Google Shopping vs. text ads: Where should digital marketers spend their AdWords budget?

With ever-growing opportunities to promote businesses via Google, it can be difficult for digital marketers to know where to focus their efforts. Whilst a number of search specialists are – quite rightly – deploying clever tactics to boost organic listings, businesses should also remember the benefits that paid search can bring – speed, insight and ROI. However, if budgets are limited, what’s the best way to invest time and money with AdWords?

Google Shopping is not new – in fact, it was first released in late 2002 and known in the early days as Froogle. It’s changed a lot since then, primarily in that it is now a form of paid advertising through Google AdWords.

With often limited budgets available, digital marketers must therefore carefully consider their allocation of spend – should they plough their budget into Shopping campaigns or stick to more mainstream text-based PPC activity?

In truth, this quandary is only really of concern to ecommerce brands and retailers with stock to sell online. But there are still pros and cons that such organisations need to be aware of.

The benefits of spending with Shopping

Ultimately, when analysing paid advertising with Google over the last two years, Shopping campaigns have steadily grown to be a major source of traffic and sales. As a result, more than 50% of all AdWords spend has shifted from traditional text adverts to Shopping ads. That is a massive shift, which shows how effective shopping campaigns can be.

Brands can bid on products for a relatively low cost per click (CPC) usually ranging from £0.15 – £0.45. Compare that to text ads and the cost is likely to be four or five times more for a top three position. This is the great benefit of Google Shopping – the lower CPC allows marketers to drive relevant traffic directly to product pages efficiently.

But the success of a Shopping campaign almost always comes down to price – shoppers can filter according to the cost of a product, so competitiveness is crucial if the item is to appear in listing results and convert.

It is also possible to gain an advantage over competing retailers using tried-and-tested promotional techniques including free delivery, discount codes and even complimentary add-on products.

Like any AdWords campaign, Shopping ads should not be set up and left alone – optimisation is required to get the best ROI. For example, once enough data has been acquired it is often possible to identify poor performing products or brands that could be excluded from the campaign moving forward, to make it more efficient. Likewise, bids could be increased on products where returns are good.

Digital marketers will often refer to a target ROAS (return on advertising spend) when analysing the effectiveness of Shopping campaigns. This target ROAS will depend on the margin in the product and therefore the allowable cost per sale. Retailers will be aiming for a ROAS of 800% plus, but a brand owner selling higher-margin products may be able to work to a much lower target. Working this figure out before committing to significant spend is important. There are systems out there that will use machine learning to work to the target ROAS – at a cost, of course.

It is also worth noting that with Shopping campaigns, it is possible to control some elements in AdWords, such as visible products, the bid amount, adjustments for devices and location. But the marketer has no influence over keywords – they must rely instead on the search popularity of the products they sell. Shopping campaigns are therefore excellent for products where users have a good understanding about what they are searching for. But they will not prove as effective for new or unbranded products where there is no search volume.

Generate sales or leads with text ads

Text ads, on the other hand, are incredibly customisable depending on the goal of the campaign. Different ad variations can be tested, with ease, which helps to improve ad performance and protect spend levels. For example, if the goal is to drive more phone calls, the marketer can feature a number more prominently with a ‘click to call’ button.

Text ads are also more flexible and can be used to target a wider range of audiences – not just people searching for product-related terms – with very relevant content. The digital marketer therefore has more options for promoting products or services at various stages in the user journey, from research to sale or enquiry. For this reason, traditional text ads are often used for lead generation campaigns, in both B2C and B2B industries. For retailers they might be better used to focus on key lines and brands, increase awareness, or to promote brand new products that a user may not be directly search for.

That said, the average cost per click is usually a lot greater than a Shopping ad, depending on the sector and its competitiveness. So, this could prove a very expensive digital marketing activity if it is not underpinned by some clear commercial objectives.

So where should a brand spend money?

As with any digital marketing strategy, the chosen approach should reflect the situation and goal(s) of the business concerned. If driving more leads from a website is the priority, or there’s a need to target a wider audience, then text ads will no doubt prove the most effective type of campaign. However, the uplift in Shopping ad usage is undeniable, so, for e-commerce brands, Shopping campaigns will normally deliver a better ROI for the spend.

Of course, the investment could be split across both, if budgets would allow. But with only so much space on that all-important first page – and because money is often an issue – it may be more intelligent to adopt a quality over quantity mindset.