How Much Of Your PPC Budget Should Go to Google Shopping Ads?

My assumption is you play some strategic role in your company when it comes to setting marketing budgets. You may be a CMO, CEO, VP, Marketing Director, or Paid Search strategist and you are likely curious to know how much money you should invest in Shopping Ads.

This is a fairly common question we get at ZATO when talking to prospective clients or onboarding new partnerships. For many, Google (or Bing!) Shopping can be a bit of a black box, which makes budgeting difficult. There is only so far that the "we'll spend as much money as the profit we make" sort of response can go since, at some point, any new marketing venture needs to have initial experimentation dollars invested to identify success... and someone on the board will eventually (rightfully) ask questions as to how wise of an investment that spend is.

To further complicate matters, there is no accurate way of identifying what competitors are spending in Shopping Ads, and Google does not even have an estimate tool for Shopping like it has for the Display and Search networks.All of that being said, we think it's not too difficult to get some sort of idea of a target budget for Shopping Ads based on your total Paid Search marketing budget (or at least where you want to end up in the near future, if not tomorrow), and wanted to offer a few thoughts to get you aimed in the generally correct direction.

The big idea: >> An average Ecommerce PPC account will spend around 40-60% of its Paid Search budget on Shopping Ads.

The General Market

In order to maintain parity with the general market, we see that Shopping Ads are currently 60% of clicks of Google Search Ads clicks (according to Merkle who compiled the report). Based upon a typically lower CPC rate in clients for Shopping as opposed to Search, this puts your ideal Shopping Budget in the 40-60% of your total Paid Search budget... if you want to hit parity with the overall market of course.Keep in mind that averages can be helpful... and sometimes they're just stupid. Averages are made up of lots of variations lower and higher and you should make sure you are aiming for what is reasonable both in your budget, industry, and competitive market.

The ZATO Market

That being said, I did some digging into our clients and pulled some numbers. These are general but still give us a good idea of what to expect. We certainly have a wide range of clients spending in Shopping... actually our two widest variances are 7% and 99% of Paid Search spend devoted to Shopping Ads!!  Of course, the 7% is a client we are actively moving forward with in investing more in Shopping spend, so it's not quite accurate in that regard.Overall, we certainly see the same thing in our clients as the notes Merkle has pulled. I would say on average we see around 50% spend devoted to Paid Search and Shopping each.

Why Is Shopping So Hot?

Why the variance?  Why is Paid Search getting less attractive to the market at large and why is Shopping growing?I think it's for a few reasons.(1) Google and Bing are invested in showing more Product Listing Ads in more predominant SERP real-estate slots than they used to. Do an ecommerce search and notice how often the Top Center ads are Google Shopping.

(2) Shopping Ads give the consumer what they want. Customers in the research & decision stage are interested in things like reviews/ratings, price, and seeing what the product looks like. In this way, Shopping provides for all of these things and will beat Text Ads every time.

(3) Shopping Ads still tend to be lower in CPC in our clients than Search Ads. This means you can get higher ranking, for lower cost which means better margins. The difference in CPC depends a bit. It could only be 10% lower, or it could be 70% lower (both actual numbers pulled from our clients). We have seen Shopping be *higher* in CPC on rare occasions in an account, though it's almost always lower.Regardless, I hope I've at least convinced you that if you are investing very little in Shopping Ads in your paid search strategy, you are definitely in the minority and should reconsider!ZATO is a Paid Search Agency focused on Ecommerce and Shopping Ads. For more information about our services, contact us here: https://zatomarketing.com/

Did you know: ZATO can manage just Shopping Ads for your Brand or company alongside your in-house/agency Paid Search team?  Learn more about this offering here: Google Shopping Agency.