I’ll use an example of a merchant with 5,000 products in their catalog. Each of these has different selling prices ($10 – $2,500) and a range of margins (3% – 70%). Would you pay the same for a click to a product that sells for $10 with a 3% margin as you would for a product you sell for $2,500 that has a 70% margin? Of course not. It’s an extreme example but it makes the point clearly.
Calibrating how much you pay for each click should match the price of the product, the margin of the product, the total amount the specific PLA brings to the shopping cart checkout, etc. That Max CPC then needs to be adjusted with bid modifiers: mobile, repeat visitor vs. remarketing, and so on.
The example I used above with a merchant having 5,000 products in their catalog wants two things from their campaign: (1) grow revenues as much and fast as possible, and (2) ensure that the cost is controlled very tightly for the growth. The amount of products and the number of variables that needs to be kept under control makes it impossible to do this manually.
The options the merchant has is to use an agency to manage this for them or use an internal team that has access to automation tools. These approaches require either immense coordination or managing this wide range of tasks: campaign structure, bid adjustments, product group exclusions, setting Max CPC for new products, updating Max CPC to reflect changes in performance and competitive metrics, updating to adjust for mobile performance, updating to adjust for visitor history (i.e. repeat visitor with abandoned cart history) conversion rate impact, and the list goes on.
A programmatic approach to the above keeps adjusting all these variables automatically and keeps track of how each of these changes impacts the other components. Programmatic Advertising is a way to drive quality, accuracy and predictability for your account. Think of the power you’d have if you knew the profit of the next click before you bought it. It gives you the ability to maximize growth while keeping costs controlled. So, it’s not a matter of if – but when – you will utilize Programmatic Advertising for your business.
In our upcoming webinar about Google Shopping next week we will cover in great detail how this approach can help your business and how it has helped others. We will offer case studies and show why Programmatic Advertising is such a big deal for advertisers.