The effect of the 20% CSS partner discount on your shopping campaigns
When you switch your Merchant Center from Google CSS to a CSS partner, you will receive 20% discount on your CPC. What is the exact effect of this discount on your campaign and what can you use this discount for improving your results?
How does the discount work?
A CSS partner receives a 20% discount on the CPC (cost-per-click) charge to be able to “compete” against Google Shopping CSS. Shopping campaigns work just like Google AdWords through an auction in which the advertiser can bid on the cost-per-click that he wishes to pay.
In practice, this means the following: a bid of €0.80 via a CSS partner has the same value as a bid of €1.00 via Google Shopping CSS. This means that an advertiser has to bid 25% more via Google Shopping to match a bid via a CSS partner.
How you notice the discount
The most frequently asked question is how you see the discount in your account. The 20% discount on the CPC is not an amount that is refunded or displayed in your Google Ads account. It is a bidding advantage compared to Google CSS. The effect is the same as if you were to stay with Google CSS and increase your bids by 25%. You realise better positions of your product displays and you will be included in more auctions because your bid is higher. The number of your campaign(s) displays will therefore increase.
You will note that the total number of clicks increases considerably after the switch to a CSS partner:
The increase in clicks was achieved while the CPC of the campaigns decreased:
How to use the 20% discount
There are actually two strategies you could pursue with the CSS discount. You could increase the turnover of your shopping campaigns or improve the profitability of the campaigns.
1.Increase your turnover
If you have a perfect ROI (return on investment) / ROAS (return on ad spend) profitability on your shopping campaigns and you are looking for more volume, it is best to leave the bids of your campaigns unchanged. You will note (and I have clearly experienced this in many accounts we monitored after switching) that your displays and clicks are sharply increasing. The same thing actually happens if you were to increase your campaign bids: your display increase. That extra volume in shopping campaigns is found in displays on less specific search terms (higher up in the funnel). Also note: that extra volume has a lower click-through ratio (CTR) and conversion ratio. The overall performance of your campaign thus does not stay the same. Choose this strategy if you have some room in your ROI and if you are looking for growth.
2. Improve your profitability
If you do not have too much room in the ROI of your campaigns and you wish to save costs to improve profitability, then you will have to, for now, lower the bids of your campaigns somewhat (10% -20%). I have, in multiple accounts, noted that when applying this strategy, the volume is maintained at lower costs.
We recommend that most advertisers start off with strategy 2: from an improved profitability and volume retention perspective, the turnover of the campaigns are subsequently monitored in a controlled manner.
Automated bidding (target ROAS / target CPA / Smart Shopping)
Campaigns that are not managed with manual CPC, but via automatic bidding by Google Ads (target ROAS / target CPA/ Smart Shopping), also receive the bidding advantage after the account has been converted to the CSS partner. You have a lot less control over the campaigns with these automatic optimisations. The CPC and the number of impressions are naturally more difficult to control compared to manual bidding. If you leave the CPA or ROAS target unchanged, you will (after the bidding algorithm is accustomed to the new situation) realise more conversions and turnovers against the same CPA or ROAS.
If you set the CPA target lower or the ROAS higher, you can ultimately achieve the same conversion or turnover results at a lower investment by connecting to Producthero CSS.
My experience with campaigns using automatic bidding that switch to a CSS partner, is that in the first period the algorithm needs to get used to the new situation. Be prepared that in the first period after switching the results can be a bit disappointing. The algorithm simply does not know this sudden change in bidding power has happened. You might see a big rise in impressions and clicks shortly after the switch. The algorithm will start to compensate shortly after this and will need some time to find the new bids. Do not be surprised if it takes some time for the campaigns to find their balance again.
Also, keep in mind that in case of automatic bidding, the Google system will always set the bids to achieve the goal (ROAS or CPA) you have set. Therefore it is not as obvious as with manual bidding that the CPC will visibly go down or the volume will go up. In the end it is automatic bid system that decides what happens. So maybe the CPC will not go down or the volume will go up. But in the end, after a while, the automated bidding will be able to convert the extra bidding power in more conversions or revenue in accordance with your ROAS or CPA goal.