Today we are going to talk about something brand new and the latest and the greatest for Google Ads Smart Shopping. Let me open up the slides and then we'll go through it. There have been some major updates. Well, I wouldn't say major, but it's very interesting updates this month, and this is being rolled out. You may not see all these functions in your account right now but it will be rolling out pretty soon. What they are doing is you can now showcase your brand products in a very visual way with a slide show or a video like this and you have all the products underneath. Smart Shopping is also including video now and this is where things are moving along and progressing. When something so big is happening then you know, that video is going to be very important, which it already is, any kind of marketing. This is something very interesting, which I look forward to because we can create some really cool stuff and I will be covering about creating little videos, like five seconds or 20 seconds videos effortlessly next week so be worth your while to join in.
Then what happens is obviously the path to conversion is not straightforward anymore. They'll come to your website, they'll come to mine, they'll go somewhere else and then they'll look around on the social talks, forums, and all these places and after eight or nine touchpoints, that's when they will start to convert and the conversion will happen. Once they do some more research, the customer narrows down the choices and starts searching for specific search terms. Let's say we go after the site share. They may see a more immersive browsable experience with the carousel of your products over here, which you can see on your mobile now. Most of the shopping conversions now are happening on mobile. It used to be different going back even two years. But now because of 4g and possibly 5g coming very soon and the internet getting faster, the websites are getting very fast.
The user experience on mobile is effortless and it's much easier while you're watching TV you can shop online and buy products, even without thinking about it and even if you don't need it, you'll end up buying some stuff, which you may not want. As the customer is going through that customer purchase journey what happens is they are now starting to see very specific Google Ads and Smart Shopping is going to get smarter as we go along. The algorithms are getting extremely powerful and it is pretty much impossible to beat Smart Shopping if you feed the right data, in the first place. What they are also showing on Smart Shopping are these annotations, you can see over here which is quite nice.
You can highlight, you know, something like free and faster shipping, but at the moment, it's only in a Google Search US, but I believe it will be rolled across all the other countries and what Google has said, that those retailers who have participated in this beta and use the annotations, they saw an increase in the conversion rates by up to 9% and what Google is saying is they are also going to be rolling out more annotations pretty soon. It would be quite exciting. They're kind of like extensions on shopping campaigns. You can have callouts... Could be the best way to name this because you can have free shipping, fast shipping, coupon code. I think is on the next slide where you can put up your offers, that you can highlight promotions on your products to get somebody to convert and those of those retailers who use these promotions offer over here, like this shown over there and over there, they saw an increase in conversion rate up to 28%, which is quite a lot just by adding offer and highlighting your promotion.
Now, this is where Smart Shopping is. It is going to be extremely powerful going forward because what is going to go after, in my humble opinion is the new shoppers and this is why Google has said that one in three shoppers dropped online with the store they hadn't shopped. A third of the people by buying from new places because constantly more and more online shops are being launched. More and more people are starting their own business and this is why this is happening, that people are buying from new places where they hadn't shopped before and that's where shopping is going to play a huge part because it's going to go after those new customers and this is why I believe they have launched this new feature in the smart shop is called the new customer acquisition. It's very clever the way they have set this up and you will soon find this in your accounts as well once it's all rolled out or your account has been whitelisted.
By adding the new customer acquisition goal in the Smart Shopping campaign, the retailer saw a 188% increase in revenue from new customers. If your goal, which I believe will be the goal for every business, is to keep on acquiring new clients at the same time, you want to keep servicing your existing ones as well. Now I'm not saying that you keep on just getting new clients all the time and forget about the old ones, but the new customer acquisition and if this data, well, I'm not saying if, but this data is correct because this is what Google has announced, but this is massive and it's absolutely huge when it comes to Smart Shopping and it'll be a very interesting next few months when these and this feature starts to roll out. You assign a value, additional value to assign, to conversion from a new customer. But how does Google know whether this is a new or an old customer?
So let me go through this first and then I'll tell you two ways they are going to do this. The new customer conversion goal for Smart Shopping campaigns lets you increase the number of new customers your campaigns acquire and Smart Shopping campaigns optimize conversion value. This is very important in that it is optimizing conversion value for both online sales and new customer acquisition. Customer conversion value for new customers is the sum of the purchase value and the new customer value you set. You give a value or your new customer value. The combined value is attributed to a purchase made by a new customer. Let's say you've got a fixed value, a new customer value of $50. Your online sale is 100. 50 plus a hundred is 150. That's pretty much a straightforward path.
Now, this is how they will distinguish new customers from existing clients or customers. There are two ways. One is the Google detected. If your Google Ads conversion tracking is set to track purchases, which you always should and will because smart campaigns will not work if you haven't set up your conversion tracking properly or any kind of ads will not work. It will work but it won't give you the results. That's as simple as that. Never run any campaigns without setting up your conversions, no matter whether it's shopping, video, display, search, any other kinds of campaigns. Google can automatically create an audience list based on the last 540 days of campaign activity and tracked purchases. This is the easiest method for distinguishing new customers from existing customers, but maybe less comprehensive since users can remove cookies and opt-out.
I believe it was yesterday or the day before yesterday when someone asked me a question about what if they have removed the cookies and have opted out from the consent. This pretty much gives that answer. This is automatically used when you select the new customer goal conversion. This is how Google will track your new customers and the other one is the new customer conversion tracking using tags. You set up new conversion, customer conversion tracking with tagging. This method requires more setup on your side but allows greater control over which conversions are reported as new versus return and then you can do that quite easily with Google Tag Manager or through the Global Site Tag.
There are two ways you will be able to distinguish between new versus returning. When you are getting new customers all the time, you are increasing your database, you are absolutely 100% increasing your business and growing your business. Let's come and talk about bidding. Well, what happens? The smart bidding accounts for the new customer value you set and maximizes the total conversion value including the additional value you specify for new customers. Smart bidding factors the understanding that new customers help drive more overall value into the bidding decision. That is also quite important. The new customer value you set should equal the expected future organic revenue of a new customer. For example, if customers spend an average of $120 per purchase transaction, and two out of three customers buy once a year for two years, the recommended new customer value would be.
So this is the formula $120, which is the purchase price times two-thirds. That means two out of three is two thirds, times two, two years. That is your customer lifetime value and I've talked about this before. You not only just set your campaigns and your conversions on the first time or the first conversion, but you've also got to know your lifetime value of a customer. If you don't have data and you may be a brand new business, then you just take a guesstimate and work towards that.
If you have been running a business for a while, you should know, and we'll have the data as to what is the customer lifetime value and you've got to bid on those values, because if you're bidding on the front end for one transaction and not at the lifetime value, you are going to lose out because if your competitors are smart enough to do that, they will bid more aggressively, whereas you will not be able to bid aggressively thinking that, "Oh, I can only afford to buy a customer for such and such price," but you look at the bigger picture and the overall customer lifetime value is going to make a huge difference to the way you run your business and your campaigns.
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