The Google Shopping Pricing Trick Your Competitors Don't Know About: Automated Discounts Setup Guide

Google's automated discounts feature just grew one client's gross profit by 25%, and it's now easier to set up than ever. 

In this episode of the Google Ads Unleashed Podcast, host Jeremy breaks down exactly what automated discounts are, how Google's AI dynamically adjusts your product prices within a range you control to win more visibility, clicks, and conversions in the shopping auction, and why counterintuitively dropping prices can actually increase profit. 

Learn step by step how to set it up through Merchant Center, Shopify, or feed tools. If you're running shopping campaigns and haven't explored this feature yet, this episode gives you the full picture, including real results across impressions, clicks, orders, revenue, and gross profit from a live client account.

Get your free 30 minute strategy session with Jeremy here: https://www.younganddigital.marketing/

Scale your store with 1:1 coaching: https://www.younganddigital.marketing/1-2-1-coaching

Transcript

Pricing is one of the most important features that you can implement and manipulate in order to improve your Google Ads rankings and essentially your performance as well. People really underestimate the power of just appearing that little bit cheaper next to other people, which is why I've uh talked about it in previous episodes so much, which is why I've talked about it in our feature with Product Hero where they have pricing suggestions. That's why I've talked about merchant centers, sale price suggestions. And in this episode, I am going to broach this subject again because I want to revisit an absolutely amazing feature which we have now actually tried in a lot of our ad accounts called automated discounts. You've probably heard of it before. Um it kind of came out last year. I think it was last year. But the issue that we had so far was It was ridiculously difficult to implement. Really the only sort of uh feed software provider which at the beginning had some form of native integration with this was uh Srosis and Srosis um is probably known to a lot of people to be a very reliable feed software rightly so and they were basically pioneers in um sort of uh launching this feature and now it has actually come natively in the last few months to um the Google and YouTube app within Shopify to the native feed apps within a lot of website builders such as Woo Commerce and it has come natively to other feed solutions which many of you use who are running multilingual feeds and that is multif feeds by Woolly for instance right so today I want to run you through what it is um when to potentially not use it and how it works and how you can set up. So, first of all, what is automated discounts? Basically, have you ever um I don't know if you live in the UK, you will probably know this, but there's a website called Ticket Master, right? Where you can buy sort of uh tickets for various events. So, we have a very big band in Britain called Oasis who has sort of been uh apart for many years, then reunited, and I think it was last year, the year before, um they played bunch of concerts in the UK and demand exploded. And as demand for this band exploded, what happened when the ticket prices went up? But even more perversely, they didn't go up just with resellers and stuff like that, but they went up on the ticket site itself because Ticket Master implements something called dynamic pricing. So what they do is they actually dynamically make more profit by raising their prices as demand goes up. Okay? And potentially also dropping prices as demand goes down. You've probably seen this when you use an Uber as well. It's uh it's all over the place. And there's when you've been at an event and want an Uber back home. Suddenly, it's much more expensive than it was on the way there. The reason for that is the demand drives the price. And it's logical because clearly that is an intuitive understanding of what how important pricing is. and automated discounts makes use of that feature as well because it being a massive ranking factor within the auction. It actually can help you gain more visibility, more clicks and then thus even a better conversion rate and and uh counterintuitively more profit if you actually drop your prices in instances as well. And this is what automated discounts does. Basically, it's Google's AI sets um does the following When someone searches for a search term that is relevant for one of your products that is opted into automated discounts, it'll artificially uh lower the price to a certain threshold that you can set as a maximum. Uh so it's a bandwidth, let's say 20% up to 20% discount and it'll automatically lower the price on your feed. And actually for this person on the website, I think for 48 hours or so, um in that moment to win more visibility, more reach and a click. And um I have to admit it sounds a little bit dystopian. It seems like sort of we've come at a first step of uh the step of individualized pricing. Who knows whether in future it might actually go the other way as well that you can actually raise your prices if Google thinks that you're going to make more profit that way. But at the moment it's working in the opposite direction. So you can give Google a range of how much you want to be willing to drop the prices for your products in order to achieve more competitive pricing. And this is what automated discounts is all about. So essentially, it's a mechanism that allows you and Google to calculate what is the optimal what's the combination of the right demand, the optimal price in that moment and the right bid in order to achieve the maximum outcome within your bidding strategy and the maximum profit that you are going for. And we have been testing this feature quite a bit. I am actually amazed at how good it is. And I'm also amazed um uh of how well it's how easy it is now to set up. Okay. So, for whom is this not really good? I assume if you have sort of RRPs or something like that, it's probably not for you. It's probably not very good if you uh are bound by certain pricing for other reasons, for legal reasons. Sometimes it's not even legal in your country. So, please check that beforehand. Um, it's sometimes not very good for um, let's say, for instance, if you have extremely low margins or something like that, right? Uh, nonetheless, I think it's extremely powerful and we you should definitely now give it a whirl. So, how the hell do you get started with this? Um, Um, so how you get started is pretty straightforward. First of all, you actually have to head to Merchant Center and you have to opt into the uh automated discount section. For that, you actually navigate to um your add-ons. Then uh to automated discounts and click add. And then you should be taken to a section below your marketing area where you can head to automated discounts. I have to admit, if you have a custom shop or something like that. Quite frankly, you're f***** because it's going to be much too difficult. But then again, if you have a custom shop, you probably have developers who can do that and or you know, you can some sort of geek and you can do it yourself. Uh but uh for the normal uh uh consumer like myself, you need some sort of uh preset shop builder such as Shopify, Woo Commerce or something like that in order to make maximum use of this. Okay. Um there you go into the automated discount section and what you then want to be doing is uh select your shop builder uh select your preferred currency and once you've saved that information you want to be heading to the next step. The next step that you will want to uh have is you want to um head then to the um sorry to your shop builder and actually head to the area where you can configure automated discounts. Now if you go into the Google YouTube app. Once you have actually opted into automated discounts, this option will usually appear under your connected services. You will have the feature automated discount. Sometimes it'll even pop up with a suggestion for you to do so. Sometimes you can go to different sections, right? Um, for instance, if you use multif feeds, uh, you can head into the multif feeds app. Um, let me do that right now because I literally have it in front of me and uh it'll be one of the key features that you can do and you just have to follow the prompt there. Basically, what Google wants from you is to set up uh conversions with basket data and to uh submit the product attributes for the products that you want to have opted into the service. Okay. So, um essentially once you have that set set up, there's two things that or three things rather that Google wants from you. First of all, the first thing is cost of goods sold. So, you need your cogs in all of the areas within Shopify and within your feed. Typically, every feed software will uh submit this attribute automatically by drawing it from the product section within uh your products uh in the back end. Uh but if you haven't done so already, this is something that you will need to submit pretty pronto. Okay, regardless, right, I think that's a good thing to do whether you want to have the products um um uh opted in or not opted in. Then Secondly, you will want to go into the feed and add um a new attribute uh called minimum price. Uh the formula for it or the the sort of how should I say the um uh uh denomination for it is uh brackets auto_pricing_ min_rice and that is then uh the minimum price that you will want to set. for your optedin products. You will then, of course, want to um uh show, you know, just opt in the products that you want. If you want to opt out, uh just remove the autopricing feature. Don't remove the cost of goods uh thing because that's actually pretty uh important. Um still just remove the auto price minimum pricing attribute for each product um or set uh because that's super super important. You have to in order to actually be eligible cover at least 20% of your inventory to have this done. If you do it for less than that, then this is not really something that uh you can do. Okay. Uh usually when you're in those apps, they will prompt you to those sections and say, "Listen, you still need to do this. Listen, you still need to do that." Um and there's a couple of rules of how deep you can go. Um I believe the uh minimum that you can go down is 5%. Um the maximum is it can't be less uh than the cost of goods sold and it can't be more than 95% of the price currently shown to consumers. Okay. Um that is basically how that then works. The next step then is you have to complete the URL integration because essentially what Google does is and this is probably within the prompt of the setup of your app then as well once you go through through this process. What essentially Google does, it uh changes a little bit in your theme or in your website that detects when someone has come from an ad that carries an automated discount. The ad then has some form of parameter and this parameter uh will be passed onto the current session of that user and as a result actually change the price on the site and actually change the price in the back end for this user. in that instance and that's extremely powerful. It works really well. Typically with a couple of uh clicks then Google verifies this for you and uh which may take a few days and that is then when all of this can be kicked off after the activation and once this has been successful um the uh sale prices are then optimized for automated discounts and they start showing in your shop shop shopping ads for all of your optedin products for only 90% of consumers. So, this won't be for everyone, but a maximum of 90%. And something that you may want to know as well is that this is actually rolled out in phases. Okay? So, this won't happen straight away. Um, this will sort of start with something like 10% of your user base or 10% of your uh current products and it ramps up uh that initially then to 90% of all of your uh customers, okay? Who get shown this. And like I said, it uh takes into account so many things such as for instance the um perceived brand value, the seasonality, price competitiveness, price elasticity, uh demand for your product, delivery costs, etc., etc., etc., to set the absolute optimal price in the optimal moment for the optimal user. And um yeah, it's a little bit of fiddly work. Right. Um, depending on, you can also just message in if you need any help. More than happy to help you out to to set this up. Uh, regardless of how complicated, no doubt it's relatively easy. Jeremy atyounitigital.marketing, Jeremy Young Google Ads on LinkedIn, or head to our new website, which I'll say a little spoiler there. Head to our new website and uh book a session with us in order to to do that. But yeah, essentially um it's relatively easy to validate and then relatively easy to run. And we have set this up at the beginning of May with one of our clients where we've had some results already. And I just want to read out some of the uh performance uplift that it has brought across the inventory. So um overall we've had um,03 products opted in uh to the service. Sorry, 130 um of which 715 have been discounted. So not the entire inventory. 314 roughly a bit more. or have not not been discounted. And overall from the entire feed, 840 uh products have been opted out. So you can see relatively straightforward. It only took the optedin products and then didn't even discount all of them to do uh to show the optimized sale price. Um also um uh by the way just one feature as well which I forgot. If your sale price is actually lower than the automated discount range, then it won't work either. There You can actually within Merchant Center just pause or uh continue as you like and show this relatively flexibly if you want. Of course, the more you leave longer you leave it on as with any algorithm, the more reliable this all becomes. Um and now uh for what you've been waiting for for the core sort of metrics. So overall our impressions grew by 3% 3.2%. That is not that much. So but it's still pretty good. Our clicks have gone up by 6.8%. So clearly the click-through rate has improved and probably because sale price and lower prices are just generating more enticing listings. As a result, our ad spend has actually gone up by 8.4% because we've been able to gather more clicks and uh and uh a bit more impressions, right? So uh completely normal. That's relatively linearly, but I guess the more you sort of do a mini scale uh CPCs rise a little bit, but that's actually not dramatic because now come the cool numbers. Our orders have actually gone up by 16.9%. So the conversion rate has been absolutely much much higher than it has before from the same pretty much the same ad spend and pretty much the same number of clicks. Our revenue has gone up by 19.9%. And now comes the coolest figure. Our gross profit has actually gone up by 24.9%. Um, and this is of course just from the transactions from the attributed clicks and shopping ad ads uh that were opted into all of those. Uh, and this is really cool, right? And um, it is really an amazing way how you can outgun competitors with a relatively easy trick. And this is something that we're trying to roll out to as many clients as possible. And if you want this done to your ad account as well, if your business business owner looking for help in Google Ads, then simply hit me up, Jeremy Digital.marketing. We have quite a few spots in the agency right now. It would be awesome if we can onboard you for the summer ready for the Q3 and four season. Um, we also have a few coaching spots available. If you need any more tailored help, just reach out. You can also reach out at Jeremy and Google Ads. You can also on LinkedIn and you can also So, just go to the website, younganddigital.arketing, and find us there. We've got a brand new website. Let me know what you think. I think it looks amazing. I think the podcast will get a bit of a rebrand soon as well. And we will all be singing off the same hym sheet. Then until then, if this is not something you can implement, reach out. And I would love to see you in the next episode.