Episode 17

The Halo Effect of Google Shopping

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00:23:42

October 13th, 2020

23 mins 42 secs

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About this Episode

We know that internet traffic doesn't operate in silos. No matter what method you are using to drive traffic and sales, there's always going to be a halo effect. Today Jon and Ryan chat about Google Shopping, but more specifically the effect it has on other channels.

TRANSCRIPT:
Jon:
Hey, thanks for listening to Drive and Convert. Before we jump into this episode, just wanted to take a quick second and let you know that during this episode we had some recording issues and the audio quality is nowhere near where we would normally like to see it. But because the content was solid, we decided to keep it as is and get it out to you. Hopefully you can see through this less than perfect audio, but a big shout out to our editor, Josh, for helping make us sound pretty solid, despite all of the technical shortcomings. We do have some improvements in audio quality on the way, so thank you for listening and on to the show.

Jon:
Ryan, we know that internet traffic doesn't operate in silos. No matter what method you are using to drive traffic and sales, there's always going to be a halo effect. We've all heard this famous quote from 120 years ago, "Half the money I spend on advertising is wasted. The trouble is, I don't know which half." That is still true today, even with all of the attribution and digital advertising tracking we're able to do. But the good news is that with all of the data we have these days, it allows us to know that there is a halo effect and to know how much that halo effect is worth to each brand.
I was recently checking out a presentation you gave [Aclavio 00:01:44] and you showed data for some real clients that blew my mind and I actually just found out one of them is a shared client of ours, which made me even more excited.

Ryan:
Yeah, maybe some of that's due to you.

Jon:
Hey, I'm not going to take credit for this, but the data was a comparison of revenue and performance before and after implementing Google Shopping. I'm talking 1800% increases in revenue in both of these cases. Tens of hundreds of thousands of dollars in newly found revenue.
Now, it seems to me that Google Shopping itself didn't account for most of this revenue gain, but rather that it could be attributed to the halo effect of implementing Google Shopping correctly. Today I wanted to chat about Google Shopping, but more specifically the effect it has on other channels.

Ryan:
Oh, man. It is such a unique topic that doesn't get brought up enough. I'm exciting to really dive into this. I don't even necessarily know if halo effect is a technical term that anybody really uses. It's just kind of how we refer to it internally at Logical Position and what we're seeing.

Jon:
But I do think it makes sense though. You said halo effect originally when we started talking about the topic for today and I immediately got it. Here you are inventing another term, perhaps, that makes a lot of sense. Ryan, tell me. What is the benefit of understanding the halo effect of Google Shopping? Maybe we just start there.

Ryan:
As you're understanding conceptually, and most I think business owners, marketing teams understand that attribution paths generally look like bowls of spaghetti at this point in time, as people can really easily do research and understand what they want from a product as they're finding it and then coming back to business that they had maybe found it somewhere on. What I've learned, through the last decade plus in digital marketing and a lot of that in eCommerce, is that I'm weird in the eCommerce transaction space. I have a very linear conversion path. I see it. I click it. I buy it. Every company on the planet can track my conversion. It's just very simple. If I've bought from you, you know exactly how I found you. Maybe I don't do enough research or I do enough research before I actually go search for the product. I haven't done a lot of analysis on myself, but that's not normal.
What's more normal is my wife buying something, where she'll do research over probably a week and a half and she's got a pretty low threshold for extensive research. If she's going to buy something for $25, she does a decent amount of research to make sure that that's the best deal. But she'll click on multiple shopping ads, multiple social ads, multiple things throughout the process as she goes back and forth between different sites to figure out where she should buy something.
Through that process, what we've seen is that the Google Shopping click, for somebody that is more normal like my wife, is how people are originally going to find you, but it's not how they're, at the end of the day, going to buy from you. It's more of a discovery tool for a lot of people because Google is a research entity for most people in finding the product on eComm. They're very good at it. Google is just phenomenal at product discovery and helping people figure out what they need or want.
Knowing that, most business owners still look at Google Shopping based on last click, because that's what Google Ads has set them up for. Google Ads tracking by default is last click. You can change it to be linear. You can change it to all these other things, which can make sense, but I don't necessarily think it's bad to be looking at that way, but I think you have to understand as a business owner or marketing team that it's doing other things and that attribution conversation... I've been in digital marketing for over a decade, just like you, and attribution just makes my brain hurt.

Jon:
Yeah, there's too many models. None of them are ever accurate.

Ryan:
Yeah. You conceptually know it's there, but you never really want to be like, "Let's really dive into attribution today." That has never come out of my mouth and probably never will.

Jon:
I'm pretty nerdy, but it's never come out of my mouth either.

Ryan:
Yeah. That just doesn't sound fun. No. No, not going to do it. The halo effect is something we've seen and it's an easy way to explain the fact that attribution is happening and we want to be aware of it and know it's there and that helps direct a lot of our goal setting, I think. Knowing that, from a very simple perspective, the more you spend in Google Shopping, the more the other channels on your site are going to increase even if you're not doing anything else to increase them.
The easiest example, I think it happened in May of this year. We were in the middle of COVID and pretty strict lockdown at that time. This company is a B2B company and they came to me I think through a partner of ours and we were talking just general strategy and marketing, what were they trying to accomplish as a business. They sold on Amazon. They sold on Walmart. They sold on Ebay. They sold on their website, but it was very small. They didn't really care about the website much at all and they had an agency that had told them that buying on Google was the best place for them to be, which the Google Shopping actions. At that time it was I think they were the 12% mark, based on their product mix. Then, they had another agency tell them that, "Hey, your product makes us too big. You need to shrink it down because it'll never work with that many SKUs." So, they shrunk down their product mix on their website. All these things are coming together.
Before they kind of have to look at their company now like a before LP and after LP because it was so dramatic, the change. Their website, in the month of April, did $16,000 in revenue and their buy on Google entity did $34,000. They combined did $50,000 in total revenue from Google and their website and they paid $4,000 for that buy on Google, $34,000. That was their total cost of doing that. By no means bad. There's not many business owners that would be like, "Ah, that's a bad idea. Don't take it."
When I told them, I was like, "I think you're leaving a lot of money on the table," because we as an agency have done a lot of pretty advanced analysis on the buy on Google entity. When you run that, generally you're losing about 40% of the volume that you could be getting if you didn't use buy on Google. So, I just said, "It's probably worth a test. It's a very small piece of your business at this point. Let's just go. Give us three months. We'll go with Google Shopping instead of buy on Google and we'll see what happens. If I'm crazy and it's not more volume for you, you can very easily just flip the switch and go back to buy on Google."
They thought, "Okay. That's a reasonable test for us. If the website evaporated tomorrow, our business doesn't materially change. So, let's try that." We decided to start May 1. Takes us a week or so to get campaigns up and running, but what happened in the month of May surprised even me, and I've seen lots of things in the digital marketing space. The first month, getting out of the gate, we weren't hyper aggressive. We were getting things in position. We spent a total of $2500 in Google Shopping for this business. They're a multi-million dollar business, so $2500 still wasn't a big number. The data in May, the site did $192,000 in revenue as a whole. That $2500 of spend was given attribution credit in Google Analytics of $115,000. So, they spent less, $1500 less, and they gained a 3X increase in revenue on their Google Shopping by moving from shopping actions to shopping on Google. Which is good and that return is not normal. Nobody should ever reach out to me and say, "I expect you to get that type of return." It would just be-

Jon:
Well, now that you say it, Ryan.

Ryan:
... Yeah, it's out there in the public. Don't say that that's going to happen. It can happen, lightning can strike, but what was really surprising to them is they, on their organize traffic and analytics, they weren't doing any SEO by the way. Their organic traffic, their channel and analytics in the month of April did $10,000 of their $16,000 in revenue. In the month of May, again no SEO, that organize channel and analytics did $45,000. It was up 350%, from $10,000 to $45,000 with no SEO. That's an extreme example of that halo effect, where you spend more in Google Shopping. They find you. They didn't convert through that Google Shopping click, otherwise it would've gotten the attributed revenue and analytics. They came back and bought later, after doing research through your organic links and your organic rankings within Google.
Same thing happened on direct traffic. They didn't do any other external marketing and their direct traffic went up 250%. Their email went from, I think, two or three clicks to having $4500 in revenue. Again, no changes in those things to justify that type of increase, but just starting to spend on Google Shopping. The numbers are cool. It's an extreme example that shows the value beyond just looking at the results in Google Analytics or even Google Ads, but just having that understanding that there is more going on.
When I'm looking at my businesses... and I talk to business owners regularly and tell them that I am a fairly aggressive marketer, a fairly aggressive business owner, I want to win... I will spend to break even on Google Shopping all day long. It's not exciting for business owners to hear this from me because every business owner usually goes into business to make money and to have profit, but when somebody's looking for your product on Google Shopping and they haven't put another brand or competitor along with that product search, they're a free agent. That's going to go generally to the more aggressive marketer.
If I have a competitor that is shooting for profit on Google Shopping and I can break even, I can be more aggressive on there. I can pay more per click than a competitor, so I can get that traffic. I can get that buyer to my site and I'm going to have a good product. Part of my model is I have to have repeat business and lifetime value, but even if I didn't, by spending more on Google Shopping and breaking even, I know about this halo effect and I know that I'm going to get profit from my organic rankings and my direct traffic will increase.
So yeah, I may not see the profit from my spending $1,000 to get $2,000. That may not be profitable for many businesses, but understanding that there is profit coming is a pretty big light bulb for a lot of business owners. And a lot of agencies don't talk about this because it is a little more advanced and somebody that's only been in the space for six months to a year may not have understood that this is there.

Jon:
Well, and it's harder to track, right? Because you can't give a straight answer and just say you tell a client halo effect and they're like, "Well, I'm doing a lot of marketing things." So, any of those could've been the halo effect.

Jon:
Let me ask you this, what are some of the common challenges to understanding these halo effects? Obviously, you have to have the right data, right? And some attribution. But where do we go from there?

Ryan:
Step one is just knowing it's there. Okay. If we know it's happening, then I can go look for the data to help explain what the magnitude of it is. I kind of go back to GI Joe growing up, knowing is half the battle. Once you at least conceptually understand that it's going to be there, then we can start looking for examples of it. I keep my analytics investigations pretty simple. I'm by no means one of the experts at Logical Position. There are people that can make my brain hurt in attribution and analytics, so I like looking at the attribution tabs within analytics and seeing, okay, I want to know what is it looking like as far as last click and assisted conversions?
I'll click into the attribution and assisted path portion of the conversions tab and I'll click on the top for Google Ads. Then, I want to see the campaign names and I want to filter for campaigns that are shopping. In Logical Position's structure, it's pretty easy. I can just put in the keyword shop and it'll find all the shopping campaigns. Then, I can easily sort for assisted conversions. I can sort for last click. So, people just have to basically understand analytics, by default... and probably 99% plus analytics accounts are going to be setup by the default stuff... it's last non-direct.
If somebody clicks on a shopping ad and then comes back later that day, tomorrow, whenever, directly by typing the URL into the browser, that attribution or that credit for the sale is going to go to the channel that was right before that direct. You look in there and you can see, okay, if my shopping campaign did $10,000 in revenue that analytics is telling us it got credit for, it did this work to do this, as far as a last click attribution, you'll see right next to that what did that shopping campaign do for assisted conversions.
It's basically telling me, as a business owner, if that shopping campaign wasn't there, if I didn't spend that money, I would for sure lose the $10,000 that it drove in analytics. That would just not be there probably. I can't say for sure, but the majority of that would just evaporate. But what you'll see in assisted is often in shopping, that assisted conversion number is much bigger. It assists on a lot more sales than it closes. That's just the patterns of people shopping and doing more research and making it so easy to click into a site, see what it is, go back to Google, search for another site, see what they're doing. It's very easy. People are using tabs a lot, especially me. I'm a tab-a-holic. I have multiple tabs open as I'm researching. But that assisted conversion, that's where it's just pushing the process forward and something else in analytics is getting credit.
So, if you take away that shopping campaign, there's a lot of other revenue that's going to be impacted. Will 100% of that assisted conversion revenue go away? Probably not. But there's no reason you'd want to take that away and you want to keep emphasizing it. By spending more in shopping, there's a lot more of this assisted conversion revenue coming, which is where you're seeing the evidence of this halo effect in the process.
Then, you can also do... I like looking at the conversion paths. There is a conversion path report in Analytics and I like going by source medium so I can see if it's Google Ads. You can even get into some of the campaigns and finding out where the campaigns are in the process. This is more advanced, so a lot of people probably aren't ever doing this, but you can download it into Excel and pivot against it and you can actually see which channels is it helping the most, what's getting the credit often, is it coming back through organic from the shopping campaign, is it coming back from an email. Maybe abandoned cart emails are a big deal for your brand. You can see a lot of that and who's getting credit in Analytics.

Jon:
This is my favorite view in Analytics, by the way, because it really tells you were people are dropping off in the funnel, how they came in. It really shows you a great view of what are the different challenge points along the way, based on where people came from.

Ryan:
Oh, yeah. When you're looking at it, where are you seeing for most businesses? What channel's often falling off that you're able to help with or that you're able to direct them to and like, "Hey, they seem to be breaking right here."

Jon:
Usually what we see is when an ad campaign is setting some type of expectations that aren't being met on the site, people then start clicking around a little bit. Maybe they end up on a product detail page eventually that doesn't align with that expectation the ad set. So, the messaging there is usually the case, where the alignment is off between the two. But also, it's just really helpful to understand, from a purely conversion standpoint, where people are leaving the funnel who maybe in come in via organic or non-attributable methods. The whole point there is just what's causing people to bounce at that particular page or point in the process?

Ryan:
Yeah, and if you can minimize that friction, then conversions go up.

Jon:
Exactly.

Ryan:
And Jon looks even smarter. Dang it.

Jon:
Well, it's easy when you drive good traffic and you have all these halo effects for me to solve the problems and move forward from there. This has been great, Ryan. Anything else that you wanted to touch on on this that we haven't yet today?

Ryan:
I just think it's important, if you're going to get more aggressive in shopping, and you also are doing SEO, you have to understand that, okay, the SEO work is probably doing good, but if there's a huge jump it's probably not necessarily 100% attributable to the SEO work being done. That's where this does get really messy. You don't want to stop doing SEO because you're doing shopping stuff, but understand that there's going to be a bump and you're going to enjoy that, but there's a lot of things probably contributing to that. Just be aware that there may be some more analysis needed, but also don't get analysis paralysis. Just understand there's a lot of good things happening.
You'll find getting aggressive in Google Shopping, knowing that there are some side benefits that you're getting, that even if you can't put a number on it you know it's going up. So, breaking even on Google Shopping on non-brand searches is never a bad thing if you have some lifetime value and you just want to get market share and be more aggressive than your competitors. Because there's very few companies out there that are willing to consistently break even on some of that traffic. And a lot of companies aren't breaking out brand and non-brand shopping, which still surprises me that companies aren't wanting to do that.
If you've got a campaign that is just general shopping and if you can see search queries so that you're not using a smart shopping campaign, you should go in there and see how much of your shopping revenue is actually people looking for your brand. I think too few business owners look at that. If you're getting more of your shopping revenue from brand and that's what's causing the results that you're seeing that are exciting you, you've already done the work for those companies and for those searches. You've got the brand you've built up.
You need to separate that goal off on its own and you're not going to be able to set a goal specifically around what do you want to get for your brand search, as far as a return. It's going to fluctuate with things that you can't control from a Google Ads perspective. Google search results pages being tested and changed, competitors coming in and out of the market place. The brand is just going to fluctuate. It's going to be profitable, unless you have an odd brand name that is more like a Kleenex, when people just search for the product you come up because of the way your brand is named. You can be assured that your brand search is going to be profitable. Put them in their own shopping bucket and in the non-brand is really where you set your goal. That's where you decide, hey these people don't know me yet. They're going to find me.
If I'm breaking even, if you're in certain competitive industries on Google, baskets, there's a lot of money to be lost on that first order because lifetime value is so high. So, sometimes you may lose money on that first order on non-brand searches, but unless you're tracking that data you won't necessarily know what you could or should be losing to get that customer, what you could be shooting for to get market share. That segmenting is important when you are pushing in shopping and you're doing that because of some of the halo effect.

Jon:
Yeah. If there's one big lesson I've learned from you recently, and you keep hammering this point home so hopefully everyone else is learning this as well, but it's your goal on spending with ads, it's okay to just break even because of the customer lifetime value you're unlocking there. There's other things besides just return on ad spend or just revenue that comes from that initial order from those ads. There's value in emails. There's value in all these other things that somebody knowing about your brand now and having actually validated your brand by giving you revenue. There's a lot of value here outside of just getting a high return on that ad spend. As much as that should be your goal, it's also okay to buy that first customer by breaking even there.

Ryan:
Well, yeah. The thing you've talked to me about, enlightened me on, about the post-conversion CROs, things I never thought about. If you're breaking even right before but you've got a great process after the fact to just increase sales immediately after a sale, wow. You've got the halo effect on the front end as well and then you've got additional revenue coming back through a better conversion process to keep that a happy customer. There's just so many wonderful things that happen when you are pushing more traffic as well. Most business owners, I need to tell you and preach to you, don't be timid.

Jon:
Yeah. Well, Ryan, I definitely feel more comfortable today about knowing half of the money I'm spending on advertising is wasted, but also understanding that I now know that halo effect is helping to ease some of that spend and pretty excited about that. Thanks for walking us through some examples and showing us the value here in doing some of these digital marketing things like Google Shopping, that you might not see a huge return on ad spend immediately, but are increasing your revenue overall. Thanks for your time today, Ryan.

Ryan:
Oh, yeah. Thanks for the questions.