-to-no impressions. From the accounts I have managed, I have seen anywhere from 20% to 80% of products with few-to-no impressions.  When you have only a few products using up all of your budget, you want to make sure those products are the most profitable ones to your business.

How to Set Up a Margin-Based Campaign Structure

The first step in setting up a true margin-based Google Shopping campaign is determining your gross profit margin for each of your products. Once you know your gross profit margin, you can use that information to create profit margin-based ad groups in your campaigns.

Alternatively, you could just separate your ad groups by price and assume an even % margin on all of the products in your account. Obviously, this isn’t the best way to do this, but if you don’t know what your profit margin is, it’s better than nothing.

Once you have decided how you will be sorting your product (by price or by gross profit), you can create price brackets based on feed rules.

Feed rules allow you to create a custom label based on criteria in the feed. If you were using price as the variable to organize by, you would simply set up a feed rule that says, “If ‘price’ is ‘less than’ ‘$10’ set ‘Custom label 1’ to  ‘$0.01 – $9.99’.

If you set these rules for all price ranges of your products, all products will fall into a certain bracket.

Now that you have a custom label 1 set up with price or profit brackets, you can now use custom label 1 as your ad group! I recommend using a high level category such as product type to organize your campaigns and then custom label 1 for your ad groups.

Easy Bidding and Optimization

The great thing about margin-based campaign structure is the way it allows you to optimize revenue and profit. For example, if you have products that produce around $5.00 of gross profit and a conversion rate of 10%, you probably don’t want to spend more than $0.50 per click.

Again, this is where the ad group level organization is key. Additionally, if you have a margin-based campaign structure instead of merely a price-based structure, you will see better results at the profit level.

Conclusion

Margin-based Google Shopping campaigns can be a great way to get more bang for your buck from eCommerce. It’s a fairly simple trick, but one that yields great results.

By the way, if you need any help setting up margin-based ad groups in your campaigns, let me know here or in the comments. I’d love to help out!

What are some of your favorite ways to optimize your Google Shopping campaigns? Have you tried a margin-based strategy before?