Margin is a key metric for any retailer’s products, and a critical performance indicator for business as a whole.
Yet many retail marketers are not thinking of using margin as a central part of their Google Shopping strategy. And those that are considering this approach might be concerned about the seeming complexity of it all. To maximize profitability in Google Shopping, however, bidding by margin is essential—and it can be simplified drastically.
Granular Management Is Required
A great example of margin-based bidding comes from wehkamp. The company is the Netherlands’ largest online retailer, and a Sidecar customer. wehkamp’s assortment of 300,000 products mostly comprises apparel and accessories, in addition to home, beauty, sporting, and electronics items. Like many businesses’ products, wehkamp’s vary widely in margin, making it difficult to maximize profitability for each one.
For catalogs like this, granular management of Google Shopping becomes critical to success in the channel. If you take a broad approach—perhaps create one campaign and set one ROAS (return on ad spend) goal for your entire catalog—you’re essentially treating every product as equally profitable.
This is rarely true in reality. Margins can vary greatly, depending on each product’s price, whether it’s private label or not, what you pay for it, and other factors.
Margin Bidding = Maximizing Profit
The solution that Sidecar developed with wehkamp is a margin-based bidding strategy, which gives the retailer’s marketing team the scale, automation, and optimization it was looking for.
For catalogs with large product assortments and varying profit margins, granular management of Google Shopping becomes critical to success.
We apply our technology to optimize wehkamp’s campaigns for profit at the product level. wehkamp now has 27 ROAS goals and 54 campaigns, and we plan to increase that granularity as it makes sense. Every campaign contains products with similar margins, and has a ROAS target that aligns with the margin and wehkamp’s overall business goals.
wehkamp’s approach to Google Shopping is worth a closer look if you have a similar catalog composition and goals. Head over to wehkamp’s Google Shopping case study for more details.