The Three Things I’m Doing Next After Google Rethink Retail
TLDR:
Google shared a lot of new, powerful information at its Rethink Retail event last week. After reviewing my notes, these are my three biggest takeaways:
Update Your Product Feed Now
Just in time for the holidays, Google announced a number of updates to the product feed that every retailer should be looking to take advantage of, whether or not Q4 is a busy season. These include new conversational attributes that give Google’s AI more structured product information to share with shoppers.
The conversational attributes include powerful options like “question and answer,” which allows merchants to add FAQ about a product directly to the feed. Google’s example asks, “Does it support Bluetooth?” with the accompanying answer, “It has full Bluetooth 6.0 support.” Something like this gives Google’s AI the information it needs to answer a user’s question, as well as to better recommend products that meet the requirements of a query.
Other new conversational attributes include document links, related products, Item group titles, variant options, and popularity rank.
Given that Google will now be enhancing some ads with AI explaining why Google recommended that particular product, the new conversational attributes provide a crucial opportunity for advertisers to give Google the information it needs to answer questions and best recommend its product. For example, if someone asked “What is the most popular product Nike sells?” the popularity rank would allow the AI to answer that question.
If a prospective customer asked for a good recommendation for a present for their mother who likes dogs and the outdoors for the holidays, Google now might not only show a potential product recommendation, but explain why it made that pick. I tried this example case, and Google not only provided recommended products, but information about the features of each recommended product (see screenshot). So take this crucial opportunity to give Google as much information as you can about your products.
In the same vein, Google also called out that product feed best practices were similarly expanding to allow merchants to better provide more information to the feed and to consumers. They recommended using 30+ character titles and 500+ character descriptions for each product in the product feed as a best practice.
In another change, Google recommended adding lifestyle images of the products into the product feed. For a long time, product feeds could only contain white backgrounds, so this is a nice change that allows merchants to show products in action or “in the wild.” Many merchants will now need to add these images to their feeds.
Put Product Value Optimization To Work
One of the most welcome changes I learned about at Rethink Retail was Product Value Optimization (PVO), which is still coming out of Beta. PVO allows marketers to adjust bids in Google Ads on the product / SKU level without needing to redo their whole campaign structure in order to do so.
Previously, if a merchant needed to unload extra inventory or zombie SKUs, they would need to put those SKUs in their own product group, asset group, ad group, and/or campaign, depending on the campaign type, in order to tell Google that a lower ROI is ok for those products than for the rest of the product assortment. However, PVO allows merchants to do the same thing with one click and without messing up the product structure.
PVO is a really exciting development and a powerful way for merchants and marketers to work better together. It also addresses a longstanding client request: prioritize one product over another.
Consider What Demand-Led Budgeting Means For Your Business
One of the other biggest underlying stories of Rethink Retail and Rethink ROI was that Google is encouraging advertisers to switch to “Demand-Led” budgeting. Essentially, this means that if a campaign is performing well, fully fund the campaign / never let the campaign be limited by budget. Now obviously it would make sense that Google would want advertisers to do this, and it’s not surprising after years of Recommendations to spend more, but what was really interesting to me is where, from a data standpoint, the recommendation is coming from:
Query length is growing. 38% of retail queries are more than 8 words long, with AI mode queries more than 3x as long as regular queries. And AI mode adoption is growing too, with over 1 billion monthly users. Keywords have never been able to be more than 10 words long, making it harder, if not impossible, to add all the possible keywords and/or queries a user is searching for into a campaign. As such, AI Max is becoming more necessary in order to better show up across these more complex searches.
But the searches also don’t happen predictably. When a product goes viral, searches spike. What makes things go viral? Sometimes no one knows. And if the viral activity is the result of user-generated content, it is especially unpredictable. That means that no matter what daily budget an advertiser chooses, there is still a point where they could likely be limited by budget on any given day. However, if the product were going viral, the queries being missed out on would be profitable ones that the business would theoretically like to have.
In addition, Google presented data showing that users are not very brand loyal – two out of three shoppers end up buying a completely different brand from the one that they initially discovered, whether it’s via creator video or a ChatGPT recommendation. As a result, if the brand isn’t advertising, whether it’s because they’re limited by budget or for another reason, it’s more likely than not that the shopper will buy from a different seller/brand.
Demand-led budgeting is supposed to help fill this gap, allowing brands to stay present when demand is high for them, as long as that demand would be profitable. With Google’s recent move to bidding to target CPAs and target ROASes, Google has aimed to remove some of the uncertainty around unlimited scaling, essentially trying to promise that if a customer is ok with scaling at a 3x ROI, they will scale at a 3x ROI, for example, and if they can’t achieve that ROI, their ads won’t serve. This change also supports the switch to demand-led budgeting.
Now, most companies don’t have unlimited marketing budgets, nor do most advertisers think this way, as anyone who has ever done annual budgets can attest. And companies aren’t just going to change the way they do their annual planning and budgeting because Google Ads told them to. But it is nonetheless an interesting lens to look through as Google’s new ideal state.
Google has consistently asked advertisers to spend more money, and it's obviously in Google’s business interests to do so. Yet by reframing the conversation as one of adding predictability to unpredictability, it makes, in my opinion, a stronger business argument worth consideration.
Google Rethink Retail was a very thought-provoking experience, and this article is only the tip of the iceberg. For retailers preparing for Q4, I would recommend starting with these three steps: update your product feed, apply Product Value Optimization, and consider where and whether demand-led budgeting makes business sense.
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