It has become apparent that many PLA merchants and advertisers have been misinformed by agencies and industry professionals about the most cost-effective Product Listing Ad campaign structure.
The structure I refer to is the SKU-level (a.k.a. product-level) ad group strategy, or creating an ad group for each and every SKU in a retailer’s inventory. This strategy has been packaged as "cutting edge" and "innovative," and this selling point naturally makes many PLA campaign managers feel like they're missing out.
Plain and simple, breaking out your entire PLA campaign at the SKU level is by itself a detrimental PLA strategy. This holds true for merchants with sizable inventories and tight time resources. The reality is that, when used alone and as the primary foundation for a PLA campaign, the product-level ad group strategy is insufficient and primitive at best. RELATED CLASS: Google Shopping Overview: Strategies and Tactics for Success
Why the SKU-level Ad Group Strategy Is Primitive
If you currently structure your PLA campaign like this, I highly recommend stopping by our white paper on its downfalls and what to do about it. In theory, product-level ad groups are totally logical. Right off the bat, a PLA manager could imagine that he/she has the utmost control over bids for each of their products. The structure also lends itself to automation pretty seamlessly. However, in practice the SKU-level ad group strategy typically results in:
1. Less bidding optimizations and modifications*
The more ad groups you have, the less likely you are to go in and make bid changes to each. We took over one campaign with 7000 SKU-level ad groups. Who's going to take the time every day (because management is best done daily) to make changes to all 7000 of those ad groups? This directly impacts product rankings and performance.
2. Less control over ad spend*
The more ad groups you have, the less control you have over the campaign's overall ad spend. For example, let's say you have 500 ad groups. That means you have 500 different entities contributing to just one total ad spend so if a manager wants to lower overall ad spend, he/she has to go in and evaluate and make changes to each of those. You can see how handling and maintaining ad spend can be considered cumbersome.
3. An inhibited ability to track and analyze campaign performance
When you have only data for just one product, there's not much to go off of and the data can become cluttered. For example, after 30 days of a PLA campaign with SKU-level break outs, the data (for a retailer with a small inventory) may tell you that you have 20 products with 50+ clicks, 70 products with 25-50 clicks, and 200 products with less than 25+ clicks. Great.
This data doesn't tell you that Nike is doing great for you or that your top-sellers continue to do great or that you're not doing well in the sock department. Well technically it does tell you that, but now you have to go in and manually make those bid changes to each individual Nike product or sock. When you compare this reality to the nicer categorization of product type, brand, and top-sellers ad groups, you can see how a product-level breakout just isn't feasible from a management perspective for a retailer with a decent-sized inventory.
*These general results from merchants with sizable inventories. A small PLA campaign with only 10-100 SKUs is far more manageable at the product-level than a PLA campaign for a medium-sized retailer with a hundreds or thousands of SKUs.
The Right Way to Structure PLA Campaigns
You might be thinking that this isn't a problem for you either because A) you have product-level ad groups and automate your account smoothly or B) you have an agency or tool that automates and runs the account for you (regardless of their strategy).
Here's an analogy: Having an automated PLA campaign is like having an iPhone with no internet access. You're simply not going to get the most value that you can out of the lucrative program (yeah I know, I need to up my analogy game).
As I mentioned earlier, the most effective way to structure your PLA campaigns is by breaking out your products by:
- Top-Sellers: Group your best-performing products in one ad group. This way you can dedicate more attention to the products that need an aggressive strategy most. Bid high on this ad group.
- Some Brands: You should do some research and see if customers are searching for particular brands that you carry. If you find that there are a few brands that convert better than others, give them their own ad group and implement a more aggressive bid strategy for these so they get more exposure.
- Product Types: This is the same deal with the brand-level ad groups. If you find that as an apparel retailer, your shorts are converting much better than any other category, you'll want to segment these and bid higher so the group as a whole gets more exposure.
- Seasonal Products: Halloween is quickly approaching, and so if you carry related items in your inventory, you'll of course want to give all of these relevant, seasonal products more exposure this time of year.
- All - Products: This is the catch-all ad group of all your products where the remainder of your products not categorized in more segmented ad groups will be accounted for. Typically you bid as low as 1 cent for this entire group.
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