Product Segmentation in Google Shopping: What You Need To Know

By: Jyll Saskin Gales, Google Ads Coach

Feeling overwhelmed by the sheer number of products in your Google Shopping campaigns? It's time to implement a strategic approach to product segmentation. This involves categorizing your products based on their performance and potential, allowing for more effective optimization and budget allocation.

Categorize your products into three tiers

Instead of treating all products equally, consider dividing them into three distinct categories:

• High-Performing Products: These are your star players, generating the most conversions and revenue.
• Mid-Performing Products: Products with the potential to become top performers, showing promising signs but not yet in the top tier.
• Low-Performing Products: Products that haven't demonstrated strong performance and may not warrant significant ad spend.

Strategies for Mid-Performing Products

Once you've categorized your products, the next step is determining the best strategy for each group. For your mid-performing products, there are two potential approaches:

• Profitability Focus: Allocate a smaller budget with a higher ROAS (Return on Ad Spend) target. This strategy aims to extract profitability from these products without a significant investment.

• Growth Focus: Assign a larger budget and a lower ROAS target. This approach provides more room for these products to grow and potentially ascend to the high-performing category.

The optimal choice depends on your overall goals and budget. If your primary focus is maximizing immediate profitability, the first approach might be preferable. However, if you're aiming for long-term growth and market share expansion, investing in your mid-performing products could yield significant returns down the line.

Evaluating Low-Performing Products

While it might be tempting to completely neglect or exclude your low-performing products, it's essential to remember that a product's performance in a Shopping campaign doesn't necessarily reflect its overall value to your business.

For instance, a product might perform poorly in Google Ads due to factors like a high price point that's difficult to justify in a small ad format. However, that same product could be a top performer through other channels like email marketing or organic social media, where you have more space to communicate its value proposition to a warmer audience.

Key Takeaways for Product Segmentation

• Don't judge a product solely on its Google Ads performance. Consider its performance across all channels before making any decisions.
• Context matters. Factors like audience familiarity and platform limitations can significantly influence a product's perceived value and performance.
• Strategic product segmentation can simplify campaign optimization. By categorizing your products, you can tailor your bidding and budget allocation strategies for maximum impact.