Smart Shopping Campaigns: Overview and Optimization Tips

With so many different advertising options from Google, it can get a little confusing, to say the least!

No worries though, because today we’re breaking down everything you need to know about Google smart shopping campaigns. These powerful ad campaigns offer some incredible benefits for e-commerce businesses, with impressive click-through and conversion rates when they’re done right.

We’re getting ahead of ourselves, so let’s get back to basics...

What Is Google Shopping?

To understand where this all began, we need to go back quite a bit.

Google Shopping launched way back in 2002, although back then it was known as Froogle or Google Product Search. This was when the “shopping” tab option first appeared in Google search results.

It works as a comparison shopping engine. Retailers can advertise their products to users. It works similarly to the traditional search engine function.

A user enters a keyword or query and a list of results come up. The results don’t look like search results though. They’re image-led and feature a product image, price, reviews, and a link to a site or list of links if many retailers sell the product.

Originally, Google Shopping offered no advertising opportunities. It was all organic searches. However, this changed with the dawn of product ads (previously Product Listing Ads).

This meant retailers could bid to appear at the top of the search results within Google Shopping, turning the engine into an online marketplace. This continued to evolve as these product ads began appearing at the top of the normal search results pages, above the other search ads even. These are now your standard Google Shopping campaigns.

You’ll be familiar with seeing these ads by now if you use Google regularly. If you enter a transactional query into Google such as, “blue women’s sneakers size 7”, you’ll notice the first results are a selection of Google shopping ads.

Like the ads above, they all feature a product title, image, price, and name of the retailer, as well as reviews if available.

You run these Google Shopping campaigns through a combination of your Google Ads account and your Google Merchant Center. Smart shopping campaigns are one of the campaign types available for retailers using Google Shopping.

What Is a Smart Shopping Campaign?

Smart shopping campaigns are a relatively new offering within the Google Ads platform from the technology giant. They were first launched back in 2018. Since then, businesses across the globe have been figuring out how best to use this campaign type.

In the search results, smart shopping campaigns look like any other product shopping ad. But your smart shopping ads can also appear as local inventory ads and display ads. So these can appear not only within search results but within the Google Display Network, YouTube, and Gmail.

In this sense, the campaign type is a bit of a hybrid between standard shopping campaigns, responsive search ads, and display remarketing campaigns. But there’s also a lot of difference behind the scenes.

Much like other smart campaign types such as dynamic search ads, smart shopping campaigns use machine learning. So the campaign does most of the work for you to help maximize conversions. This includes bidding, optimizing, and making budget adjustments.

As you can probably imagine, this makes smart shopping campaigns an absolute dream for e-commerce businesses  — particularly small to medium e-commerces that wouldn’t usually have the resources to dedicate to managing Google Ads campaigns.

All you need to do is find the time to do the initial setup, set up a campaign budget and goals and Google does the rest of the work for you.

It can feel a little daunting to hand over most of the control of your advertising to a machine. But you can rest assured that Google is at the top of the game when it comes to learning algorithms.

Different Ad Types

We touched on this very briefly earlier. But we’ll pause to dive into each different ad format available as there are so many within one type of campaign.

First up is product ads. These can appear within the Google search networks, on traditional search results pages, in the image results, or within the shopping tab. These are the familiar visually led ads that appear at the top of transactional search query pages.

Your ads can also appear within the Google Display Network

(GDN). These are display remarketing ads. They’ll only be served if a user has visited your website before or shown an interest in products on your site.

The GDN has over 2 million websites that reach 90% of users on the internet. Suffice to say it’s a powerful tool for getting the right eyes on your ads.

Your ads can also appear on YouTube. This could be on the homepage, on video pages, or within the search results.

There are also Gmail ads. These will appear at the top of users’ inboxes in the promotions and social tab. They’ll only appear for users who have already visited your website.

Local Inventory Ads

Last but by no means least is local inventory ads. These are currently only available for retailers in the following countries:

• USA
• UK
• France
• Germany
• Japan
• Canada
• Brazil
• Australia
• Netherlands
• Sweden
• Switzerland
• Denmark
• Norway
• Austria
• Brazil

You’ll also only get this option if you’re a “brick and mortar” store. By this, we mean you have a physical location that Google is aware of via the Google My Business platform.

If you do meet these requirements, local inventory ads are an incredible tool. They allow ads to be placed to shoppers near you, featuring your store information.

If they click on the ad, they’ll land on a Google-hosted storefront for your shop. Here they can view all the inventory you have in-store, as well as get directions and see opening times. It's a great option for bridging the gap between physical and digital commerce.

How Does Smart Shopping Automation Work?

As we said above, Google uses an AI algorithm to run smart shopping campaigns.

They take your existing product feed from your Google Merchant Center, as well as the assets there (more on this shortly!

) and combine it with machine learning. This system then pulls ads from your product feed and serves them across a variety of ad networks.

The algorithm is constantly testing and learning what best works for your goals. For example, most often the goal will be to maximize conversions. So the algorithm will focus on the best images and text combinations for ads and where best to place them to achieve that goal.

You can have a maximum of 100 smart shopping campaigns running within a Google Ads account, regardless of whether they’re paused or enabled.

Similar to other smart campaigns, much of the initial learning is done within the first 15 days of the campaign going live. After this point, the algorithm should have enough data collected to optimize your smart shopping campaign to achieve your goals.

Smart shopping campaigns are the likely future of shopping campaigns. All this automation can save you a huge amount of time, as well as using your budget more effectively. But these aren’t the only benefits.

Pros and Cons of Smart Shopping Campaigns

We’ll start with the good news, which is plentiful. Smart shopping campaigns offer all the same benefits as standard shopping campaigns.

Smart shopping campaigns are the only way to rank at the top of the search results. Even search ads are pushed further down the line in preference of this campaign type. With this premium spot and a visual format comes more clicks.

When you factor in that Google is automating your bidding, you’re likely to see even better results. The Google bidding algorithm can draw from a wealth of data to put your ad in front of the right eyes at the exact right time. This combination of visibility and timing makes it a powerful combination when it comes to conversions.

It’s why an increasing number of retailers are moving their budget to Google Shopping Ads instead of traditional search ads. The visual element of the ad can drastically improve click-through and conversion rates.

Smart shopping campaigns take this a step further than traditional shopping campaigns because of the variety of ad types available. Your ad can not only appear within search results but across so many ad networks where your viewers are looking.

They also offer a unique take on the intent vs interruption debate. Where standard shopping campaigns perform so well is because they take into account the transactional nature of queries and only appear for these types of queries. The ads aren’t interrupting users in their search.

Smart shopping campaigns benefit from this when they appear as product ads in search results. But because they can also appear within the display network, YouTube and Gmail. It interrupts a user's original intent, which can be a powerful tool, particularly in combination with remarketing lists enabled.

What’s the Catch?

As with all things, there are some downsides to using smart shopping campaigns.

For retailers who wish to have control over every aspect of their budget, smart shopping might not appeal to you. We would still always recommend trialing a campaign to see how it compares to your own manually set up standard shopping campaigns. But it can put some marketers off due to the lack of control overbidding.

Another frustrating aspect for some is the lack of data available.

In your standard shopping campaigns, you’re able to see the search terms used that triggered your ad to appear and ultimately be clicked on. Smart shopping campaigns don’t reveal this data. They also don’t reveal any audience data.

There’s also minimal data available on placement data. What we mean by this is because there are so many different ad types available within a smart shopping campaign, you won’t know which types of ads are performing best within your campaign.

This lack of data means there’s no option to set goals based on things like the type of ad, search intent, or demographics. You put all your faith in Google’s algorithm to figure it out, which for the vast majority of advertisers it does, very well in fact. But it can still be daunting initially.

Now you’re aware of the benefits and pitfalls, you’re probably wondering just how to set up a smart shopping campaign. As we said before, you’ll need both a Google Ads account and a Google Merchant Center set up to do this. We’ll walk you through setting up the latter first, so if you’ve already done this, skip ahead.

Google Merchant Center

The Merchant Center is Google’s own platform that helps you manage your online or in-store product inventory. As with the majority of Google products, setting up your Merchant Center account couldn’t be easier.

Product Feeds

The first thing you’ll need is a product feed. Google is quite stringent about what should be included and what formats it accepts. There are two main ways of doing this; manually by creating a spreadsheet or you can generate it using an app or extension.

If you’re using one of the main e-commerce platforms such as Shopify, WooCommerce, or Magento, you can use an app to speed up the process of creating a product feed.

For Shopify, use the Google Shopping app. For WooCommerce, you can use the Google Feed Manager or Product Feed Pro app. For Magento, you can use Google Shopping or Simple Google Shopping modules.

If you’re using structured data markup on your website, this also allows Google to automatically generate a product feed for you.

No worries if none of the above is the case for your site, you can do all this manually. Google has their own helpful guide for creating a product feed

using its free Google sheets tool.

Initial Set-Up

Once you’ve created, or know how you’ll create, your product feed, log in to your Merchant Center account. Click on products, then feeds, and then hit the plus icon.

You’ll get prompted to fill out information like country of sale, language, name of your feed, and destination. Then you’ll be prompted to upload your product feed document or Google will let you know it can automate one from schema.org markup.

There’s the option to add multiple countries of sale for international retailers. You can also do this using the add an additional country of sale feature if you need to set different feed rules for products.

Once your product feed is uploaded and any errors are fixed, there are a couple more bits to do. You’ll have to configure your shipping settings.

You can do this by clicking the wrench icon in the top navigation and selecting “shipping and returns." Here you can create a variety of shipping services with variables like distance, order size, and carrier pricing.

For US retailers, you need to configure your tax settings as well. Head back to the top navigation and wrench icon again and select tax. You can pick different tax rates depending on the state you’re selling from and the state you’re selling to.

You’ll also need to link your Google Merchant Center Account to your other Google accounts, most importantly your Google Ads account.

To do this go to the tools icon in your Merchant Center account, then the settings menu gear icon. You’ll find linked accounts here.

Once you’ve clicked that, select Google ads. Then enter the Google Ads customer ID of the account you’re linking. You can find this in the top right corner of your Google Ads account.

Then just select "link." You’ll then receive a request within your Google Ads account notifying you of this. Once you accept it, your two accounts should be linked and you can move on to setting up your campaigns!

How to Set up a Smart Shopping Campaign

You set up a smart shopping campaign just like you would any other ad campaign, though with considerably less legwork involved.

Head back over to your Google Ads account and go to the menu on the left, then select campaigns. Click the plus icon and then "new campaign."

You’ll then be prompted to select a goal for your campaign so select sales or you can create a campaign without a goal. Then select "shopping" as your campaign type.

Then you’ll select the relevant Merchant Center account which has your product feed in, as well as the country where the products are sold. If you sell in multiple countries, you’ll need to set up multiple campaigns as you can only have one country of sale.

Once you’ve done all this, you’ll be prompted to select a campaign subtype. Select "smart shopping" campaign and name your campaign.

Next up, you’ll need to set an average daily budget. It’s worth keeping in mind that a smart shopping campaign will take priority over any standard shopping campaigns or display remarketing campaigns that feature the same products.

So if you want to keep your overall ad spend at the same level, you should set a budget that is equivalent to the overall budget for any of these campaigns.

You’ll then set up the bidding. Smart shopping campaigns use automated bidding as the only option initially. Though after the campaign has collected sufficient data, you may add a target return on ad spend (ROAS).

Product Grouping

Next, you’ll choose the products or groups of products to advertise within this campaign. If you don’t specify particular products or groups of products, all your products will be able to appear in this campaign.

Google advises that the best practice is to include as many products as possible. The basis for this is that it’s simpler to manage and the campaign will perform better.

In reality, it’s not always this simple for many e-commerce businesses. As such, it’s often a best practice to group products of a similar value. This is so that later on you can set a target return on ad spend which fits within the profit margins of those products.

You could also opt to group your products by popularity, so you can eventually assign more of your budget to products you know sell well. It’s your call. However, for starter campaigns, Google knows best.

Once you’ve set up which products will be advertised within your campaign, you’ll move onto uploading assets.

Smart Shopping Campaign Assets

Because smart shopping campaigns feature responsive remarketing ads, you’ll need to add assets that Google can use to create these ads. By assets, we mean a logo, image, and text.

These ads can feature across the Google Display Network and YouTube. They’ll be combined in various ways to create a variety of ads for Google to test. Then eventually, the best performing ones will appear more often.

For your Logo asset, if you’ve already uploaded one to your Merchant Center account, you don’t need to do anything. If you haven’t then you need to upload one.

Square logos need a ratio of 1:1, while rectangular logos must be wider than 1:1, but no wider than 1:2. A transparent background is best practice regardless of shape and, ideally, your logo should be centered.

For image assets, you should pick a landscape image that is 1200 x 628 pixels ideally. It should be no larger than 1MB. For some ad spaces, your image may be cropped up to 5%, so this is worth bearing in mind when choosing the image.

Text Assets

You’ll also need to add text assets including a short headline, long headline, and a description.

Your short headline appears in tight spaces and may appear on its own with no description. It should be 25 characters or less.

The long headline will appear instead of the short headline where there is room. It can appear with or without your description. It should be 90 characters or less.

The description should be 90 characters or less. It will only appear with either the short or long headline text. It can be shortened if the ad space is small and may appear with ellipses instead.

Finally, you also have the option to add video assets. You need to have the video you want to feature already uploaded to YouTube. Just copy and paste the link to the YouTube video you want to use.

You can preview all your ads before they go live to make sure your assets look good and work well together. We recommend doing this as there are so many combinations available that you might end up wanting to tweak certain aspects of your assets.

Once you’re done, hit save. Then your campaign is live.

The Learning Phase

Once your campaign is up and running, you’ll enter what Google calls “the learning phase." This is a period of time where Google’s algorithm is figuring out what best works for your campaign.

You’ll trigger this learning phase for any smart bidding strategy like target CPA, target ROAS, maximize conversions, or enhanced CPC. Usually, the learning phase is only 7 days.

But for smart shopping campaigns, because everything is automated, the learning phase is 15 days. During this learning phase, it’s very important to leave your campaign alone.

Anything you change during this period will affect how your campaign performs overall. For the best results, don’t touch anything until the learning phase is complete.

You can see the progress of the learning period in a status column within your campaign. Be patient. It’s worth it.

Optimization Tips for E-Commerce Smart Shopping Campaigns

You’re probably thinking there’s no optimization to do when Google does so much of the work for you when it comes to smart shopping campaigns.

Wrong.

There’s still plenty of work you can do on your end to ensure your campaigns perform at their best.

Optimize Product Titles

Your product feed is how Google understands your product offering. It’s the heart of your smart shopping campaign. So optimizing your product feed is a great way to optimize your smart shopping campaign.

One way you can do this is by optimizing your product titles to include your most popular product keywords. Most e-commerce businesses know to do this already, but if you aren’t, you should see some huge results by doing so.

Optimize Price

If your campaign has gone through the learning phase and you’re seeing good impressions but low click-through-rates on your products, it’s probably your price point.

Have a look at what your competitors are offering. If they’re selling the exact same products, it’s simple logic that users will head to the ad with the lowest price. The simple solution is to lower your prices.

But we understand not all businesses can afford to do so. If you cannot do this, it’s worth excluding these products from your campaign. They’ll only eat into your budget with clicks that don’t convert.

You can also look at lowering the overall purchase cost. This includes the price of the product, plus tax and shipping. If you can do something to lower your shipping costs, this may give you a competitive edge over other retailers.

Optimize Images

Your product images are your ads campaign’s bread and butter. Without good product images, your CTR will be lackluster at best.

If you’re selling the same product as many other retailers, chances are you have the same product image from the manufacturer. Though it’s a time-consuming and sometimes costly process, it might be worth coming up with a different product image variation. This will allow your product to stand out in a sea of similar results.

It doesn’t have to be anything fancy. Something as simple as a different angle can yield big results for your conversion rate.

Experiment With Target ROAS

If you’re not hitting your goals after the learning phase ends, you can implement target return on ad spend as your bid strategy. This is another smart bidding strategy available for smart shopping campaigns. Target ROAS helps you get more conversions, or return on ad spend as Google likes to call it.

For this bidding strategy to work, you will need a minimum of 20 conversions. Ideally, though, you’ll have around 50. This should give Google’s algorithm enough information to work with to optimize your ads for this bid strategy.

To do this, Google uses your previous ad data to predict future conversions. It sets a maximum cost-per-click based on the value of products. This bid strategy can reap huge rewards for retailers.

Keep Tabs on Targeting Exclusions

While the automation of smart shopping campaigns is a huge appeal, in some instances it can cause problems. These campaigns utilize targeting parameters to find the best combinations for your audience.

But this can go awry, particularly if you have a huge array of products. If the algorithm discovers a low-performing method, it will stop spending on it. This is great in theory as it’s trying to save you money, but it can cut out valuable audiences who you know are interested in your product.

So keep a close eye on the exclusions that Google creates within your campaign to ensure this isn’t the case.

Review Customer Journey

If you have a solid click-through-rate, but poor conversions, then the problem is on site. This suggests your ad is in the right place for the right audience and at the right price. But the experience after is poor.

It’s worth reviewing your customer journey to figure out any possible issues here. It could be that your sales process is too long-winded. You can reduce the number of digital touchpoints and simplify your route to conversion to rectify this.

This should reduce your abandoned cart and bounce rate.

Exclude Poor Performers

If you’re noticing that certain product groups or items are performing badly, remove them manually. You can do this by excluding items at the product group level.

Stay on Top of Errors

Error pages are never good news, but this is never truer than for shopping campaigns. If users are landing on an error page, your bounce rate is bound to soar.

Especially for e-commerce sites where products are being regularly updated and changed, this becomes an issue. You need to keep on top of any changes and update your product feed to avoid this issue.

Smart Shopping Campaign Strategies for E-Commerce

You might think that because smart shopping is automated, you can just create the campaign and then forget about it. But that’s not the case.

You still need to be vigilant over your analysis of data and testing new strategies to ensure you get the best results out of your smart shopping campaigns.

Set an Aggressive ROAS

See how far Google’s algorithm can go by setting an aggressive ROAS target. You might think you have a good idea of return on ad spend from other campaigns, but you could be surprised.

Your overall volume of ad impressions will decrease significantly for this, but it’s well worth trying to see what results you get.

Product Segmentation

We touched on this briefly earlier. Google's advice is to group the most products together for the best results from a smart shopping campaign.

In reality though, for many e-commerce businesses, products may be far too different to group together and run a campaign that successfully reaches all of them.

You can segment your products by running an item ID report. Head to reports, then predefined reports, and select shopping. Then select "item ID report" to view products by performance.

You can do this to segment your best performing and worst performing products, as opposed to segmenting by price.

'Tis the Season

You need to remember seasonality when setting up smart shopping campaigns. You may initially not see the returns you immediately wanted to. If you start your campaign in a slow January after the big Christmas expenses, you need to keep this in mind.

You should account for this when setting up. Set up your smart shopping campaign in a relatively stable period for your industry. Ideally, this will be neither a peak sales period nor a low sales period to give you the most accurate information on your campaign.

Custom Channel Groupings

Though smart shopping campaigns are limited in the data they allow for analysis, you can try and get around this with custom channel groupings.

To do this, head to Google analytics. You set up custom channel groupings here for your smart shopping campaigns and your standard shopping campaigns. Once you’ve set this up, you can compare the two by using advanced segments.

Custom Labels

Custom labels

let you customize your product feed. They allow you to segment your products based on something unique to your business or industry.

You could use them to segment your most popular products, clearance products, high margin products, and more. It’s an excellent way to segment your products logically and compare them to standard shopping campaigns to see which performs better.

Placement Exclusions

At the campaign level, you can’t exclude placements for smart shopping campaigns. But you absolutely can at the account level.

Whether this works for you will be entirely down to your business. If you know certain placements like YouTube or Gmail don’t convert for your business, you can exclude them at the account level and apply this to your smart shopping campaigns.

Negative Keywords

It’s true that you can’t add negative keywords to your smart shopping campaigns. But if you have a Google rep working with your Google Ads account, then you can ask them to do it.

Again, you shouldn’t do this haphazardly. Let the algorithm do its job, but if you notice your ads are getting high impressions with a low CTR, it’s worth discussing this with your Google Rep to see whether you can include negative keywords into your smart shopping campaign.

Reporting on Smart Shopping Campaigns

While smart shopping campaigns are limited in data compared to other campaigns, that doesn’t mean the information is any less valuable to your business.

You’ll find all the typical reporting data like clicks and conversions available at the campaign level. You can find all of this within your predefined reports tab within your campaign. You can segment this information by product attributes such as categories or custom labels if you’re using them.

Who Should Use Smart Shopping Campaigns?

In theory, everyone.

Smart shopping campaigns are yet another push for Google to move towards advertising automation. Whereas in the past, technology limited the capability of the algorithms doing the hard work, smart shopping campaigns now mostly avoid this pitfall.

These campaigns are likely Google’s idea of the future of online marketing, particularly for the e-commerce industry. If they’re right, as they so often are, avoiding them entirely only disadvantages your business in the long run.

If you’re unsure, start small. Don’t pit them against your entire shopping campaigns, select a small group of products to test them against each other and see which does better. We think you’ll be surprised at the results.

Smart Businesses Use Smart Shopping

We’re only starting to see the potential for smart shopping campaigns. The huge variety in ad placements and automated bidding strategies make it a serious contender for advertisers. Embracing machine learning and freeing your time up to focus on other aspects of managing your e-commerce is an appeal most advertisers can’t turn down.

For more solutions for growing your e-commerce business, Lengow can help. We specialize in streamlining your products across advertising platforms to save you time and money while still giving you the best results. Just get in touch to book a demo.