Google Shopping: what it is and how it works (2021)

Google Shopping Ads are great for driving traffic that converts. They require some initial effort, but then Google automates most of the work involved in creating and displaying these ads to the right people.

But this automation is also why advertisers feel like they don’t have control over what appears and where it appears. In this post, I’ll show you how you can take back some of that control over your shopping ads.

I’ll cover everything from setup to optimization and share additional resources that will allow you to further refine your Google Shopping campaigns .

Let’s begin!

What is Google Shopping?

Google Shopping is a comparison shopping engine, a service that allows retailers to advertise their products to users in a visually appealing way.

This means that if someone searches for a product you sell, Google will show Google Shopping ads that are relevant to your products and those of your competitors.

If the user clicks on your ad, Google will take them directly to the product page.

The image above shows the product ads (formerly known as product listing ads or product listing ads) for the search query “jordan one bianchi” at the top of the page.

Each Google Shopping ad includes an image, product title, price, retailer name, and sometimes some retailer-specific information such as shipping costs or reviews.

Why should you use Google Shopping?

Many people keep searching for their products on Google. So advertising on Google allows you to be right there, where your potential customers are.

In these search results, there are text-based ads, where you have to write the ad copy and manually add the keywords.

But also shopping ads, where Google does most of the work for you. Its algorithms will automatically pull data from your store, build ads for your products, and match them with relevant search queries.

Shopping Ads may take longer initially (to set everything up), but later require a lot less effort.

This is the main reason why I recommend stores to get started with Google Shopping . They have fewer problems than search ads, which means you’re less likely to blow up your ad budget to no avail.

How Google Shopping works

As seen above, Google Shopping Ads are very different in how they work than regular search ads.

First, Google’s algorithms process a special file called a product feed (more on that later) that contains all of your store’s available product data (such as titles, descriptions, images, price, etc.).

Google uses this data to match your products with relevant search queries and to create real ads.

People will see shopping Ads relevant to their search queries, which show a picture of the product, with the price and additional information (such as reviews).

If someone likes what they see, they will click on your ad which will take them to your website.

In return, Google will charge you for that click.

Let me give you a simple example. Sell ​​mobile phone accessories and launch a Google Shopping campaign to increase your sales.

  1. Provide Google with your product data in a product feed
  2. Someone searches for “Wireless Charger for iPhone 11” on Google
  3. Google’s algorithms select an iPhone 11 compatible wireless charger from your store, create a Shopping ad for it, and show it to the user along with other ads
  4. The user sees the ads and clicks on yours
  5. The user is taken to your product page
  6. Google charges you for the click

How much do Google Shopping ads cost?

Similar to search ads, you pay every time someone clicks on one of your shopping ads.

Let’s take a look at the typical cost of these clicks.

The image above shows the average Google Shopping cost-per-click (CPC) for each of the different niches.

While clicks cost a lot less, the Google Shopping average conversion rate (1.91%) is also lower than the Google Ads average for the ecommerce industry (2.81%).

Because Shopping ad clicks are cheaper, cost-per-action (CPA) is also lower, $ 38.87, compared to $ 45.27 for all Google Ads clicks.

While these stats show averages for Google Shopping , the REAL performance of your Google Shopping campaigns is in your hands.

The Google Shopping campaigns may have worse performance than regular search ads, but with the right changes, there is much room for improvement.

How to add your products to Google Shopping?

The first step to start advertising on Google Shopping is to turn your store’s available products into Shopping Ads. This process consists of four elements:

  1. Your shop and products
  2. Your product feed
  3. A Google Merchant Center (GMC) account
  4. The Google Ads account

All of these elements are connected and help Google Shopping Ads work efficiently.

I like to call the whole process the Google Shopping Puzzle as it can be a puzzle for first-time users.

In the next sections I will show you how to add your products to Google Shopping .

Step 1: Create the product feed for Google Shopping

The product feed is the heart of your Google Shopping campaign . Essentially, it’s a large spreadsheet that holds product data.

Google is quite strict about what information to include and in  what format to enter it. That’s why it’s quite easy to get it wrong and confused when creating.

If so, Google will not endorse those products and you will not be able to advertise them. But if you correct mistakes by editing your product data, you will be able to advertise again.

There are two approaches to creating the product feed for Google Shopping ads : generate the feed using an app, extension, or tool, or do it manually by creating a spreadsheet.

If you are on one of the major ecommerce platforms (Shopify, WooCommerce, Magento, etc.), you can download an app to speed up your product feed setup.

I would like to share with you the best apps for each platform:


Google Shopping app – Despite poor ratings, the official Google Shopping app for shopify works like a charm (they’ve made a lot of changes recently).


  • Product Feed PRO
  • Google Feed Manager


  • Google Shopping Feed – Magento 1 (paid – Magmodules)
  • Google Shopping – Magento 2 (paid – Magmodules)
  • Simple Google Shopping – Magento 1 (paid – Wyomind)
  • Google Simple Shopping – Magento 2 (Paid – Wyomind)


  • Google Shopping by Sales & Orders (BigCommerce partner)
  • DataFeedWatch
  • GoDataFeed

While Google automates much of the work, the apps and extensions I’ve listed help you export your product data feed and usually warn you if something is wrong.

If the product feed you get from your ecommerce backend isn’t perfect, you may need to make a few extra changes before uploading it to Google Merchant Center.

You can do this with product feed management tools. Here are some examples:

  • Channable
  • GoDataFeed
  • Sales and orders
  • DataFeedWatch

Step 2: Google Merchant Center setup

When the feed is ready, you can  create a mercant centre account.

When finished, you’ll need to claim and verify your store’s domain to prove you’re the owner. You can do this using Google analytics , Google tag manager or by adding a meta tag to your website.

Upload the product feed to Google Merchant Center

You are now ready to upload your product feed to Google Merchant Center.

If your store’s platform is connected to Google Merchant Center via its API (it is, for example, on shopify), you don’t need to upload the product data feed as the data is automatically sent to Google Merchant Center.

If so, you can skip this section.

If not, you have to do it manually. Click Products , then Feed .

To add a new product feed, click the big blue + button. You will be guided through the whole process.

When you’re done and Google has processed your feed, go to Diagnostics to see its integrity.

On first upload, most product feeds almost always have some errors.

Don’t be discouraged and follow the instructions to eliminate the most urgent ones (the red ones). Do not defer this step as failing to provide any corrections could result in your account being suspended.

In addition to uploading the product feed, you must provide Google with your shipping and / or tax information.

Configure shipping settings

Google needs to know shipping costs to make an accurate price comparison with other suppliers.

You can always set it up in Google Merchant Center.

To do this, click on the wrench icon in the top bar, inside select Shipping and returns . You can create a new shipping service where you can define the costs. Anywhere from a flat rate, depending on the size of the order or supplement with courier prices such as FedEx or UPS.

Step 3: Create a Shopping Campaign

Once your products are approved, the next step is to create a Google Shopping campaign within Google Ads.

To do this, you will need a  Google Ads account .

In the Google Ads dashboard, you can create a new Shopping campaign by clicking the plus sign on the Campaigns screen .

On the next screen, select the option Create a campaign without a goal and then ‘Shopping’.

Make sure your Google Merchant Center account is displayed (so that Google ADS knows where to pull your product data from) and indicate your country of sale.

Standard shopping and smart Google Shopping campaigns

After selecting Shopping as your campaign type, you can choose to set up a Standard or Smart Shopping campaign. Note: Smart Shopping campaigns require conversion tracking so that Google ADS can track when your ads are driving sales on your website.

For explanatory purposes, let’s choose a standard Shopping campaign.

The next screen contains all the Google Shopping campaign settings. First, enter a campaign name and click  Additional Settings  if you want to set up an inventory filter, enable local inventory ads, or change the campaign URL options.

Choose the offer and budget for your Shopping campaign

Next, in the Google Shopping settings, you will be asked to select your bidding strategy and set your campaign budget.

Bidding is how you pay for people to see, click and interact with your ads. According to Google, “sufficient supply and high quality product data will ensure that your ad reaches a higher ranking.”

First, select your bidding strategy. Manual CPC (cost per click) means that you set your maximum CPC for your ads. You can also set up an automatic bidding strategy. Target ROAS (return on ad spend) and optimized CPC both require conversion tracking as Google uses ad conversion rates to set the most efficient bid for your products.

With “Maximize Clicks”, Google Ads automatically sets your bids to get the most clicks into your budget. You can set a maximum CPC bid limit to limit your spend on each ad.

Next, choose your campaign budget. This is the amount of money you want to spend on average each day… but the amount is not limited each day. Instead, Google manages your monthly budget – in a month, you won’t spend more than your daily budget for the number of days in each month.

For example, suppose you have set my campaign budget to € 100 for the month of August. Google sees that I am willing to spend € 100 x 31 days = € 3,100 in August Since it bids on my ads, Google may spend over € 100 in a day, but it will never spend more than € 3,100 per month.

You can also set up a delivery method for your budget: Standard spends your budget evenly over time and Accelerated spends it faster.

Finally, if you are running more than one campaign, you can set a campaign priority so that Google knows which offer will be used.

Choose the target and plan your Google Shopping campaign

The last section of the Google Shopping campaign settings is about campaign targeting and planning. This part is important because it determines who will see your product ads and when.

The first two settings – Networks and Devices – shouldn’t change. Basically they are just telling you where your product ads will appear.

Next, select the locations targeted by your ad. Make sure you only choose the locations where you are and / or where you can ship. In  Location Options , you can change the Destination and Exclude settings, although we recommend Google’s default options.

These options ensure that you are targeting the best people: those located in your target location and those who are looking for (even interested in) those positions. (The same goes for excluded locations.)

Finally, set the start and end dates of your Shopping campaign. Your ad will continue running if you don’t set an end date, so don’t forget that section.

Create ad groups

After completing the Google Shopping campaign settings, you will be prompted to create ad groups for your campaign. Ad groups determine the type of ads to run and how you will organize bids for those ads.

There are two types of ad groups that you can run: Product sopping ads and  Showcase shopping ads  . Product Shopping ads promote a single product. Featured Shopping Ads are a new format and allow you to advertise multiple products as part of a product ad that represents your brand or business.

If you choose a Product Shopping ad group, enter the ad group name and set a maximum CPC bid.

This creates a large ad group for all of your products. If you want to filter your products further, you can create separate ad groups for different categories.

If you choose a Showcase Shopping Ads group, enter the name of your ad group and set a maximum CPE (cost per engagement) bid. (Engagement occurs when someone expands your Showcase Shopping ad, clicks, and spends at least 10 seconds within the ad.) Finally, you choose which products to advertise as part of your Showcase Shopping ad.

After clicking Save, the campaign is sent. Congratulations, you have completed your first Google Shopping campaign… we hope to see your products in the Google Shopping results!


Google Shopping is a welcome change from an otherwise text-rich online shopping experience. It’s almost like a digital mall – shoppers can walk in, search for what they want, and see different brands and types of products on one screen. For this reason, many people (including myself) prefer marketplaces over product purchases available on a standalone ecommerce site.

If your physical products aren’t advertised in Google Shopping results, consider adding this tool to your marketing repertoire. Not only will it increase your website traffic, it will also give you leads and sales that you otherwise might not have been able to collect. Use this guide to get your Google Shopping campaign up and running and you will see how it can greatly benefit from your e-commerce strategy.

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