The COVID pandemic has shifted shopping habits – Q1 2020 saw a sharp jump in percentage of ecommerce sales from 12% to 16% in a single quarter.
Source: SmartInsights
Whether you are an experienced seller or someone just looking to get their feet wet with ecommerce, the current environment makes ecommerce one of the best ways of making money online.
SEO typically takes too long and unless you already have an established site, you typically need longer form content to rank for keywords as well as high domain authority. The fastest route is via paid traffic – Google Shopping and Facebook Ads to be specific. Let’s compare the two.
The Basics
Google Shopping ads appear at the top of the page – in this example I searched “perfume near me”. The advertiser gets charged whenever someone clicks on the ad. This is search based marketing because you only see the ad if you directly search for it.
Facebook on the other hand is interruption based. You can find products that you are not even searching for. As I was scrolling down my Facebook feed this perfume ad showed up even if I was not directly searching for perfume.
Pricing
Google Shopping charges per click and is search based. This makes Google Shopping ads much more effective if you are selling expensive high ticket products. The reason is that CPCs (cost per clicks) on these items can be very low in comparison to the selling price. Average CPC ranges around $0.66 so if you are selling products that are $1,000+ you can get a very good ROI.
On Facebook, products prices are typically within the impulse buy range (<$40) – this is because their ad serving system drives down costs of media (photos & videos) which attract more engagement (typically viral products). It is for this reason that you should stick to lower to medium price points if you are promoting your product on Facebook. Facebook provides the flexibility to charge per click or per impression. In terms of costs, estimated CPC’s are slightly higher since it is a more mature platform than Google Shopping with a $0.97 CPC.
Traffic Quality
In general, you will find that the quality of traffic from Google Shopping Ads is much higher than the traffic from Facebook Ads. This is due to the fact that the website visitor actively searches for your product and hence has higher buying intent.
Targeting
In Facebook’s defense, one of the advantages that it has over Google Shopping is it’s targeting capabilities. For Facebook, you can target via age, gender and even by country – this means your reach is potentially much greater.
With Google Shopping, the targeting is based on keywords – the great thing is that you just need to specify the product category and then Google finds the keywords. Although this makes the setup easier, total reach for your product will be lower since it is limited by the number of keyword searches.
Scaling
If you have a product with broad appeal, then Facebook is the best platform to scale it with. This is because their engine collects over 52,000 data points on a single individual and once the Facebook Pixel is seasoned enough with purchase data – it can find the right audience without much guidance.
With Google Shopping, you are limited in terms of scaling because there are a limited number of searches for a specific product. This means that your audience are only those who directly search for your product instead of those who could be interested but don’t know about it.
Return On Ad Spend (ROAS)
Typically, you will find that the return on ad spend (ROAS) will be higher for Google Shopping Ads than Facebook Ads for the same product. This is due to the fact that the visitor who lands on your site via Google Shopping is most likely already looking to buy. Another reason is that you can sell much higher priced items with Google Shopping Ads. You can typically reach a ROAS of 5x for a well run campaign
With Facebook Ads, you trade more reach for lower ROAS. For products with broad appeal such as the posture corrector, a good ROAS would be around 2.5 – 3.5x. The lower profit margin is offset by the larger audience size.
Campaign Setup
Campaign setup is much easier on Google Shopping Ads especially if you have a multi product store. This is because you can create a single shopping feed that hosts multiple products on Google Merchant Center. You only need 1 campaign to market all these products. Within a few clicks you can set the campaign up and just wait as it gathers more and more data.
Selling on Facebook requires you to configure a campaign for each product, each with different ads. You may need to also deactivate certain adsets/creatives which are not performing well within the campaign. This makes it much more time consuming since you need to be more hands on.
Pros/Cons of Google Shopping & Facebook Ads
We’ve compared both Facebook and Google Shopping – both have their own strengths and weaknesses summarised below.
Google Shopping Pros
- High quality traffic
- Higher ROAS
- Easy campaign setup
- Low campaign maintenance (set & forget)
Google Shopping Cons
- Limited targeting
- Slow to start (takes 2+ weeks to see results)
- Campaigns not as scalable as Facebook
When to use Google Shopping
- If you are selling high priced products
- If you want something that is low maintenance
- If you are running a store with multiple products
Facebook Ads Pros
- Broad targeting and reach
- High scalability of campaign
- Machine learning targeting algorithm is intelligent
Facebook Ads Cons
- Advertising account can get banned easily
- Campaign needs to be managed especially early on (high touch)
- Lower quality traffic in general
When to use Facebook Ads
- If you have few products on your store
- If your products have broad appeal
- If your product is not too expensive
Leveraging Both Platforms
If your goal is to launch and scale a product, you don’t need to pick between the two. The best way is to first start with a Google Shopping campaign on your store (with the Facebook Pixel installed). Once you have reached around 500+ purchases, the Facebook pixel should be seasoned enough with high quality data to find another audience who would be interested but who would not necessarily search for your product.
Conclusion
It’s no secret that e-commerce can be one of the best side hustles but there are multiple ways to skin the cat – or in this case to market a product. I’ve compared the pros and cons of two of the largest paid traffic sources. My personal favorite is Facebook and it was through Facebook ads that I was able to grow my online store to five figures a month. Having said that, I’ve also seen many online stores run successfully with Google Shopping Ads. The best marketers I’ve seen have managed to combine the two. My advice – pick one traffic source first and master it. Then branch out.
About the Author: Strategy consultant by day, blogger by night – Eddie helps entrepreneurs create, grow, and scale their online businesses on his blog Passive Income Tree. By finding the best tools, deeply understanding the business models and interviewing successful founders, Eddie provides a holistic approach to building online businesses.