How to Optimize Google Shopping Ads for a Better ROAS

An Explanation of ROAS

ROAS, or Return on Ad Spend, is one of the most important terms you’ll need to understand to measure the success of your Google ad campaigns. This metric measures the amount of revenue you earn for each dollar you spend on advertising. As eCommerce business owners selling actual products, we’re lucky in that we can measure the exact dollar amount we’re earning for each dollar we spend on ads. For service-based businesses, it’s much more difficult to measure, as there isn’t always an easy to calculate monetary value that can be assigned to each click. How do you measure, in dollars, when someone fills out a contact form or makes a phone call that could potentially turn into new business? It’s more difficult. For a product-based business, when someone clicks on a Google ad then checks out on your website, there’s a monetary value there, giving you a clear cut ROAS.

“At the most basic level, ROAS measures the effectiveness of your advertising efforts; the more effectively your advertising messages connect with your prospects, the more revenue you’ll earn from each dollar of ad spend. The higher your ROAS, the better.” [SOURCE]

The formula for calculating ROAS is Conversion Value / Cost. Conversion Value is the amount of money you earn for a given conversion. So, if you spend $50 on an advertisement and your Conversion Value is $250, this means your ROAS is 5 (250/50). For each dollar you spend on ads, you’ll earn $5 back!

When it comes to Google Shopping ads, I’ve tried everything under the sun to optimize them as effectively as possible. The end goal for me is always to increase my ROAS, ensuring that for every dollar we spend, we’re getting the best possible return. For anyone that’s run Google Shopping ads before, you know that they can be tricky and if you don’t pay close attention to them, it’s easy to overspend on search terms that don’t make sense for your business. 

Luckily, there are some surefire ways to optimize your ads to ensure your budget doesn’t run rampant and that you can continue increasing your ROAS, thereby increasing your bottom line.

Make Sure You Have a Strong Google Shopping Feed

In order to initially set up your Google Shopping ads, you’ll need to upload a shopping feed into Google Merchant Center. Google has easy to follow instructions on how to create and upload your feed HERE. 

The feed pulls in product information such as product ID, title, description, link, image link, price, product category, GTIN and more (see HERE for an explanation of all the properties in the feed). You can edit specific properties in your feed like title, description and product category, to provide very detailed information that will help your customers find your products on Google.

Optimize Title

For DermWarehouse, we always make sure that our title is the exact name of our product. For example, “Park Perfection Instant Eye Lift.” We include the brand name and product name. You can also include some descriptive keywords in your title, giving even more information about what the product is. In this example, I could use the title  “Park Perfection Instant Eye Lift Eye Cream for Puffiness & Dark Circles.” This tells Google and our customers not only the name of the product, but also the product type (eye cream) and what it does (helps with puffiness and dark circles). 

Optimize Description

For the description, we always try to describe exactly what the product does without adding too much fluff. A great description for our Park Perfection Instant Eye Lift might be something like “An eye cream that works in 60 seconds to diminish the appearance of fine lines, puffiness, & dark circles. Also works in the long term to hydrate and nourish the eye area.” This description goes into detail about the product but is very direct and to the point. Anyone reading that would know exactly what our product is for.

Product Type & Google Taxonomy

You can also add a product type to each product, again, helping Google identify exactly what your product is, so they know who to serve your ads to. For Park Perfection Instant Eye Lift, the product type would be Eye Cream. Google also uses taxonomies to help map each product [VIEW HERE]. You have to look through the list to see the best fit for your product. As you can see in the list below, they don’t have a specific taxonomy for eye creams, so I would go as far as skin care for this particular product taxonomy:

Health & Beauty > Personal Care > Cosmetics > Skin Care

The more information you can give Google in your feed, the more targeted your searches will be, so it’s extremely important to optimize your Google Shopping feed, which will, in turn, help optimize your Shopping ads.

Monitoring Search Terms

Unlike Google Search ads, where you can choose which keywords to target, for shopping ads, Google uses all the data in your feed to determine who to show your ads to. This means that you have much less control over who is seeing your ads. The best way to monitor this and ensure you’re not paying a ton of money for non-relevant search terms is to keep a close eye on your search terms and set anything that doesn’t make sense as a negative keyword.

I have an example of this that I love to share. We have a brand we sell on DermWarehouse called Elon. They are a haircare brand that sells shampoos, hair treatments and hair supplements. We had spent over $100 on the search term “Elon Musk Smart Pills.” You can see why Google may have thought that this was a relevant term. The brand is Elon and they do sell supplements, which someone may call a pill. I still to this day have no idea what Smart Pills are, but I was extremely happy to catch this and set it as a negative keyword within the campaign to make sure I wasn’t wasting any more money on this search term.

You can see in in the example below for DefenAge, when you go to “Keywords” and “Search Terms” within the account, you have the opportunity to add certain search terms as negative keywords. In this example, we’ve excluded two search terms that are irrelevant to these products. 

If there are certain keywords or search terms that you see often across your entire account, you can also set negative keywords at the account level, rather than doing this for each and every campaign. I have set some account level keywords such as “Botox”, “Laser”, and “Filler”, which are all treatments that are done in a dermatologist’s office and not something that’s available to buy on our site. This saves me from having to go into every single campaign and adding these, plus it ensures that I don’t have to worry about forgetting these keywords any time I add a new campaign.

Pause Poor Performing Products

Whether you’re using manual bidding or one of Google’s automatic bidding strategies, you should always make sure to keep an eye on how each product is performing individually. It’s easy, especially if you have a ton of products, to just look at your ROAS at a campaign level or ad group level. Make sure you’re getting down to the product level. You may have a good ROAS, but when you dig deeper, you see that there’s one product in particular that’s eating up a ton of your budget. If you’re using manual bidding, you can continue lowering the bid on that product. If you’re using automatic bidding, you may choose to pause that product altogether. Keeping a close eye on this and knowing when to cut the cord on a poor performer could help improve your ROAS. 

Making Bid Adjustments by Device

65% of clicks on paid Google search results come from mobile devices. [source]

According to SalesCycle, mobile conversion rates are less than half that of desktop.

A common flaw is when the mobile bid isn’t properly adjusted within the Shopping campaign. Within each of your ad campaigns, you have the ability to adjust your bids by device type. This means that if you have a max CPC for a campaign of $2, and you decrease your mobile & tablet bid by 50%, your max CPC for mobile and tablet will be $1. You can utilize Google analytics or your history on Google ads to dig into how many customers are coming to your site on each device and how they’re converting and then adjust accordingly. This is a great trick to save a lot of money on devices that don’t convert as well and in turn, increase your ROAS.

Using the same DefenAge campaign for DermWarehouse as above, you can see that we are bidding down 50% on mobile. Why would we do this? Because we’re seeing a 9.31% conversion rate percentage on desktop versus a 1.36% on mobile. Our cost per conversion is 1/3 on desktop versus mobile so we’ve even bid up 10% on desktop.

Not sure how to adjust the mobile bid ? You can see within “Bid Adj.” there is the opportunity to bid up or bid down a certain percentage.

We have a great article all about mobile bid adjustment if you want to read more.

Segment By Price 

You don’t want to bid the same amount on a $30 product as you would a $150 product.

It wouldn’t make financial sense to bid $4 on a $30 product. If you have a conversion rate below 10% while bidding $4 on a $30 product, you’d be losing money. It would make sense though to bid $4 on a $150 product though.

If you don’t know how to create a custom label, this article from Google will help. This is an easy way to properly segment by price at scale.

Below you can see how many products are segmented based on various price points. This allows us to create unique shopping campaigns that are segmented by price while bidding accordingly for profitability.

Getting Positive Reviews

“97% of consumers consult product reviews while 85% of consumers seek out negative reviews before making a purchase. Research has shown seller ratings have the potential to increase conversion rates by as much as 50 percent.” [SOURCE]

Those stats speak for themselves! Another great way to optimize your Google Shopping ads to increase conversion rate, and therefore ROAS, is to make sure your product reviews are displaying within your ads. HERE are Google’s instructions on how to do this. Important takeaways are that you need at least 50 reviews across all your products to get started. You also need to work with a supported reviews aggregator or with Google themselves. 

When potential customers are browsing Google and they see a product that has a ton of 5 star reviews vs. one that doesn’t, chances are they are going to go for the higher rated option.

In Closing

Google Shopping Ads are a very powerful and effective way to drive new customers to your site. You want to make sure that once these are up and running, you’re optimizing your ads for ROAS to ensure you’re getting the most value out of your money. We’ve utilized all of the tips above to optimize our Google shopping ads for DermWarehouse and using this roadmap, you’ll be able to increase the ROAS for your shopping ads as well.