Start Selling MORE with Google Ads in 2023
In this tutorial Aaron Young explains why and how to segment products within Google Ads, focusing on Shopping and Performance Max campaigns. He begins by outlining the business need: balancing high‑traffic, low‑margin products with low‑traffic, high‑margin items to maximize overall profit. He argues that without segmentation, Google’s algorithm will allocate most budget to the high‑traffic, high‑conversion products, leaving profitable but lower‑volume items under‑funded. The solution is to create separate campaigns for distinct product groups because budgets are controlled at the campaign level, preventing high‑volume groups from cannibalising spend. He details practical segmentation criteria—traffic volume, conversion rate, cost of goods sold (COGS), and target ROAS—and shows how to set daily budgets (e.g., $150 for a high‑volume category, $50 for a high‑margin low‑volume category). He introduces key performance metrics such as Search Lost Budget, Conversion Value Cost, and ROAS, demonstrating how to monitor and adjust budgets based on these signals. Through two case studies—one for Shopping campaigns and one for Performance Max—he illustrates the impact of segmentation: conversion rates rose from 6.6% to 7.9%, spend efficiency improved (spend down 43% while conversion value cost up 56%), and overall conversion value cost doubled from 1.5 to over 3.0. He also warns against over‑segmentation, using a baby earmuffs account as an example where products are too similar in keywords, traffic, and margins to benefit from separate campaigns. The video concludes with a reminder to continuously monitor performance and apply segmentation only when product groups differ significantly in traffic, conversion behavior, and profitability.
Chapters
Let me show you how to segment your products in Google Ads. But wait, before we get there, we first need to understand why you would even go about segmenting your products in Google Ads in the first place. Now the obvious answer is obviously you want to add in some extra layers of product segmentation to your Google E commerce campaigns so that you can increase the total profit that your Google campaigns achieve. But that simple explanation, and the reason doesn't explain the technical reason for why you would go about doing this. Because it does create not only extra work when you're setting up your accounts, but by adding in extra campaigns, it also creates extra work for optimizing and reviewing your Google Ads campaigns. And the simple way to explain it is like this. Let's just say you're an E Commerce store owner and you have a store that has over a thousand different product skus. Now it is highly likely that within that thousands, potentially multiple thousands of different products, you would have some products that would have a very high traffic volume and a very high conversion rate. But those products have one issue in that they have a smaller total profit value for you or profit margin for your business. Whereas on the other hand, you may have another different version of product categories that have a lower search volume and a lower conversion rate, but they have a really high profit margin. So you want to be able to focus some of your spend on on these products as well because every single sale of these products gives you a higher profit margin. And the issue is, is that Google doesn't know the backstory of these profit margins or even some of what we would call like a gateway product. So you might get an initial conversion through Google Ads, but because of the subscription nature or the fact that they have to continually buy extra parts or extra pieces for this product, they have a much longer lifetime value. So there are reasons for why you'd want to be promoting the these type of products in Google Ads even though they don't have an initial high conversion value. But the problem is, is that the Google algorithm will continue to focus on those high traffic, high converting products because that's the messages that is being sent to Google in that they're not only getting a high traffic, so a high search volume, but they are also getting a high conversion rate. And if just left alone with no product segmentation, Google would focus more on those products. Now that's not necessarily a bad thing is because you are still getting a profit margin and you are getting an easy amount of conversions. But as we said, we want to make sure that we've got some budget remaining for those lower traffic volume, lower converting but high profit products. So the way that we add in product segmentation into our Google Ads accounts is that you set different product categories into different campaigns. And the reason for why you do this at a campaign level and not an ad group or an asset group level is because budgets are controlled at a campaign level. So if you were to have a high volume and a high converting asset group or ad group in a shopping or performance max campaign, alongside with another asset group or ad group that had a lower search volume and a lower conversion rate, the Google algorithm would automatically focus a lot more budget on that higher volume, higher converting group of products. But if we add in some product segmentation and buy bring out those lower volume, lower converting products into a separate campaign, you are then able to ensure that that group of products is going to be getting some money spent on it without it being interfered by those high volume products which are taking all of the spend in Google Ads. So using that example that we're currently using, if we had product category A that had the high volume and high conversion rates, you could set that budget at $150 a day. And then you can have a second campaign which is focusing on that product category B, that one that has the lower search volume and the lower conversion rate, but that really high profit margin. And you could set that budget at $50 a day. What that would then mean is that campaign which is focusing on those product A groupings of products, it wouldn't be able to spend that $50 that we've allocated to that product B category of products which has that lower search volume look, lower conversion rate, but at really high profit value. So when it comes to going about adding in some product segmentation for your Google shopping and your performance max campaigns, you need to not only think about like simple product categories. So for example, if you're running a clothing store, a simple segmentation would be to put all your types of shirts together in a separate campaign to different types of hats that you're wanting to sell. But proper product segmentation also goes beyond that simple type where you're segmenting by different types of products. Because what you also want to be looking at is you also want to be looking at the expected traffic volumes and also the cost of goods sold or your cogs. So obviously it's a no brainer everything running through this shopping campaign here. And then we went through and we actually broke it out so that we had different levels of shopping campaigns around different products and these were all based around the different levels of traffic volumes and also their different target ROAS goals that we wanted to see set. What I want to show you through here is that we've actually also added in this search lost budget. And this gives us a bit of an idea of how much spend we're losing because of our limited budget. So you can see with this one, this is one of our ones that had a higher conversion value, but it also had a lower traffic volume. So you can see with the search lost is that we're only losing 2% of search volume because of our traffic volumes. So we're being able to separate that out and make sure that this is getting the required levels of traffic because it was converting at a higher level. And now these other campaigns which have higher traffic volumes. What we're doing in here is that we're not increasing the budget yet because we want to build these conversion value cost scores closer to A four, potentially up into a four and a half before we start to really scale up these budgets. But we definitely know that we've got our budget at the right level to be able to achieve those results. And now when we first took on this account, this whole account was only running at a one and a half. So we've been able to already double in the conversion value cost. We've still got a long way to go. But this was the main reason for why we were able to achieve these results, because we added in that product segmentation so that we could really assign extra conversion value to these lower spending product groups. And you can see through here the different levels of budget. So we've got, you know, 93 pounds here. This one's at 20 and this one's at 15. So we are using this one to really push through that volume of sales, and we're using these other ones to bring in that higher conversion values. Now, I want to show you another example. And this is for our Performance Max campaign. And what we're looking at through here is that we're looking at nearly the first three months of 2023. And what we actually did is in this one, we added in some product segmentation around about the first or second week of February. And so we're already about six weeks after that. And you can see from here that this has really started to take effect. We really bumped up our conversion rate. You can see from here, our conversion rate is up at 6.6 and now it's up at 7.91, when it was pretty flat in and around those three and fours, which is still a great result, but obviously any business owner would take a six and a half and nearly close to eight any day of the week. And we've been able to build up that conversion value as we're going through here. And the good thing that we've been also being able to do is that as we've increased that spend, we're also increasing that conversion value. And the way that we went around this one is that once again, they had one performance max campaign that had all of their products in the same campaign. And what we've done is we've now broken this out into two separate campaigns, one focusing on that core product category and another one focusing on another group of products that they had. And you can see from here, once again, it was a lower traffic volume. And so that's why we've only got a budget of $60 a day. We in the process of looking to scale this because it has been performing so well. And the other one is still taking, you know, the vast majority of that budget. And that's because it has a lot more searches. But if you come over to here and see our conversion value cost, you can see that this lower traffic volume is appearing at 4.5. Now, this is a conversion of over 30 days. So you can see that this is within the first 30 days. What you can also see what's also happened by breaking out this group of products from this other campaign. It's also had a positive effect. So you can see that the spend has gone down by 43%. But you can see from here the conversion value cost has gone up by 56%. So we've actually seen a much higher profitable campaign. Once again, the conversion value only went down by 12%, but that cost went down by 43%. So it's running far more effectively. And we're now even in the scenario where we need to go through this campaign because it's new, we're going to be adding in its first target ROAS setting. So. So based around the different levels of traffic volumes and also their different target ROAS goals that we wanted to set, what I want to show you through here is that we've actually also added in this search lost budget. And this gives us a bit of an idea of how much spend we're losing because of our limited budget. So you can see with this one, this is one of our ones that had a higher conversion value, but it also had a lower traffic volume. So you can see with the search lost is that we're only losing 2% of search volume because of our traffic volumes. So we're being able to separate that out and make sure that this is getting the required levels of traffic because it was converting at a higher level. And now these other campaigns which have higher traffic volumes, what we're doing in here is that we're not increasing the budget yet because we want to build these conversion value cost scores closer to A four, potentially up into a four and a half before we start to really scale up these budgets. But we definitely know that we've got our budget at the right level to be able to achieve those results. And now when we first took on this account, this whole account was only running at a one and a half, so we've been able to already double in the conversion value cost. We've still got a long way to go. But this was the main reason for why we were able to achieve these results, because we added in that product segmentation so that we could really assign extra conversion value to these lower spending product groups. And you can see through here the different levels of budget. So we've got, you know, 93 pounds here. This one's at 20 and this one's at 15. So we are using this one to really push through that volume of sales and we're using these other ones to bring in that higher conversion values. Now, I want to show you another example. And this is for our Performance Max campaign. And what we're looking at through here is that we're looking at nearly the first three months of 2023. And what we actually did is in this one, we added in some product segmentation around about the first or second week of February. And so we're already about six weeks after that. And you can see from here that this has really started to take effect. We really bumped up our conversion rate. You can see from here, our conversion rate is up at 6.6 and now it's up at 7.91, when it was, you know, pretty flat in and around those three and fours, which is still a great result. But obviously any business owner would take a six and half and nearly close to eight any day of the week. And we've been able to build up that conversion value as we're going through here. And the good thing that we've been also being able to do is that as we've increased that spend, we're also increasing that conversion value. And the way that we went around this one is that once again, they had one Performance Max campaign that had all of their products in the same campaign. And what we've done is we've now broken this out into two separate campaigns, one focusing on that core product category and another one focusing on another group of products that they had. And you can see from here, once again, it was a lower traffic volume. And so that's why we've only got a budget of $60 a day. We are now in the process of looking to scale this because it has been performing so well. And the other one is still taking, you know, the vast majority of that budget, and that's because it has a lot more searches. But if you come over to here and see our conversion value cost, you can see that this lower traffic volume is appearing at 4.5. Now, this is a conversion of over 30 days. So you can see that this is within first 30 days. What you can also see what's also happened by breaking out this group of products from this other campaign. It's also had a positive effect. So you can see that the spend has gone down by 43%. But you can see from here the conversion value cost has gone up by 56%. So we've actually seen a much higher profitable campaign. Once again, the conversion value only went down by 12%, but that cost went down by 43%. So it's running far more effectively. And we're now even in the scenario where we need to go through this campaign because of it's new, we're going to be adding in its first target rower setting, so we're going to be moving it well above that 100%. And this other campaign up here, this had been running and stuck at a target rolls of 275 for a very, very long time before we took on the account. But now, as you can see, we're going to be able to bump that up to around about a325,350 for the next period. And now finally, what I want to take you through is an example of when you would never go about adding in some product segmentation. Now, this is an account which runs performance max. And you can see over here, once again, looking for this first period of this year, we've been successful in maintaining that. I mean, there was a little bump here in February, but maintaining a really good cost per conversion. And this conversion value cost is still really, really healthy, ranging, you know, above that 10 also up to around that 7.8. But the reason for why we wouldn't be looking at adding in any different product segmentation into this campaign is because the products are just so similar. So they've got one performance Max campaign. They in the baby earmuffs niche. So they've got baby earmuffs, they've also then got audio headphones and then they've also got a kid's earmuffs. And because their products are just so similar, there's no reason to add in that different levels of product segmentation, because not only are those products likely to be triggered by the same level of keywords, they have very similar traffic volumes and they've also got very similar product margins because they've got very similar pricing and very similar cost of goods. So don't get caught into that trap of thinking that you have to always add in product segmentation. You generally only do it if it makes sense. In that sense of that you've got some very defined different product categories that are going to be targeting different keywords and you've also got products that have different levels of conversion rates and also different cost of goods sold. So I know that this video would have helped you in really understanding how to do product segmentation and when you would look to add in some different levels of product segmentation. But I do want to stress two things. Firstly and around the performance of your accounts, because you need to also be making sure that you're following through.
