The Truth About Smart Shopping: Weighing Both Sides & How to Optimize

Intro

There is rarely only one side to a story.

Smart Shopping is one of the few automations from Google that has really received overall praise. Remember when Smart Bidding first came out? It was absolutely hated.

What about AdWords Express (aka Smart Campaigns)? I wrote a highly critical article on AdWords Express back in 2013 and then met its creator at our agency office a few years later, where he mentioned the article. Talk about awkward.

Smart Shopping definitely splits the waters, but it has never had that universally hated phase that many new automations from Google experience.

That’s because it actually works.

Don’t get me wrong. I don’t like it. I feel the cons outweigh the pros, but I have a lot of good things to say about Smart Shopping. It is something that we will test in certain eCommerce scenarios (you’ll see why in the section on whether you should pay an agency to run Smart Shopping).

This article will not be a usual love it or hate it type of article. It’s not going to be about an agency who’s angry about losing hourly billings (we don’t charge hourly), and it’s not going to be a complete love story.

To find out whether Smart Shopping will fit your eCommerce store, let’s get started with the pros.

The Pros of Smart Shopping

Performance Is Better Than Manual Campaigns

If you are running a manual Google Shopping campaign with one campaign, one ad group, and are running manual bids, then Smart Shopping will beat your performance 99 times out of 100.

That’s not necessarily because Smart Shopping is awesome, but because you are doing it wrong. You’re setting the bar too low, and Smart Shopping can easily beat your campaign’s performance.

Note: That’s an ode all “PPC Experts,” claiming Smart Shopping is the best thing in the world. Imagine how bad their campaigns were before?

Once you enable Smart Shopping, it will start using audience data, automated bidding on the Search Term level, and thereby optimize your campaign. This will lead to better performance than what you had before.

Greater Use of Audience Insights: No Need to Add Manually

Smart Shopping is very limited in actions you can take. That also means it’s simple. For instance, you don’t have to add remarketing audiences to Smart Shopping. It takes care of that itself.

It can also use insights across its network (e.g., in-market audiences, demographics data, etc.) to improve your performance. Some of these areas are not available to us mere mortals.

This is also dangerous, though. What if I don’t want certain audiences? What if I have proactive insights to my market? What if I want to exclude converted users? You can’t control that.

Maximize Conversion Value Bidding Format

Smart Shopping is not running on your typical Smart Bidding algorithm. Rather, it uses the Smart Bidding “maximize conversion value” goal.

In other words, it will try to get as much revenue out of the budget you make available to the campaign.

That can work exceptionally well. We’ve seen accounts running for a year on a set budget and actually hit the target ROAS each month without having a ROAS target. The campaign just had a set budget of $10,000. Pretty interesting.

Black Box Advantages

I have a theory that Smart Shopping uses price comparison as a bidding factor. Something that we can’t use yet. The data (benchmark pricing) is available as a column in regular Google Shopping campaigns, and we’ve seen some instances where Smart Shopping could only perform better than our setup by using pricing data.

I think it weighs the price competitiveness of each product into the auction, especially if there is no other data.

Pricing data for Search/Shopping campaigns is extremely useful. Not having to bid for products where you are significantly more expensive can be a game-changer. Smart Shopping seems to be able to use this data (they have it) in their bidding. If that’s true, then Smart Shopping has a distinct advantage.

That’s just one example of a bidding factor that we don’t have access to in the interface or API (as of this writing). So, if you’re struggling with getting Google Shopping profitable for certain products, then maybe it’s as simple as taking Smart Shopping for a spin.

Easy to Use: No Complications That Beginners Can Mess Up

Oh, this is so nice. People mess up Shopping campaigns all the time.

You would be surprised at how many times we opened accounts where some product groups were missing, or priority settings were set incorrectly, etc. Smart Shopping campaigns are tough to mess up, which is why it’s great for those who don’t have a ton of experience yet.

Awesome Reach Across Display and YouTube + New Partners in the Future

Smart Shopping automatically opts into Google Display and YouTube. There isn’t any specific magic going on, though. It tries to find the same type of users that have converted on Search, and target them via Display.

For some product types, like D2C, this can be a nice addition of revenue. Large retail stores can also see a 10% increase in revenue if it pans out, which for large accounts is something that is really nice to see.

The Cons of Smart Shopping

Many who opened this article might have thought they’d see the typical rant on Smart Shopping and see a huge list of cons with maybe a pro or two.

The truth is that I do find that there are more pros than cons with Smart Shopping, but in my opinion, the cons significantly outweigh the pros.

It all starts with the lack of search data, which is detrimental to your other work on the account.

There is No Search Term Data

You can’t see what search terms your campaign is triggering. Smart Shopping will analyze the performance on the search term data and bid higher or lower on the individual search terms.

This is paradoxical because it needs data to determine good or bad search terms. But if you have ever looked through a search term report for Google Shopping campaigns, then you will know how many search terms you can proactively exclude without needing to get “sufficient data” first.

Furthermore, the loss of search term data makes it hard to use that data for your Search Ad campaigns. A cornerstone tactic in any large eCommerce account is to cross-reference search terms in Google Shopping with your keyword covered in your regular search campaigns.

That tactic goes out the window when you use Smart Shopping.

No Insights to Split Between Remarketing and New Users

Smart Shopping automatically targets users across Search, Display, and YouTube. You can’t tell it not to, and you can’t see how much of the traffic comes from where.

For smaller advertisers, this might not be a big deal. But for larger advertisers with multiple marketing channels, this is a dealbreaker for me. We need to be able to know how much of our budget is going to display remarketing and how much is going into product ads in Google Search (i.e., the regular Shopping ads).

If all we do is focus our Smart Shopping campaigns on remarketing audiences, then our campaigns will suffer a slow death, which is the same thing if we just rely on a huge Facebook campaign.

Again, it might be smart to feed off our Facebook Ads traffic. But we need to understand it. Otherwise, we might turn off our Facebook Ads, and then what happens to our Smart Shopping campaigns that are living off our remarketing audience?

Potential disaster. And the bigger you are, the bigger the disaster.

You Can’t Differentiate Mobile vs. Desktop ROAS Targets

Google is not good at identifying which users go from mobile to desktop to complete a purchase. Google’s cross-device metrics will say that out of thousands of purchases, only a handful of them went cross-device even if that might not be actually the case.

That might be the case for some accounts, but not all. Facebook Analytics is a lot more trustworthy here, and it helps us set the right ROAS and profit targets for mobile and desktop traffic.

You may be thinking, “Ok, Andrew. I hear you. But why don’t you just split Smart Shopping up in two different campaigns with different ROAS targets?”

You can’t.

Which is annoying 🙂

There is No Search Data (Yes, I Have it Twice)

This is such a major point that I need to make it twice.

Especially for large eCommerce stores, you will never be able to get all keywords in the first try. If you don’t use search term data from your Dynamic Search Ad and Shopping campaigns, then you are missing out on exposure.

When It’s Wrong, There Is No Quick Fix

Uff. This might be the biggest reason why we change from Smart Shopping to “manual” campaign structures. About 50% of the clients we accept in SavvyRevenue are running Smart Shopping today.

In all cases, we propose two management fees—one with Smart Shopping and one with our strategies. The fee structure where we use Smart Shopping is lower than our regular fees, as there is less legwork (more on this later).

As of this writing, we’ve never had a case where they stuck with Smart Shopping.

The reason for this is that the second something goes wrong, then there is not much we can do to fix it.

What happens if your conversion tracking drops out or is wrong (even just a little) for a few days? Smart Shopping traffic drops drastically, and takes a couple of weeks to recover. That’s expensive for large stores.

What if your competitors are running a promotion that you can’t follow? Smart Shopping takes a few days to catch this and gets expensive in the long run.

You need to push certain products/brands/categories proactively because you’ve become more competitive, or you strategically need a category/brand to increase revenue? You can’t without breaking it out into separate campaigns.

For these reasons and a couple of other scenarios, they always —over time —opt for a regular Shopping campaign setup.

It’ll Try Things You Don’t Want

Some of these insights are directly from users themselves. This one, in particular, is one I’ve seen a couple of times on Twitter.

Smart Shopping runs with a set amount of conversions, and then a seasonal change happens, which results in a lower amount of conversions. Seeing that the bid format is “Maximize Conversions” (within the budget), Smart Shopping will try to find other avenues to increase conversions.

Sensing that it can’t get more profitable conversions out of Search, then it will start jumping into Display.

This is using Responsive Display Ads. For Smart Shopping, these ads are super ugly. The chances of getting additional profitable conversions from that display ad format are very low. There is a reason why it became an industry-wide best practice to turn off Display partners in Search campaigns as early as 2008 (yes, I’m that old).

Now, Google is saying that they can do it better. And they probably can. So they opt your Smart Shopping campaigns into the Display Network.

Personally, I think this is great when you have a mountain of conversions, solid audience data, and in addition to Search.

But as a Hail Mary tactic to try to go from 50 to 100 conversions? Not gonna happen. But you can’t turn this off in Smart Shopping. So you have to take it.

Smart Shopping Don’ts and Other Tidbits of Information

Just a couple of quick nuggets of information that I think you should know:

There’s no need to break up your campaign into various ad groups or product groups, unless you want the insight. Google will not bid differently if you break out your product groups. So no need to do this unless you want to have the insight for how various brands/product_types/custom labels perform.

I’ve seen advertisers break out Smart Shopping product groups at different margin levels. Good idea for the insight, but when I hear it’s to help Google optimize, then it makes no sense.

Smart Shopping is an “Ultra Priority” and Overrides All Other Shopping or Dynamic Remarketing Campaigns. If you have the same products in Smart Shopping and regular Shopping or Remarketing campaigns, then Smart Shopping will almost always be prioritized.

There are a few instances where it’s not true, such as if you have a much higher bid in your regular campaigns, or if you’re running a different CSS engine.

Never Use Smart Shopping Initially If You Can Avoid It. Because you lose the search data, then I never recommend starting accounts with Smart Shopping. The search data is simply too valuable.

Who Should Use Smart Shopping

Advertisers who lack the insight to build and optimize regular Google Shopping campaigns should use Smart Shopping campaigns. If you aren’t doing a good job running regular Shopping campaigns, then Smart Shopping will almost exclusively be a great addition to your account.

How to Optimize Smart Shopping

Despite popular belief, there are ways to optimize Smart Shopping. They’re not evident, and you’re not supposed to optimize them per se. Google is supposed to take care of everything 😉

I’ll list some of the things we’ve done to optimize Smart Shopping, and improve its performance.

Change Your Bidding Method; Add or Remove the Target ROAS

You can choose between two bidding methods in Smart Shopping:

1. Maximize Conversion Value within a set budget
2. Maximize Conversion Value within a ROAS target

The two bidding methods have subtle differences, but they work a bit differently in reality.

To optimize your Smart Shopping campaigns, try changing between the two methods to find which works best for your products.

Change the Target ROAS

If you’ve set a Target ROAS, try changing it up and down every two or three weeks to boost revenue.

We’ve seen surprisingly good results by setting Target ROAS 100-200% below our actual target. In one instance, we actually increased revenue by 50% while still hitting our Target ROAS after we changed from 700% Target ROAS to 500% Target ROAS.

The theory here is that Google tries to predict the value of a conversion from various products. Seeing that Google “has to” hit 700% ROAS, then it’s more constrained in what auctions it can enter. By loosening the target, you can allow Google to enter more auctions and thereby convert better.

Change the Budget

If you haven’t set a Target ROAS in your Smart Shopping campaigns, you can play with changing the assigned budget.

If you increase the budget, Google will start entering more auctions.

If you decrease it, Google will enter fewer auctions.

Increasing and decreasing the budget can be a clever way to bid higher or lower despite not having a direct ability to change bids.

Just be careful. I wouldn’t increase budgets by more than 25% at a time, depending on the budget you have today. Google will spend the budget if you don’t set a Target ROAS.

Split Products Into Different Campaigns to Set Different ROAS Targets

You can exclude products from your Smart Shopping campaigns by excluding them on the product group level.

If you know that different products/categories/brands should run at different ROAS levels, then it makes sense to split them into various Smart Shopping campaigns with different ROAS targets.

Just don’t do this too granularly. Algorithms live off data, so the more you split up your data, the less likely you are to succeed with their automated setups.

Exclude Certain Products

Not making a profit from $10 products? Exclude them.

Shipping taking too long for certain brands? Exclude them.

Essentially, if you know that certain products will not convert well no matter what, then exclude them. That way, you don’t have to wait for Google to do it for you.

This is especially true in apparel. Google can’t tell (yet) how many sizes are left for a specific product. If the least popular size is the only one left, Google will still try to sell that product aggressively.

Having a rule in place in your feed optimization tool to exclude low-stock products can, therefore, be a very good way to help Smart Shopping deliver better results.

Improve Your Google Shopping Feed

And lastly, improving your Google Shopping feed.

I will not go into too much depth as we have several articles and webinars on this topic, but anything you can do (to a certain extent) to optimize your Google Shopping feed will help improve your Smart Shopping results.

Should You Pay Your Agency to Manage Smart Shopping?

Yes and no.

Don’t pay full price, or the regular percentage of ad spend. There isn’t as much work as we’d normally have for another campaign.

But as I mentioned above, there are still areas to optimize within Smart Shopping, but they are not as extensive as the regular approach, which requires quite a bit of work.

As a result, the math becomes based on how much you can save on Smart Shopping management.

Our mantra at SavvyRevenue is that we need to outperform Smart Shopping by more than it costs to have us manage it for it to be worth us running regular campaign setups.

Because if we outperform Smart Shopping by 5%, then it’s often not enough to offset our management fee, which ranges from 8% to 20% based on spend. However, if our client values not having to worry about the day their tracking (unfortunately) stops working, then they will happily pay that little bit extra.

But what you absolutely shouldn’t do is pay $10,000 for setting up Smart Shopping, which we’ve seen examples of, and then a ludicrous amount in monthly fees. If anybody is ever in doubt about whether they have a fair agreement they can always write to me directly (hello@savvyrevenue.com). You’ll just get an assessment of your agreement —no pitching from my end (we don’t need to).

Is Smart Shopping a Sign of What’s to Come in the Future?

Some people have proclaimed that Google’s success with Smart Shopping is a sign that, within a few years, Google will be able to automate all of Google Ads for eCommerce (and other industries).

I highly doubt it.

Dynamic Search Ad campaigns should be in any eCommerce account but are way too volatile to be standalone.

Google’s Automated Ad Suggestions are horrible at best.

Smart Bidding is hit-or-miss based on various scenarios.

But what I do think is that Google’s automation will become better and better for small businesses. I wrote about this in my critique of AdWords Express back in 2013; that if the “spillage” from the automated campaign formats was less than it would cost to have an agency handle the account, then AdWords Express was actually the better choice.

It’s that bar that I believe will be set higher. Google’s automation will become better and better, so the level at which you will need an agency will become higher and higher.

I predict that Google’s automation will weed out many of the worst PPC practitioners out there. If you don’t have any specific intellectual property, framework, or anything unique about what you do, then Google’s automation will swallow you simply because you will not be able to outperform Google’s automation enough to make it worth it for advertisers.

The rest of us will be juuuuust fine. We might execute less and therefore open us up to more clients per person, but as this article indicates, then even when it appears that nothing can be optimized there are things we can do to help the black boxes.