Shoppers can be very fickle when it comes to the price of a product, and slight increases or decreases will impact a shopper’s purchasing decision. More often than not, shoppers want to find the cheapest price possible, and thanks to online marketplaces like Google and Amazon, finding it is just a few clicks away.
However, the ability to comparison shop so easily has made it increasingly difficult for retailers to stay competitive. As one of the main Four P’s of Marketing (along with product, place, and promotion), price matters. And, retailers have to spend a lot of time making sure their price matches the market’s expected value.
Why Price Matters In Google Shopping & Amazon’s Marketplace
It has been known for a few years now that product price also plays an important role in finding success with Google Shopping and Amazon’s Marketplace. However, its role is much more significant than one may think.
Studies have shown that changes in price can have a significant impact on how often a product ad is displayed to a shopper. That’s right — Google and Amazon will literally give preference to a product if it’s cheaper than the competition!
We’re not talking small fluctuations, either. These differences can sometimes be significant with increases or decreases in impression volume reaching 40%, even without any bid changes.
This puts retailers in a tight spot. How do they find the right balance of price and profitability and, more importantly, how do they even keep track of their competitor’s prices?
Google Ads’ Price Benchmarks
In an effort to provide retailers with better tools and insight to reach their goals, Google announced at June’s SMX conference the rollout of a new Google Ad’s feature called Price Benchmarks.
This report will show advertisers how their prices compare to other retailers selling the same products. Google is encouraging advertisers to use this information not only to develop their bidding strategies but also determine if a drop off in performance for a product is due to being out-priced by a competitor.
Staying Competitive And Profitable
With more pricing insight available, we’ll likely see more Shopping campaign strategies focused around price, especially for retailers who regularly mark down prices for a wide variety and percentage of their product catalog.
However, considering that Google gives preference to products with a lower price, it could be expensive and inefficient to put a focus on products that aren’t competitively priced compared to the rest of the market. This is where segmenting product groups by price to easily control spend on products with the most competitive price will be crucial to campaign success.
As online marketplaces increase in quantity and popularity, retailers will need to be diligent in tracking competitor prices to win over consumers and algorithms alike. And, if retailers ever doubted price’s importance before, the release of Google Ad’s Price Benchmarks should be a sign that it matters more than ever.
Segmenting your products efficiently can have a huge impact on the success of your Adwords shopping campaigns. Learn how we helped a client segment their products and restructure their account to increase revenue by 400% year-over-year and ROAS 132% in this case study: Optimized Shopping Feed Steps Up Equine Supplier’s Sales.