From our Depsters September 07, 2018
Beyond the Hype of Google's CSS
Google introduced Comparison Shopping Services (CSS) in order to comply with European legislation on market forces. To encourage competition, Google applies serious financial incentives leading to an increase in the number of price comparison service providers in Google Shopping. Thereby making advertisers more than happy to switch. So, the hype around CSS is complete. But don’t allow yourself to be tempted solely by a temporary benefit. Switching now will also help you achieve sales at a good margin in the long term. If you really want to profit you have to continue to bid intelligently.
The EU slapped a huge 2.42 billion euro fine on Google, which apparently prioritized its Google Shopping price comparison service above its competitors in search results. Google’s response was to open up Shopping advertisement positions in Google Search to product advertisements of other price comparison services, or Comparison Shopping Services, or CSS for short.
What are Comparison Shopping Services (CSS) exactly?
Just like before, advertisers can purchase product advertisements in Google SERP. Either on the familiar Google Shopping, or via a different comparison shopping service such as Beslist.nl. These can easily be recognized by the consumer as a link to the CSS partner is displayed below each product. Clicking on the product directs the visitor to the actual advertiser. In practice it looks like this:
As with other Google search advertisements, the advertising spots for products are sold via auction. The bid combined with the quality (read: the expected CTR) determines the position of the advertisements and results in the CPC you pay. For Google Shopping in Europe, this CPC is now spilt into the actual CPC you pay to Google and a margin for Google Shopping (estimated at 20 percent). If you advertise through a CSS partner this 20 percent margin for Google Shopping does not apply. This means that advertisers could see a 20 percent reduction in advertising costs or keep their effective CPCs the same to achieve more visibility and conversions.
How did Google CSS become a hype?
On top of the 20 percent margin advantage, Google also reimburses a percentage of click costs as ad credit under the SpendMatch incentive programme. Currently, this could run to a maximum of 32,000 euro per 30 days. The end date is not yet known, but the quicker you switch the more you benefit. The number of certified CSS partners is booming, partly thanks to this incentive. Dept also became a CSS partner in order to be able to pass on these advantages to customers. The EU appears satisfied with the developments. In her initial reaction EU Commissioner Margrethe Vestager stated a clear increase had been observed in the number of competitors displayed and clicks. Therefore, CSS sounds like a success, but this is just at first glance.
From temporary advantage to a new standard set-up
Google has been honest about it from the beginning: SpendMatch may be terminated at any time. It is a temporary special offer, aimed at attracting more price comparison services to Google Shopping. Considering its huge success, SpendMatch is not expected to be around next year.
And beware: if everyone switches to a CSS without the 20 percent CPC margin, the auction will automatically correct itself. This is something we will first witness in competitive markets. These early adopters, for which Google Shopping is crucial for targets, will be more inclined to opt for allowing the higher CPC to remain in order to obtain a better position in the auction. In calmer markets lowering your bids to get more clicks with the same budget will pay off longer. But even there, the growth in advertising via CPC partners will ultimately ensure standardization of the CPC around the current values. Due to the auction principle, all advertisers will be encouraged to pay what the visitor is worth to them.
So, is the hype only interesting for those advertisers that jump on board first? No. Although: the sooner you get on board the more you benefit. The only advertisers that really lose out are those that continue to advertise exclusively via Google Shopping. They will continue to pay 20 percent more for their product displays in Google Shopping than their competitors.
Do you need to switch completely to a CSS? No. It’s good to bear in mind that you don’t (yet) have to leave Google Shopping entirely. Some consumers use shopping.google.com. In contrast to the search results page, CSS partners are not displayed here. Therefore, it’s a question of waiting for the option to configure your shopping campaigns via Google Shopping as CSS, so that they only bid for displays on shopping.google.com. Until then, the best solution is to duplicate your shopping campaigns and allow them to run side by side with your own bidding strategies. Google automatically ensures the same product is not shown twice.
Long-term competitive advantage on shopping
Unfortunately, advertisers can easily lose sight of the bigger picture with these types of hypes. The real benefit is in bidding intelligently, and so: management and data. It is precisely these two factors that are important because what everyone is looking for is a healthy Return On Advertising Spend (ROAS). However, advertising space on Google is becoming increasingly expensive year-on-year. This is why it is about bidding more intelligently than your competitors on the Google Ads auction (previously AdWords). Optimally recognizing the value of a potential customer is therefore crucial. We see opportunities for many advertisers in using their own data, such as margin and return. By making this data available in Google Ads, you can effectively focus on actual profit.
It is also useful to briefly reflect on a policy, for conversion data within Google Ads. If you spread your advertising budget across multiple Ads accounts and partners, you get less volume per account as well as reduced insight in order to optimize your ads. Matters such as negative keywords and conversions are shared between your CSS partners. What’s more, the question concerns which insights you unwillingly give away to the CSS partner. This is why Google differentiates between CSS partners: comparison shopping partners and comparison shopping premium partners. While it is relatively easy to become a comparison shopping partner, the conditions for becoming a premium partner are considerably higher. You need a minimum of 100 advertisers, additional technical certification and you must support conversion tracking. This will certainly result in a difference in quality. When switching to a different CSS partner, also make sure the costs are fully transparent, and whether your data is protected properly.
Focus on your goal
It is doubtful we’ve heard the last of CSS. While EU Commissioner Vestager observes the desired progress, she also said: “We have taken no decision, neither on one side to say that this is fine, nor on the other to say, ‘no, it’s not’.” So, it remains to be seen whether CSS satisfies the EU in its current form.
Advertisers that react smartly to the CSS hype can certainly benefit financially in the short term. However, a short-term lower CPC or increased traffic with the same budget should not be the only focus. Below the line, it concerns the margin you earn per sale. By, for example, effectively incorporating your margin and return opportunity in your bidding strategy you can make a greater difference with your own data, which also continues to be sustainable in the long term. In short, develop a shopping strategy based on your long-term goal. Don’t just blindly follow the hype.
Curious how CSS can benefit your brand?
Interested in how you can get the most out of CSS for your brand? As an official Google CSS partner, Dept can help you achieve better shopping results, carefree testing, and much more. We listed all the benefits for you in the flyer.