Retailers devote 53% of AdWords budget to Google Shopping

In total, Google Shopping ads accounted for 16.1% of e-commerce sales in 2016.

Google Shopping ads captured 53% of retail marketers’ AdWords budgets for the first time, according to new research from Sidecar. 

In the 2017 Google Shopping Benchmarks Report, which examines data from more than 19 billion user sessions on e-commerce sites in 2016, found that last year was the tipping point for Shopping ads versus text ads. 

In the past, text ads have been the top priority on Google, but now Shopping ads are retailers’ preference for selling products on the site. In total, Google Shopping ads accounted for 16.1% of e-commerce sales in 2016. The percentage is a big jump from 2015, when Google Shopping drove just 9% of total site sales. In total, that is a 79% year-over-year increase. 

Retailers are also using Google Shopping to convert mobile shoppers. In 2016, mobile devices drove 29% of total Google Shopping revenue, up from 17% in 2015. The other 59% and 12% of revenue came from desktop and tablet, respectively. And retailers are improving ROI from mobile Google Shopping ads—conversion from these ads was up from 1.62% in 2015 to 1.77% in 2016. 

A surprising finding from the study was that cost-per-clicks (CPC) dropped year-over-year for nearly all verticals studied. This result seems counterintuitive at first because Google has rolled out improved Shopping ad formats and competition within the channel has increased, according to Mike Perekupka, senior statistical analyst for Sidecar. 

"However, we believe the result is tied to mobile. It seems retailers became more comfortable pursuing mobile clicks to their Google Shopping ads in 2016, encouraged by rising mobile conversion rates. Since mobile clicks usually cost less than desktop clicks, overall average CPC declined," he told FierceRetail. 

Another surprising finding was that tablet outpaced desktop in terms of year-over-year growth in Google Shopping clicks and ROAS. Perekupka says this is most likely tied to the addition of the AdWords tablet bid adjustment introduced in 2016. 

"Their surprising performance gains suggest that more retailers should take tablet seriously," he said. 

The report also looked at search habits of consumers and found that the more specific the query, the higher the searcher’s intent to purchase a product. And there was a big difference between branded and nonbranded items—clicks from branded searches resulted in ROI that was 16% higher than nonbranded searches.  

Looking to the future, Google will continue to roll out new features to sustain the rapid growth of the Shopping channel. 

"It’s conceivable that Shopping expands to Google’s nascent voice search platform one day soon," Andre Golsorkhi, founder and CEO of Sidecar, told FierceRetail. 

As a result, retail marketers are getting better at refining device-optimized Shopping campaigns for desktop, mobile and tablet. According to Golsorkhi, the next frontier for marketers will be managing audience in Shopping. 

"With the addition of Customer Match and RLSAs for Shopping, Google is driving toward direct competition with Facebook for audience targeting. Retailers will aim to capitalize on the shift by developing a more complete strategy for the customer journey—one that unites consumer behaviors with all the components of Google Shopping ads," he added.