Quarter 3 was a challenging period for all Google Shopping advertisers and collectively, ROAS performance did drop month on month. The below graph shows an aggregated view of all sectors within Google Shopping.

As we now move into Quarter 4, performance will naturally pick up before accelerating from mid-November to mid-December. However, a new set of challenges face us all during this very unique peak and we will try to unpack what some of them are whilst using the data to look at how Google Shopping has shifted over these past 3 months.

Cost of Living & Inflation

Inflation in the UK is expected to rise even further during Quarter 4. Whilst initial predictions have eased, it is still estimated that we will see inflation peak at 10.16% in Q4 2022, before dropping in Q1 2023 and continuing to drop throughout 2023.

Unlike other members of the G7 who are expected to see a fall in inflation during Q4, 2022. We’re anticipating a near 40 year high during the peak trading period which is putting a strain on the average households ability to spend.

Source: https://data.oecd.org/price/inflation-forecast.htm

Not all sectors are impacted in the same way as we can see from the Consumer Price Index. This will leave consumers with more difficult choices to make as to where they spend their hard earned money during Quarter 4.

Source: https://www.statista.com/statistics/281724/consumer-price-index-cpi-united-kingdom/

The World Cup

A Winter World Cup is a completely new to us all and whilst previous football tournaments have impacted online retail positively, we don’t know what the impact of the World Cup during Quarter 4 will be.

Using data provided from Google, we can see how the last World Cup impacted Predicted Demand and Actual Demand.

Source: Google internal data. Summer months 2018 (Russia World Cup dates). Predicted demand based on historical data prior to world cup

A Black Friday Derby is taking place between the worlds two largest Black Friday countries, England and USA.

During Black Friday 2021, 7pm to 10pm were collectively the highest period of the day for both clicks (21%) and revenue (19%). We’ll need to carefully manage our budgets to ensure we pick up any early spikes in the run up to the game in addition to have a larger budget assigned for the day directly after Black Friday. 

England's potential path to any final needs to be factored into your ongoing budget management and decision making.

If England finish as group winners, the following dates will apply:

Round of 16 – 4th December

Quarter Final – 10th December

Semi Final - 14th December

If England finish as runner up, the following dates will apply:

3rd December

9th December

13th December

The Third Place Playoff will be played on the 17th December, with the World Cup final the following day on the 18th December.

There are also, more than just England games to consider. The World Cup will kick off on the 20th November with the opening ceremony followed by one game between Qatar & Ecuador.

Three games will follow on the 21st November. Between the 24th November to the 2nd December, there will four games per day.

The Round of 16 will begin on the 3rd December and feature two games per day until the 6th December where two rest days will follow with no games.

Tw0 Quarter final games will take place on the 9th December and two more on the 10th December. The two days that follow will also be rest days, before one Semi Final takes place on the 13th and the other on the 14th December.

Rising Cost per Clicks

Since Google lowered Cost per Clicks during the initial lockdown periods, CPCs have since continued to increase.

Despite challenging market and living conditions, there is no sign that Google will reduce Cost per Clicks during Quarter 4. Based on the current trend we are forecasting that Cost per Clicks could rise to the following levels:

October 22 = £0.39

November 22 = £0.42

Black Friday 22 = £0.52

December 22 = £0.48

This will have an impact on both Cost per Acquisition and Return on Ad Spend despite increased Quarter 4 demand.

As automation grows, controlling your Cost per Click will become more challenging. A study we conducted in July 2022 found that 89.9% of Google Shopping spend during Quarter 2, 2022 was controlled by a fully automated Google Shopping bid strategy.

Performance Max & Google Shopping Shifts

As expected, the growth in Performance Max accelerated during Quarter 3 due to the automatic upgrading of Smart Shopping to Performance Max. This process is still not 100% complete but should be by the end of October.

The Performance Max growth was slightly beyond our predictions. In July, we predicted that Performance Max spend would be 82% of all Google Shopping spend. As we finished September, that figure was actually 83.82%.

Despite ROAS dropping month on month across all Shopping Campaigns, Performance Max continues to out perform and produce a much stronger ROAS.

Performance Max being is consistently generating a higher Average Order Value than Standard or Smart can produce. This is exactly what it’s machine learning algorithm is designed to do. With Cost per Clicks expected to increase during Quarter 4, retailers and PPC Managers will need to decide whether they want control over their bids or the ability for Google to acquire more valuable traffic in a way no other human or system can compete with.

Despite delivering a much stronger ROAS, Performance Max is still being beat by Standard Shopping in both Cost per Acquisition and Conversion Rate metrics. 

Whilst Quarter 4 trade is always stronger in Google Shopping. The real peak begins mid-November and experts are predicting more sales will fall within November with many consumers preparing to spend earlier during the discount periods. This could lead to a reduction in sales and a smaller December peak which has historically taken place in the 8 to 9 days prior to last day for first class deliveries.

Here we will take a look at how last years peak trading performed in Cost, AOV, CPC, Revenue & ROAS.