Imagine playing a round of golf, moving straight from Hole 1 to Hole 6. Then, after sinking your shot at Hole 17 (nearly done now!), going all the way back to tee off at Hole 1 again. While that sounds like the craziest golf game ever, when it comes to the customer journey, this sort of nonlinear path is par for the course.
Between a shopper’s first trigger and final purchase exists a disorderly place where they spend most of their time during the customer journey. As they explore and evaluate, their path is filled with twists and turns. It’s rarely sequential and is highly unpredictable.
We call this place the Messy Middle. For the past few years, we’ve been exploring how brands and retailers can help consumers make the best choices while they’re there, using both behavioural science and Google AI-powered digital solutions.
In 2023, we looked at how retailers could communicate value beyond price and avoid a discounting race to the bottom. At a high level, there were two key actions – show up everywhere customers are looking, and be compelling by leaning into key behavioural principles.
Last year’s research was all about protecting profit, and communicating value that goes beyond price. But this year, the focus of our research has evolved to be even more proactive, as we find new ways to realise profitable growth – keeping you on course and in the green.
2024 is about profitable growth
Profitable growth is not growth at all costs. It’s measured, responsible growth, that prioritises being helpful to your consumers, and building a foundation for the future. We have a blueprint for how you can do just that, within three important contextual factors driving consumer behaviour in today’s Messy Middle.
Over the past 12 months, Google has teamed up with brands, retailers, and their agency partners to put these new insights into action with the help of Google AI-powered ad solutions. Let’s look at the process and results from those case studies, and discover how you can apply the same research to drive profitable growth in 2024 and beyond.
In today’s ecosystem of uncertainty, show up on Google Search.
Coming as no surprise, consumer behaviour in 2024 is underpinned by one significant macroeconomic driver – the cost of living. More than half of all Australian adults are struggling just to keep up financially,1 which is changing how people shop.
For example, less spending power means less loyalty, with 67% of Australian holiday shoppers open to trying new brands and retailers.2 Plus, shoppers now have almost infinite choice for what and where they buy, so they’re exploring more and moving between channels before deciding on their purchase. In fact, when surveyed, 57% of holiday shoppers said they used more than 5 channels for Christmas shopping over a two-day period last year – up from 50% in 2019.3
Economic uncertainty means people are less confident about making purchases, and more wary of making the wrong decision. This keeps them in the Messy Middle for longer, as they repeatedly explore and evaluate until they feel comfortable to hit the checkout.
What can you do about it? Show up with your most profitable products
Search is an important part of a consumer’s research process. We also know that 1 in 3 consumers will choose their second choice brand just because it shows up when consumers are searching.4 So if you’re not showing up on Google Search, that brand visibility – and your sales – will suffer. This means it’s important to think strategically about your product range, and how you can boost your SKU coverage to show up on Search with the products that valuable consumers are looking for.
With profitable growth as the goal, it’s all about making your ‘digital shelf’ more visible, so your most profitable products show up when and where valuable consumers are looking. This will allow you to reach more consumers with the right product at the right time, creating more value and driving profitable growth.
Despite a strong digital strategy, Spotlight Retail Group was struggling to push their products through their feeds in Google Merchant Centre, which you can think of as their digital catalogue. Their presence in SKU-based auctions was decreasing each month – with as many as 200,000 SKUs missing, just sitting on shelves in the warehouse.
They partnered with Google to identify specific data opportunities, and by November 2023, they had established their brands as dominators of the Search auction and boosted local product depth by 231,000.5 This drove a 30% increase in Share of Voice and a 10% average increase in auction click share.6
“With multiple brands and regions, each with extensive product catalogues, feed management is critical to our success. The Google team was imperative in enriching and improving our feeds, contributing to a marked improvement in omni-channel performance.”
— Matt Demarco, Head Of Digital, Spotlight Retail Group (SRG)
As consumer evaluation evolves, create more relevant experiences
This year, our insights went one layer deeper than just showing up. That’s because the way consumers search online has changed, and how they evaluate has evolved.
For one, they search more, with retail searches up by more than 5% from 2022 to 2023.7 And there’s far more personal nuance in how shoppers explore the products they’re looking to buy. Across the past 12 months of Retail category searches, we've seen a 17% increase in search terms that include “best”.8 In the same timeframe, there’s also been a 15% growth in “review” related interest on YouTube across all categories.9 This means that consumers are searching to find what’s right for them – not just the first thing that fits their brief.
Every purchase now speaks to the individual’s unique context, meaning brands and retailers can provide value beyond just the provision of goods and services – and find incredible opportunities to be more compelling.
What can you do about it? Create highly-relevant experiences
The behavioural science principles from last year’s Messy Middle research still apply – social proof, authority bias, category heuristics, power of free or delivery friction – to communicate value beyond price. But to increase profitable growth in 2024, we explored how to give these principles a boost, leveraging your first party data and Google AI to be more relevant to every consumer. We’ve evolved our Google AI-powered ad solutions to reach the right customers at the right time, build relevant creative at scale and speed, and measure and prove success in a privacy-first way.
Last year, Google partnered with Sparro to help one of their e-commerce clients deliver personalisation at massive scale. After experiencing a softening of Gross Transaction Value, they set out to boost profits by 5% through a more compelling digital offering.
They analysed and scored profitability data for millions of SKUs, as well as what return they could expect from ads for each product. This first-party data informed Google’s AI-powered ad solution, Performance Max, to determine the right product, to serve to the right person, at the right time. Across the campaign, they drove a 1.6% growth in revenue and 7.3% growth in profit.10
“Our focus is always to solve business challenges and drive real outcomes for our clients. We've had an incredible long term relationship working with our e-commerce client and Google where we've been able to do this time and time again.”
— Cam Bryant, Partner, Sparro
Leverage digital across the consumer’s entire omnichannel experience
As people use digital at any – and every – step of the customer journey, providing a relevant omnichannel experience is more important than ever.
We know that 91% of Australian holiday shoppers use Search before going into a store,11 and 61% use it specifically for in-store related queries.12 And, the two legs of the journey are also happening simultaneously as 70% of Australians use their phone for something purchase-related while they’re still standing in the store.13
For consumers, digital channels – like Search and YouTube – have evolved beyond merely providing information. They are now trusted sources that drive confidence, provide reassurance, and importantly, help navigate the Messy Middle.
What can you do about it? Think digital first across the entire purchase journey, including in-store
Digital is pivotal in boosting total sales – not just online sales – and is an essential tool for brands looking to drive profitable growth. Digital is the connective tissue that binds all of your customers’ journeys together.
For example, New Zealand grocery retailer Four Square understands the importance of digital ad solutions to boost in-store sales. “While we don’t have an e-commerce offering, we know digital has an impact on total sales and using Performance Max to drive our offline sales is a critical part of our media plan. Initial results have been fantastic, driving 419K store visits. Performance Max will become part of our always-on channel plan for 2024," said Diane Clark, Head of Marketing & CX, Four Square.
Beyond leveraging digital across the full purchase journey, you need to measure its impact both online and offline – because if you’re only measuring digital through e-commerce, you’re only getting a small part of the picture.
With a goal of increasing in-store sales, Officeworks and their agency, Initiative, partnered with Google to leverage digital ad solutions. They ran an AI-powered Performance Max campaign to reach potential new customers with products and offers available at nearby stores.
Setting their goal to “store visits”, Performance Max did the rest. It found customers with the highest intent, and served them the best possible message - all while automating the campaign’s media buying. Across the four weeks of the test campaign, they measured an incremental return of 10:1 and a relative increase of 25% in store performance.14 Since then, Officeworks has continued leveraging Performance Max for Store Goals, embracing a full omnichannel approach for their business.
“Performance Max for Store Goals has been an effective ad product in driving meaningful revenue impact to our store network, and has helped lay the groundwork for more omnichannel testing.”
— Simon Sharland, Head of Online, Digital Marketing & Loyalty, Officeworks
Ready to take your shot at profitable growth?
So what’s the outlook for 2024? The middle is still messy. Consumer journeys are still unpredictable, and they’ll continue along this twisty trajectory in the future. Now it’s time to roll up your sleeves and embrace the uncertainty to realise profitable growth.
In a game of Messy Middle golf, while we can’t promise a sequential progression from Hole 1 to 18, these tips will keep you out of sandtraps and off the rough. By leveraging digital and layering the behavioural science principles that back our Messy Middle insights, you’ll be able to show up with profitable products wherever your customer is looking, be compelling with relevant messaging using Google AI, and measure the impact of digital across the full customer journey.
With these three key actions, you’ll set yourself up to power profitable growth throughout 2024 and beyond. We can’t wait to see how far you’ll drive it. Fore!
