The catch: the 20% “Google tax”

Google fought for a decade to keep a monopoly on Shopping in the EU.

They lost. 

In Europe, Google now operates under a regulatory framework for Comparison Shopping Services (CSS). This means you don't actually bid "on Google." You bid through a CSS provider.

And the default provider is Google’s own service (Google Shopping). If you use that, Google takes a roughly 20% margin off the top of your bid before it even enters the auction.

Bid €1.00 through Google’s CSS, only €0.80 actually goes toward winning the click.

The fix:

The CSS Partner Program. For the first time in these regions, you don’t have to use Google, you can place your ads through a third-party CSS partner and skip the 20% Google tax.

This does not affect your data or your results, it doesn’t reset the algorithm. 

It just gives you 20% more bidding power. That’s an enormous advantage in these new markets with limited Shopping exposure.

The opportunity: bid where the others aren’t looking

Most retailers in these new markets will be focusing on market share and top-line revenue growth (ROAS).

That’s the wrong strategy:

• Retailers will be starting automated bidding with zero historical data. This means overbids, leading to higher CPCs - it’s a race to the bottom
• Unknown costs for these new markets (payment fees, shipping) are not taken into account with ROAS. Something that looks successful may be the opposite.
• You would be training the algorithm on the wrong metric. New markets are an opportunity to train Google from the start to focus on what matters. Not revenue, profit.

The fix

Don’t optimize for revenue, optimize for profit.

Instead of bidding for ROAS, train Google to bid for POAS® (Profit on Ad Spend).  

In a new market, Google learns fast. Don’t spend 6 months teaching it the wrong lesson: train it on POAS so it learns to focus your budget on the orders that will actually improve your bottom line.

How to win the expansion

Make the most of this opportunity:

1. Use a Partner CSS: Don’t lose 20% of your budget 
2. Use POAS®: Feed Google’s algorithm your backend Gross Profit so it can bid for profit. 
3. Audit your feed early: These auctions are fresh. High-quality product data will go much further now than it will in two years when the markets are saturated.

You don’t need the biggest budgets to win during this expansion, you need the most focused and effective strategy.

ProfitMetrics can help you win the race with a profit-first strategy.