Google Shopping Ads Horror - $1.00 CPC, $50 CPA

[brightlife]

I am trying to use Google Shopping Ads to advertise 5 of the higher end items on my Shopify store, all in the bicycle niche. I hoped for a 2% conversion rate and a max CPC of $.35 and a CPA of $17.50. (50 clicks x $.35 = $17.50 CPA.) I priced my items to accommodate a $17.50 CPA. I set up a separate shopping campaign for each item with 4 of the 5 campaigns using the same parameters of: USA only, enhanced CPC off, $.35 max CPC, $5.00 daily budget. With the 5th campaign, arbitrarily selected to use different parameters from the other 4 as an experiment, I varied the MAX CPC, using $1.00 MAX CPC instead of $.35.

The campaigns have been running for 11 days with these results:

1 - 2 impressions, 0 clicks

2 - 0 impressions, 0 clicks

3 - 16 impressions, 0 clicks

4 - 3 impressions, 0 clicks

5 - 1,696 impressions, 16 clicks, $.84 AVG CPC

The 5th campaign is the campaign with the MAX CPC set to $1.00.

These results so far are incredibly disappointing. I am thinking that the 4 campaigns with 0 clicks have 0 clicks because I set the MAX CPC to $.35, and, further, that with the MAX CPC set so low, Google is not even bothering to give me impressions on those campaigns.

I had roughly 100 items I wanted to sell with Google Shopping Ads when I first set out to use them. After doing some calculations, I anticipated a $17.50 CPA, and only 14 of 100 items could realistically accommodate the $17.50 CPA in their sale price. Now, it is looking like the CPA will be closer to $50, wiping out every single item I had planned to sell.

This is confusing me because when I have explored other niches and searched Google Shopping for a wide variety of products, I found that whatever item I search for, if it was sourced from AliExpress, it has at least one person selling it on Google Shopping Ads. If the average Shopify store has a 1.6%-2% conversion rate and if Google Shopping Ads (regardless of the item type) needs at least $.75 MAX CPC, then the CPA will be roughly $50 on any item advertised. Yet, I see countless items (in dozens of niches) obviously sourced from AliExpress selling on Google Shopping Ads for under $35, which means the seller is not accommodating a $50 CPA in the sale price.

How are they doing this? So far, my research is showing that some or even many of these sellers are hoping to:

1. Use upsells to accommodate the CPA. That is scary to me because I am a new seller and can barely get anyone to buy one thing let alone respond to my upsells.

2. Take a loss on the sale, hoping that a sufficient number of customers will later respond to email marketing. This is even more frightening to me because getting the first sale is still a huge challenge for me and being able to bring the customer back to purchase something else feels like it will take months of practice before I can attain such a feat.

Can someone with Google Shopping Ads experience please let me know whether it is realistic to get clicks at $.35 MAX CPC ($17.50 CPA) in 2020 -- on ANY product in any niche? If my CPA is $17.50 or less, am I doomed to failure on Google Shopping Ads? Is relying on cross-sales and lifetime customer value the only way to afford using Google Shopping Ads?

I am very confused and do not know whether my expectation and hope of a $17.50 CPA (for these bicycle products or products in any niche) was wildly unrealistic?

Thank you for reading my lengthy message. I will deeply appreciate any help you can give.

[EmmanuelFlossie]

1) All drop shippers will eventually get suspended, the issue is that everytime Google cut's the grass, new grow. Because it's cheap and easy to setup you always see drop shippers, but never the same. They eventually all get booted from the program as it is not allowed.

You must stock goods in your warehouse, reference: https://support.google.com/merchants/answer/6150127#:~:text=Unavailable%20promotions

2) Your issue is most likely due to being a being new to Google Shopping. It looks to me you have setup a very diluted setup. The more you split, the less data you get. Also switching of enhanced CPC goes against your goals, which is getting sales.

You most likely are bidding the same value for all search terms

Consider setting up multiple campaigns using priorities https://support.google.com/google-ads/answer/6275296?hl=en-GB

I would not focus on CPA, but on ROAS. I hardly use any CPA type bidding, all ROAS based.

Consider doing some research on shopping advertising, I have been a shopping specialist for many years now and still learning new things. It's never ending.

Also note that just shopping is not what you should do, consider also text, display, youtube, etc... But do it one step at a time and fine tune it so you become profitable.

[Josh_Uebergang]

@EmmanuelFlossie I disagree with what you said about drop shippers and stock. If you have another source though, please correct me.

The particular policy you referenced says "Promising products or promotional offers that aren’t available for users. Examples: Promoting products that are not stocked, promoting a deal that is no longer active, call-to-action in promotion that isn't easily achievable from the landing page."

This means the product needs to be in stock, which is different to not being in your warehouse.

[EmmanuelFlossie]

Hello @Josh_Uebergang, that is absolutely fine that you disagree. The issue is that you read it however you like. If your opinion is strong that drop shipping is allowed, you will understand the sentence completely differently from one that has a strong opinion it is not allowed. Regardless of your opinion, it is clear that you can not advertise goods that are not stocked.

If you want to know the policy correctly, I recommend you ask the question on Google's official community here: https://support.google.com/google-ads/community?hl=en

I have actually mentioned this before to you, and I encourage you to ask your questions. This will get you once and for all the correct answer. And I encourage anyone else, if they have questions, just ask on Google's official community.

Product experts are hand picked by Google that show a great amount of knowledge and accuracy in answering questions. You will not see product experts giving you wrong info.

You can however drop ship on Shopping Actions, but you need to have a signed contract with Google. As Actions also show ads on Shopping tab, this may be where most merchants get confused with.

https://support.google.com/merchants/answer/9756900?hl=en

[edit]

So the issue is the understanding of the word stock and why Google says it this way.

If you are drop shipping, how can you confirm it stocked in a warehouse? For example, Ali Express, sure it says it online maybe, but how do you know?

Google only wants to show products they can confirm it can be delivered. They want to keep the quality of Google Shopping high and not be polluted with drop shipping.

This is why dropshipping is generally not allowed because when you can't physically see it, you can't confirm it.

There are also other violations, such as not adding any added value. For example, what is the point of having 1000 merchants selling the same exact product when they are all drop shipping?

There is no benefit to the client.

Another violation is that each merchant has the same image, title, description etc... here too again not adding any added value. Which is a policy violation.

Most drop shippers also don't verify their business address

There are so many violations triggered by drop shipping.

Finally the worse thing by saying it is ok, is that you get a merchant to begin advertising, then get suspended and as it is due to drop shipping, this will be a lifetime ban.

Meaning once they want to become a legit merchant, they can't use Google Shopping.

This is a disservice to the merchant by telling them things that are actually not true. As in this case you sending them in a one way direction to never being able to use shopping once caught.

I recently had a client that did exactly the same, but did not yet set the Merchant Center up, decided to wait and stock their goods. This is the correct way of doing it.

As it stands, Google does not generally allow drop shipping, due to several reasons, but mainly that a merchant can never confirm goods are stocked when they drop ship.

[Josh_Uebergang]

I think you have a narrow vision of a dropshipper that causes you to say it is not allowed. Drawing out the abuse of one policy to all dropshippers is fallacious.

"Another violation is that each merchant has the same image, title, description"

Any decent dropshipper will not use stock-standard product information. If you do, then yes, that is a violation of policy from a "site that offer little unique value to users". Their examples on "Content that is replicated from another source without adding value in the form of original content or additional functionality" indicate web developer tactics rather than dropshippers, but it's reasonable to extrapolate that to your AliExpress dropshipping merchants Shopify attracts.

"Most drop shippers also don't verify their business address."

Yes, that is a violation of Shopping Policy, but that has nothing to do with being a dropshipper. Business address verification is itself a policy requirement and not exclusive of dropshipping. We have several dropshippers who have legitimate business addresses.

The closest point I can agree with you on is the question of value in their Abuse of the ad network. Are you adding value? This can't be thrown around in a blanket-term to dismiss dropshippers. Dropshippers can add as much value to a purchase as any other business who owns their products if they invest. Most AliExpress dropshippers by their very nature of dropshipping are tight ***es. 

[EmmanuelFlossie]

I am drawing out all dropshippers, because all of them fall under the same policy violation ie: not stocking goods. My second post was merely to explain further other reasons.

2 years ago Google expressly prohibited drop shipping in Google Merchant Center policy. It was worded as drop shipping not allowed, period.

This was changed to promoting goods that are not stocked so that Google has a wider net it can have this policy apply to: https://support.google.com/merchants/answer/6150127#:~:text=Unavailable%20promotions

So the only reason I continue to mention drop shipping is not allowed is that all other Google Product Experts have the same answer, and it was (2 years ago) written in the documentation for not being allowed.

If we (Google Product Experts) were wrong, Google's community managers would have mentioned this to us. As they check the quality of our answers for accuracy.

My second post was just to further emphasize why in most cases drop shippers get suspended.

Just have a look at how many are suspended: https://support.google.com/google-ads/search?q=drop+shipping&from_promoted_search=true

Please note, as I'm a Gold Product Expert, I can not say things that are currently not correct. I have gone the extra mile and asked our community leaders (Google Employees) to check with the policy team and provide us with more info.

As the only thing I am not happy about is that the documentation is unclear, especially as it was mentioned 2 years ago, and now provided a more vague reference.

Please note, I am not personally bombarding you 🙂 I know you are very knowledgable and skill in Google Ads, I just want to avoid spreading incorrect info.

Hopefully Google will come back and say it is all good. This can take a month or so to get an answer. Current world health crisis is limiting the response time.

[Josh_Uebergang]

@EmmanuelFlossie All good mate. Happy to be proven wrong if that's the case.

"Promoting goods that are not stocked" still does not capture dropshippers though. It begins to gray hat, but there are plenty of dropshippers who abide by this policy with good communication or tech solutions with their dropshippers.

Google will be severely shooting themselves in the foot if they go out to ban dropshippers for being dropshippers (rather than an standard policy violation). The lack of explicit language about it makes me doubtful that is their intent. It would actually lead to a poorer customer experience. Most of the home market is made of dropshippers. Plenty of other industries as well like high SKU markets, such as car parts like AutoAnything who are a 9-figure dropshipper and depend on Google Ads.