Google is testing a new pricing tool that uses real-time data and AI to entice shoppers into sales called Google Ads Automated Discounts. Shopping has become more digital than ever before, and Google Ads has set its sight on fine-tuning targeted ads in real-time using AI. 

According to data that Google has shared, more and more people are searching online before setting foot in a retail store, if they do at all. Consumers are using shopping services and researching, then purchasing items online. 

Google predicts that internet-first behavior will continue to be a trend in shopping, which makes online advertising and eCommerce a critical part of any successful business going forward. Google Ads expands its services to offer Automated Discounts based on data visible to their AI. 

What Are Automated Discounts?

Online shopping allows consumers to compare prices from different businesses and select their preferred retailer. Using Google Ads Automated Discounts, AI automatically calculates the cost of your product and then advertises using the parameters established by the business.

The Google Ads optimized price gets displayed in targeted ads and follows the consumer to your eCommerce store, where the exact pricing is available to any user for a limited amount of time. Google Ad Automated Discounts aims to adjust pricing for the individual based on consumer behavior and market demand. 

Integrating Automated Discounts into typical Google Ads increases the ROAS (Return on Ad Spend), revenue, and profit while respecting pricing limitations and client restrictions. 

How It All Works

Automated Discounts uses the Google machine learning engine to help optimize discounts and maximize online sales goals. AI follows your parameters and works for you instead of a single human adjusting the price on ads after consuming large amounts of data. 

The basic version of how it works is that a merchant, business, or ad agency feeds the cost of goods sold (COGS) to the system, then sets the minimum and maximum price range allowed for sale. Google’s AI system considers market prices, price elasticity, and seasonality trends to provide optimized discounts and improve conversions (whether or not clicks become a sale).  

Does Google Ads Automated Pricing Work

Inside numbers from Google report a 46% increase in ROAS on average when using the promotion annotation. Ad conversions increased by an average of 28%. 

Optimum pricing varies several times throughout the day and gets adjusted based on Google’s AI data and your established price range. Pricing is not specific to the individual user, even if targeted ads are why a user came to the site.

Who Should Use Google Ads Automated Discounts?

Most agencies, advertisers, PPC specialists, CMOs, and business owners understand that having the best price on a product can mean a higher chance of consumers buying your product. In many situations, this means that a person at your business is analyzing trends, considering and calculating overhead costs of goods, and then determining the best price to result in a sale. 

The truth is that there are too many factors and market fluctuations for any human being to keep up on to maximize pricing and profits by adjusting for real-time trends. Google Ads Automated Discounts allows advertisers and businesses with at least 1000 clicks per day on a product to participate in the pilot program. 

How To Set Up Google Ads Automated Discounts

Google Ads intends for the automated pricing tool to be available for any business entity to use. That said, Google Ads Automated Discounts is currently in the beta phase and only available to a select number of businesses. 

Pilot Requirements

Some requirements are to meet before a business can participate in the Google Ads Automated Discounts Pilot program. To qualify, companies must:

  • Actively be advertising using Google Shopping Ads
  • Have a product that aggregates over 1,000 clicks per week
  • Be able to honor Google’s pricing for:
    • A minimum of 30 minutes during a user session
    • A minimum of 48 hours after the user adds the product to their cart
  • Have committed web engineering resources
  • Be tracking conversions through Google to integrate the discounts properly

Integration Steps

If your business meets the minimum requirements for participation in the Google Ads Automated Discounts feature, integration can be simple for your products. Four significant steps are required to integrate Google Ads Automated Discounts into your website and ad traffic. 

1. Implement the free tool from Google Ads called conversion tracking.

Google Ad Conversion Tracking shows you what happens after a customer interacts with your ads.

2. Set the minimum and maximum parameters for the price range of each product.

Set the minimum allowed sell price using the auto pricing minimum and the maximum using price. 

3. Establish the cost of goods sold (COGS) for each product.

Option A: Set your COGS in your feed for items you want to discount automatically.

Option B: Let Google’s AI estimate the COGS for you.

4. Use a JSON web token to integrate pricing controls on your website.

Option A: New pricing gets passed along to the customer as a discount.

Option B: New pricing gets passed using existing coupons or promotions. 

The business will always control the price range allowed and does not get set by Google. Google is a tool to show optimized pricing to reach consumers and convert them to a purchase. 

The Merchant Center allows businesses to start, pause, restart, and stop automated discounts by product. In theory, the cost of using Google Ads Automated Pricing should be insignificant compared to the time, effort, and cost of manual real-time price optimization. 

Automated Discounts Reporting

A feature of the Google Ads Automated Discounts is that you can measure the performance of your price optimization using the Merchant Center. The Merchant Center controls all pricing, and your representative handles products. Various reports can track incremental performance by comparing treatment to control groups. 

What to Expect When You Join

Suppose you meet the requirements and have qualified to participate in the Google Ads Automated Discounts beta program. In that case, you can expect additional options and reports to appear in your Merchant Center. Information leaks from the pilot program reveal detailed onboarding through training guides, regular access to Google technical experts to help address questions and troubleshoot issues, and reporting with real-time market trends.

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