Holiday 2023 Guide Part 4: Optimizing Your Paid Search Strategy

Lola Behrens, Content Marketing Manager


Alex White, Associate Director of Performance Marketing

Anna Otieno, Head of Research, Strategy, & Insights

Sarah DeBruyckere, Senior Manager of Performance Marketing

September 28th, 2023

The SERP is Becoming More Visual

New machine learning models are meeting consumer demand for a more visual and browsable SERP. Google is also pushing image-first PLAs, image extensions, free Google Merchant Center listings, and videos – while adding a second row of shopping ads below the fold. And PMAX campaigns continue to dominate other Google ad types, cannibalizing DSAs and Broad Text ads, and performing better than Non-Brand Text ads year-over-year.

The Path to Brand Discovery is Changing

When it comes to brand discovery, users are often turning to Amazon, TikTok, and YouTube to begin their research, over the traditional starting point - Google. Two important caveats to this trend are:

First search preference varies widely across generations - Gen Z and Millennials are more likely to favor social media platforms to begin their search, while Gen X and Baby Boomers are preferential to traditional search methods. (We will dig deeper into this topic in an upcoming installment of our Holiday 2023 Guide, so stay tuned).

This year, TikTok has lost some of its popularity as an e-commerce search engine tool, with just 3% of users choosing the app as their first option, compared to 5% in 2022. Amazon, on the other hand, increased to 49% from 45% last year. Google’s share was stable, dropping from 35% to 34%.

The bottom line? Don’t overreact and shift your marketing dollars from Google to TikTok or YouTube this holiday season. Google is still the top ad revenue engine, rivaled in a meaningful way by Amazon alone.

The Takeaway

While search engines like Google invest in image and video-based ads, other channels like TikTok are hot on growing their search functionality. Ultimately, it’s imperative for marketers to embrace a diverse channel and targeting mix this holiday season and beyond (while championing first-party data collection and insights). To stand out from the competition and meet consumers where they are, brands will need to intentionally deploy cross-channel strategies.

Get Your Search Ads Holiday-Ready

Optimize for ad strength to maximize performance

Small optimizations can go a long way - for example, improving the ad strength of at least one RSA in each ad group from an ad strength rating of Poor to Good or Excellent has been shown to drive an average increase in conversions of 12%, according to Google internal data. It is also good practice to leverage keyword insertion variables to dynamically update your ad text and better target your ad to relevant search queries.

Get visual before Q4

As discussed above, consumers are increasingly likely to engage with visual ad formats over standard text ads. Here are some rules of thumb to follow when building your Holiday 2023 ad campaigns:

1. Include at least 4 unique image assets in each ad group. This has shown to increase CTR by 10% on mobile.

2. Aspect ratios for your visual assets should be set to 1:1 or 1:9:1, and any 3-image collage ads should use a 1:1 ratio (images should be unique and will need to be approved in-platform).

3. Extend your reach with YouTube Search+ image assets - these can drive up to 100% higher CTRs than those without image assets.

4. When designing creative assets, strive for differentiated, relevant themes, and center the most important elements. Create continuity in the user experience by repurposing these images on the landing page.

🔥 Hot Tip 🔥 Images with non-white backgrounds generally perform best.

Dig Further into What’s Working

Audit your creative assets by checking the Asset Performance Rating, which ranks performance within asset groups and allows you to make a more informed decision when refreshing your creative mix. Another helpful tool is the Asset Combination Report, which analyzes top-performing combinations and generates a preview of how these ads would be displayed in the wild. Finally, leverage the Asset Audience Insights tool to identify which assets are resonating most with specific audiences and implement optimizations based on these learnings.

Finally, Get on PMAX (Or Get Left Behind)

Hopefully this is old news, but if you’re not already investing heavily in Google’s Performance Max (PMAX) campaigns, then this is an easy win for your Holiday 2023 paid search strategy. As mentioned above, PMax continues to drive efficiency and outperform other Google campaign types. Here are two data points from the New Engen client portfolio that illustrate this trend.

Performance Max launched in November 2021. By the end of 2022, PMax accounted for 35% of all Product Listing Ad (PLA) spend across the New Engen portfolio, as displayed in the above chart. This share has since exploded to 94%, as our clients continue to derive value from their PMAX campaigns.

With this investment shift, CPCs for New Engen PLAs (combined Shopping and PMAX campaigns) are up by less than 1% so far this year. In other words, PMAX represents a significant opportunity to reduce CPCs and drive performance.

The second chart illustrates the potential CPC impact of PMax campaigns, which have recorded a 17% drop in CPCs compared to 2022.

Despite the efficiency gains made by PMax campaigns, however, total CPCs (Search, Shopping, and PMAX combined) are down just 2% from last year - with progress being hampered by a whopping 27% increase in Standard Shopping CPCs. This signals an opening for marketers to unlock new efficiency this holiday season by redistributing Standard Shopping investment into PMAX.

Check out more Holiday 2023 resources below, and stay informed on all things digital marketing by subscribing to our newsletter and following us on LinkedIn.

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