ecommerce

Google Ads Smart Shopping: How Smart Are They?

What are smart shopping campaigns?

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On May 3, 2018 Google Ads announced a new type of shopping campaign, called Smart Shopping. Continuing on their path of releasing new products driven by machine learning, Smart Shopping campaigns allow you to hand over your shopping ad management to the machines. At the root of the product, what separates them the most from traditional shopping campaigns is that the ads don’t just run on Google search, they also run on Youtube, Google display network & gmail. As we continually see in eCommerce product touch points are increasing and this product takes advantage of that.

The second feature that separates Smart Shopping from traditional shopping campaigns is that they are fully automated. While there could have been an option for Google to expand shopping campaigns to enable the advertiser to choose to expand the networks the ads run on, they chose not to. We would love to see this feature added in the future.

The third feature is that because they also run on the display network, Google chose to include remarketing (with no opt out). The intention is that you no longer need to run Shopping and Remarketing campaigns, only Smart Shopping.

That all sounds pretty good doesn’t it?

What are the downsides to smart shopping campaigns?

Smart shopping campaigns are a black box. The advertiser gets no insight into whether the ads ran on search, display network or gmail. All you see is "cross-network” for placement data. There is also no audience data shared. How much of your budget is being spent on remarketing? No idea and no way to find out.

You cannot do any of the following with Smart Shopping campaigns:

  1. Add negative keywords

  2. Change location targeting (feed runs in country targeted in the merchant center)

  3. Adjust bids by device

  4. Change ad scheduling

  5. Do anything with audiences

What can the advertiser control?

The advertiser can still see product level performance data which is great, but there’s nothing you can do with the data. When you setup the campaign you get to choose your shopping feed, a budget and ad text. The default bidding type is maximize conversion value, but you can choose a target ROAS if you please.

Here is what the ad setup looks like:

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Can any advertiser run smart shopping campaigns?

The requirements to run Smart Shopping campaigns are:

  1. You must have conversion tracking installed and passing revenue data

  2. You must have the remarketing global site tag installed

  3. You must have at least 20 conversions over the last 45 days across existing shopping campaigns

  4. You need an audience lists of more than 100 users

How do smart shopping campaigns perform?

This is what we’ve all been waiting for isn’t it?

There are certain clients we have tested this on in the past 6 months. You have to be careful because smart shopping campaigns are shown before traditional shopping campaigns. Even though you technically can have both on at the same time, your traditional shopping campaigns will receive almost no impressions.

What we have seen is that half of the clients we’ve tested smart shopping with, we have continued to run long term. Here is one example:

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The results above are over a 30 day period. Traditional shopping campaigns ran for the first 15 and smart shopping for the ladder 15 days. As you can see the cost per conversion dropped from $47.60 to $19.06. What’s interesting is you see similar conversion rates, but the cost per click is dramatically lower on smart shopping. That’s because the Google display network is less expensive to run ads on.

We also have cases where the cost per conversion is almost the same, we have cases where the cost per conversion dropped the same amount, but we lost too much volume and we have cases where the cost per conversion increased. Just like any other advertising products in Google ads: test, test, test.

What else should you know?

The most difficult piece in a real controlled test between traditional shopping and smart shopping is the retargeting portion. At Relay PM, we all but phased out running display retargeting on Google for clients because we’ve seen much better performance with Facbeook ads. It’s difficult to factor that into the campaign performance. The analysis can get complex.

Conclusion

For many advertisers we highly recommend testing this feature. Be aware of all the pros and cons. Be aware it includes retargeting. Understand in most cases you’ll never be able to have a real controlled test. There are too many pieces of data Google doesn’t share.

As we’re able to bring in more data we’ll continue to update this article. Please feel free to message us with any questions.

If you’re looking to test shopping campaigns, let us know.

LTV: The Importance Of Knowing The Value Of Your Customers in eCommerce

Being in the business for well over 10 years I am always surprised how many eCommerce clients cannot answer the question "what is the lifetime value of your customers?"  Usually in my initial prospecting calls with somewhere within the second half of the call I ask this question.  At least 50% of the time I hear the answer: "no."  It does seem like most eCommerce companies understand the value, but don't always have the analytics expertise to calculate this.  Of course, you also have the eCommerce companies in their infancy that just don't have the customer data to support estimating anywhere near an accurate lifetime value.

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What does "customer lifetime value (LTV)" mean?   Essentially it's the total value a customer will contribute to your company over their lifetime.

Why is it important to know the lifetime value of your customers?  First, it tells you how much you can spend to acquire a customer without losing money.  Second, it gives you a baseline to start from while you make changes to increase the value of each customer.  There are a lot of companies out there that never make it because they don't know their customers lifetime value.  They are paying $75 to acquire every new customer, but the average customer might only drive $50 in revenue.  Understanding this is crucial to growing a successful eCommerce company over time.

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There are two primary methods to calculate this.  One is based on historical data (in which you need a lot), and one is based on predictive modeling.  Which way you need to use will depend on how many customers you've had as well as how long you've been in business.  More than likely for at least the first 2-3 years you'll be using predictive modeling, but as your actual data set grows you can integrate more historical data until eventually, you get to a point where it's entirely based on your own metrics.

If you're using historical modeling, you have the opportunity to segment even further, maybe by acquisition channel or demographic data.  Now you can find which of your customer sets have a higher lifetime value than others.  This allows you to focus on acquiring customers that are more valuable regarding long-term revenue they bring in.  Marketing to the "right" customers will help improve your customer acquisition metrics.  There's a great infographic I found from RJ Metrics illustrating this (see below blog)

As you continually do things like marketing to the right customers, adding new products to your website, improving your cross-selling approach you can continue to increase the lifetime value of your customers giving you more profit and more you can spend to acquire new customers.  

Now just because you know the answer to this question doesn't solve everything.  One of the significant challenges for eCommerce companies, especially those in the first 1-3 years of their business is that they don't have enough existing customers to offset the loss to acquire a new customer.  Here's what I mean by that.  If the lifetime value of your customer is $100 over a 2 year period and to get to $100 in revenue that customer has to place 4 orders and it costs to $50 to acquire that customer; initially you lose money.  Yes over a two years period you'll still make a $50 profit from that customer, but you might lose $25 for the first 6-12 months.

Look at Amazon and Jet.  They lost tens to hundreds of millions growing their customer base initially while continually increasing the customer lifetime value until they can eventually be profitable.  Now this indeed takes a lot of investment capital, and there aren't many companies in this position, but it's an excellent example of what it takes to grow in the eCommerce space now.

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Early on in the years of pay per click on Google, Yahoo, and Bing, it was relatively easy to make a "profit" from a first order.  As the market became more competitive rarely now do we see this from eCommerce companies on non-brand search keywords.  Same goes for Facebook ads.  Facebook advertising has doubled in cost each year as it's gone from having unsold inventory to completely selling all ad spots.  Understanding and improving your lifetime value is continually increasing in importance to the success and growth of your eCommerce business.  

If you've been in business for 3, 4, 5 years or more you might have enough repeat customers that you can cover your loss to acquire new customers and your eCommerce business is still profitable.  Many eCommerce companies and startups don't have that luxury though, and they are operating at a loss until they can start getting those repeat orders in.  Depending on how long that cycle is for your customers to make a second or even a third purchase, this can be challenging.  As an eCommerce company, we're all trying to get to that point, where repeat customers drive the profit and capital to continue losing money on a first purchase to acquire new customers.

Stay tuned for our white paper where we'll show you exactly how to calculate the lifetime value through both historical and predictive modeling.  

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Messenger For eCommerce: The One Reason You Should Forget About Every Other Chat Provider

Messenger bots for e-commerce are nothing new.  I get it.  If you search "messenger bots for e-commerce" on Google, you get 1.98 million results.

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If we all know about them by now, why are most eCommerce websites only scratching the surface of their potential?  That is if they are even using a messenger bot.


Let's check the top 5 e-commerce sites right now (I'll skip Amazon).  I'm going to go with mobile too.  
 

Walmart.com

Newly redesigned website, first time I'm actually seeing this.  Found a nearly hidden live chat box.  Oh, nevermind clicked into it, and they only want to know if I liked their website.  Gave them a 5 thinking a chatbot might open up, but they continue to ask me about the website.
 

Homedepot.com

They've got a little live chat box on all pages I found, although it seems to open up late.  First question: name.  No problem.  Second question: email.  I'm out.  (We'll come back to this later)
 

Bestbuy.com

3 minutes in looking at category pages, product pages, even adding a product to my cart.  No live chat anywhere.  I was looking for a recommendation on a Samsung or Sony TV.  I'm out.
 

Target.com

Same as BestBuy.com.  No live chat anywhere.
 

Costco.com

Nothing here either.

The number 2, 4, 5, and 6 eCommerce websites in the United States don't have live chat functionality (that I can find).  There has been article after article and test after test of the importance of chatbots increasing eCommerce sales for at least the past 1-2 years, but it seems that most of the top eCommerce websites in the country haven't even implemented this yet.
This could be a significant opportunity for smaller e-commerce companies to have an advantage over the big guys.


While there's a lot of opportunities to leverage Facebook messager for e-commerce websites within Facebook, what is more often neglected is leveraging Facebook messenger directly on your website.  This newer feature is rarely found on any website. 

That brings us to the question I'm here to answer: why integrate Facebook messenger on your website over any of the other dozens of live chat platforms on the market?  One reason.  As soon as a potential customer engages with your company on Facebook messenger, whether it's within Facebook or on your website, you can message them from that point on.  You can't do this with any other chat platform on the market.  This is a huge opportunity to take advantage of.


Back to the Home Depot example.  I couldn't even ask a question without entering my email.  I'm not ready to make that kind of commitment to them, but I completely understand why they believe the should ask and their data likely proves it as well.  Home Depot wants to have the ability to contact the individual after the conversation.  If that were done through Facebook messenger though, they would have access to message me anytime they wanted, without ever asking me for my email address.  Pretty amazing right?  Imagine the number of potential customers that drop off because they require an email address.

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Are we all familiar with email open rates right?  At 20% we're jumping for joy.  Say out of 100 people Home Depot loses 50% on live chat because they don't want to enter their email address (it's likely much higher).  Of the 50 that entered their email address at best 20% open, the email Home Depot sent.  That's 10 out of 100.  If they were running Facebook messenger, they would have a 0% drop off because they wouldn't need to ask for their email address.  So out of 100, they chat with all 100.  After the chat session, they message all 100 people.  Facebook messenger open rate is over 80%.  


With the current method, Home Depot is using they get 10 out of 100 people to open the follow-up email.  If they switched to using Facebook messenger that number would increase to 80!  That's an 800% increase.

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What are you all waiting for?  Often the mindset of small e-commerce companies is how we can compete with the big guys?  Here is a golden opportunity.


Now that I've shown you why you should implement Facebook messenger within our e-commerce website, what are the practical use cases?  Here are three I'll go over.


Engage with a potential customer early on in their sales cycle.  

This is where you have the opportunity to replace the customer service of a brick and mortar store.  While this has the most opportunity with a more consultative sale, like a TV or a washer & dryer, it can still work with clothing and any other item as well.  A great example would be a couple of months back I was in the marketing for a new washer & dryer.  I spent some time doing my research online, but I hit a wall where there was too much information out there for me to decipher and I didn't have the time to spend on it.  In the end, I was forced to go into a brick and mortar location to consult with an expert.  I wanted to make this entire purchase online, but I was missing the sales support I truly needed online and knew I could get in a store.  There are some e-commerce sites out there doing an outstanding job of this, like Crutchfield, but too many fall short.  Again an excellent opportunity for smaller up and coming companies to take the lead.

Closing The Deal

After you engaged with the visitor on your website to help consult them through the sale, if they leave unexpectedly or abandon their cart, you then have the opportunity to reach back out and close the deal.  This could be anything from offering a discount to answering any further questions they may have.  With less than 2% of visitors on average making a purchase the first time they visit your site, this is a perfect opportunity to increase that number.

After Sales Support

There was a study done where at least 80% of customers responded to order notifications on Facebook messenger whereas very few replied to an email.  What if your customers have questions after they receive their purchase?  This is where you get an opportunity to get them into your messenger list when you don't have them.  If you direct them to ask their questions using messenger, now you have that option to contact them in the future.  HP has a fully automated bot that walks customers through setting up a printer until they can print their first document.  Not only does it increase your customer satisfaction, but it also gets your customers onto your messenger list to reach out in the future.


Now there are indeed cases where a fully automated bot won't be enough.  For instance, on the consultative sale, you will likely get to a point where you need human interaction, but you can at least get through initial questions to judge the quality of the visitor and timing to have a human interject in the messenger.  The way we set these up variest by client.  Some we have only one or two questions and answers before a human interjects while others we have it set up to have a full conversation lasting up to 15 minutes.  You might find there are a lot of common issues that can be automated with a bot that will significantly cut down on the real human intervention.  In the beginning, as your learning, you will need more human interaction, but as you learn common questions and solutions, you can begin to automate more and more and cut down on the level of human support needed.  In the end this will incurease customer satisfaction, sales and reduce human interaction needed in customer service.

Chat with us on our Facebook messenger bot if you have any questions on implementing this feature.  We would love to help and show examples on successful implementations.

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Checkout Faster With Shopify: Everything You Need To Know About Dynamic Checkout

At RelayPM we are big proponents of integrating as many checkout methods as possible as Amazon Pay, Apple Pay, and Paypal.  What I like is that Integrating these simplify checking out on mobile devices and typically result in an increased conversion rate.  Last month Shopify released a product taking this one step further to improve the mobile checkout experience, dynamic checkout buttons.  

Dynamic checkout buttons allow customers to check out faster and easier using accelerated checkout methods Amazon Pay, Apple Pay & Paypal.  There are two types of dynamic checkout buttons that Shopify released.  The first type is a Buy Now button directly on the product page that takes users directly to the checkout process.  The second type, branded dynamic payment buttons.  These will feature logo and colors of each available payment method that your store supports.  

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The buttons appear beside or below the add to cart button.  Which method should you use?  Well, this is why it's called dynamic.  You don't get to choose.  Shopify will use a variety of factors to determine which dynamic checkout button to show.  

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There are a few limitations based on your store setup.  Dynamic checkout is available on all current themes in the Shopify theme store, but if you are using an older version, you may need to upgrade.  There are specific apps that may conflict like currency converters, apps that interact with the cart and apps that take customers to an external checkout.  If you have custom form features like terms and condition checkboxes, gift-wrapping options and delivery date pickers dynamic checkout may not be suitable.  

Assuming you are okay with those limitations here is how you go about setting this up:

  1. In your Shopify admin go to Online Store > Themes
  2. Find the theme you want to edit and click Customize
  3. From the top bar drop-down menu, click Product Pages
  4. Click Sections
  5. Click Product Pages
  6. Check Dynamic Checkout Button
  7. Click Save

This will implement on all products.  If you would like to limit which products you show this on there is more information on Shopify here.

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Share your results with us if you have implemented this (whether good or bad).