Retailers Are Shifting From Google Text Ads to Shopping Ads And Seeing More Mileage From Smartphones

April 28, 2017

For the first time in 2016, retailers spent a greater portion of their Google AdWords budgets on shopping ads (53%) than on text ads (47%), reports Sidecar in a new study [download page]. Google Shopping ads saw a concurrent jump in share of sitewide sales, almost doubling from 9% in 2015 to 16.1% last year among the retailers analyzed, as performance also improved on mobile devices.

Indeed, while return on ad spend (ROAS) for Google Shopping Ads dropped by 6% last year for computers, it increased by 5% for tablets and by a more impressive 9% for smartphones. That brought ROAS for smartphones to 4.58, well ahead of the comparable figure for tablets (4.19).

Along with rising ROAS, conversion rates on smartphones also grew by 9%, to 1.77%, suggesting a greater comfort on the part of shoppers with Google Shopping ads on these devices. In doing so, smartphones narrowed the gap in conversion rates with tablets, which saw a drop from 3.45% in 2015 to 2.89% last year.

Retailers certainly seem to be prioritizing smartphones over tablets: while they allocated a virtually equal share of Google Shopping ad spend to each in 2015, by last year they clearly favored the smaller devices. Some 34% of Google Shopping ad spend was directed to smartphones up from 23% in 2015), more than double the share allocated to tablets (15%, down from 20%).

As a result, smartphones climbed to 29% of Google Shopping revenue last year (from 17%), while tablets, saw a marginal decline of 2% points to 12% share.

Shopping Ad Benchmarks, by Verticals

The Sidecar report also contains some Google Shopping ad performance benchmarks across various large retail verticals. Let’s take a look at some of the results:

  • Average Order Value: Highest for House/Home ($233.16) and Automotive Parts/Accessories ($218.05); Lowest for Apparel/Accessories ($52.65) and Food/Drug ($56.34);
  • Click-Through Rate: Highest for Automotive Parts/Accessories (1.59%) and Computers/Electronics (1.44%); Lowest for Jewelry (0.85%) and Food/Drug (1.03%);
  • Conversion Rate: Highest for Apparel/Accessories (4.97%) and Food/Drug (4.96%); Lowest for Automotive Parts/Accessories (1.42%) and Computers/Electronics (2.09%) and;
  • Return on Ad Spend: Highest for Pet Care (10.3) and Sporting Goods (9.33); Lowest for Jewelry (2.65) and Books/Music/Videos (4.01).

Finally, the study also demonstrates that average cost-per-click declined on a year-over-year basis for 9 of the 11 verticals analyzed, which the analysts suggest is the result of retailers getting more comfortable in pursuing mobile traffic, which typically carries a lower cost-per-click than desktops.

The full report can be downloaded here.

About the Data: The Sidecar report analyzed retailers’ Google AdWords and Google Analytics data from 2016, and compared it to same-store data during 2015 and 2014. Results are drawn from 19.1 billion user sessions on retailers’ e-commerce sites.

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