RESEARCH
How price sensitive are Google shoppers?
Study finds 30 percent cheaper price drives a 32 percent better conversion rate. Here's how to take advantage.
 Ty Martin  October, 2016
I’m going to reveal some data that might be unsettling to most advertisers. But keep reading, because I’m also happy to share the cure.

If you’re selling products on Google Shopping, you probably sense the growing competition. Retailers are aggressively increasing spend on Product Listing Ads, creating intense pressure to have the most compelling product listing. And that largely comes down to one thing: price.

Our latest study confirms that shoppers are indeed price sensitive when it comes to Google Shopping. But just how price sensitive? And how can you win customers when you’re a retailer who is typically more expensive? Read on.
30% lower price drives 32% better conversion rate
Because our Bid Skillet technology optimizes ads using predictive data, we were able to analyze prices across multiple brands running PLAs on Google Shopping. The chart below illustrates the relationship between conversion rate and price competitiveness.

How to read this chart:  “Products with a 30% cheaper price drove a 32% stronger conversion rate when compared with products with an average price"

Overall, products that were cheaper than the competition saw a stellar conversion rate, while products that were more expensive saw the opposite effect.

In other words, price competitiveness is a strong proxy for conversion rate. That may seem like bad news (unless you work at Walmart). But we’ve found it’s actually an awesome opportunity, even if you’re typically more expensive.
How to drive 60%+ revenue growth
Almost any retailer can benefit from choosing to optimize their Google Shopping campaigns based on price competitiveness. Even if 90% of your product prices are not competitive, that still leaves 10% of products that have an opportunity to drive revenue.

The key is to identify those products and turn them into your primary revenue generators.

But while the theory is straightforward, the execution can be daunting. Check out the laborious steps here, or skip ahead to the easier solution below.
  1. Compile every price, shipping cost, special offer, and tax for all products and competing sellers, on an ongoing basis
  2. Identify and correct for anomalies that skew the data
  3. Process, compare and recalculate the data on multiple dimensions
  4. Write an algorithm to streamline the data into a feasible optimization strategy
  5. Manually apply optimizations on an ongoing basis (or create software to do it automatically)
That complexity is the reason we created Bid Skillet. Our technology makes it easy for retailers & digital agencies to leverage predictive signals like price sensitivity to optimize Google Shopping Ads. We also integrate seamlessly with popular bidding tools including AdWords, Kenshoo, DoubleClick, and more.

To learn more, schedule a free evaluation today!
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