Google Automated Discounts

 

Prerequisite

In this quick we shall dive into Google Automated Discounts, usage, installation and tips. If you run an ecommerce store based on Magento 2, you shall also find references to a few premium extensions for Magento 2 that can help you get started with Google Automated Discounts.

 

Google Automated Discounts

Automated Discounts is a new AI-Powered feature from Google designed to optimize sales, profit and conversion rates by applying a dynamic discount in your store. The discount is calculated and proposed by the Google's AI algorithm that include multiple factors such as:

Product demand
Price elasticity
Price competitiveness
Seasonality trends
Estimated delivery day
Brand value
Shipping cost

The adjusted product prices are shown in shopping feeds and then passed securly to your store where the discount is applied as well. This ensures that the price shown in shopping feeds matches the price displayed in your site. This price must not only match but be persistent in checkout, success page and throughout the entire shipping experience.

You can find details information here - https://support.google.com/merchants/answer/15152429?hl=en-IE&ref_topic=15303099&sjid=61682787315938682-NC

 

ELIGIBILITY AND REQUIREMENTS

Google Automated Discounts are not suitable for any business. You have to cover certain criteria to apply and benefit from the feature. Before you decide to participate, check if this feature is a good fit for your business based on the following requirements:

1. Your products in Merchant Center must generate minimum of 1000 clicks per week

This is required because it ensures that Google Automated Discounts algorithm has enough data to run proper A/B experiments.

2. Enhanced Conversion tracking with Cart Data

You have to have conversion tracking implemented using Cart Data. We have a premium Google Analytics 4 extension for Magento 2 that does this automatically.

2. Merchant Center Requirements

You must upload your products in Google Merchant Center and also provide 2 important attributes:

auto_pricing_min_price This attribute marks the lowest or minimum advertised price (MAP) to which a product's price can be reduced. Google uses this information for features such as sale price suggestions, automated discounts, or dynamic promotions. For starters this can be set to less than 95% of the price currently shown. Example: If sale/current price is $200, then auto_pricing_min_price can be set to $180

cost_of_goods_sold This data is used to calculate an estimated gross profit of your products. Gross profit is the difference between your revenue and the cost of goods sold  This must be lower than auto_pricing_min_price  and higher than 5% of the current price displayed. Example: If current price is $200 and auto_pricing_min_price is 180 then cost_of_goods_sold must be lower than $180 and higher than %10 (5% of $200). Suggested value 90% of %180

These 2 attributes must be provided for at least 20% of your total inventory impressions. This may sound technical but we got you covered. With our Google Merchant Center API for Magento 2 you can easily upload ALL your products in Merchant Center and manage these 2 attributes with ease.

3. Automatic discount application based on JWT tokens

Automated Discounts are applied by passing a special pv2 parameter with the product URL which contains the so called JWT token. JSON Web Token is a proposed Internet standard for creating data with optional signature and/or optional encryption whose payload holds JSON that asserts some number of claims. The tokens are signed either using a private secret or a public/private key.

The pv2 parameter is special encoded parameter that passes information about the discount that needs to be applied. A decoded token may look like this:

{
       "c": "EUR",
       "dc": "ABCDEF",
       "dp": 8,
       "exp": 1732638585,
       "m": "143318377",
       "o": "113491",
       "p": 3.21
}

Your site must accept the passed JWT token and apply the discount automatically. You can use our Google Automated Discounts extension for Magento 2 to get this done automatically.

In a real world example, the shopping feed URL may look like this:

https://www.example.nl/test.html?pv2=eyJhbGciOiJFUzI1NiIsInR5cCI6IkpXVCJ9.eyJjIjoiRVVSIiwiZGMiOiJBQkNERUYiLCJkcCI6OCwiZXhwIjoxNzMyNjM4NTg1LCJtIjoiMTQzMzE4Mzc3IiwibyI6Ij
ExMzQ5MSIsInAiOjMuMjF9.F_yyNm0JEelNBJf2NOs04XAEVLaYhTNvwc7mWdNEYN_WGKWnCzsG73jIjBDu8EnpO_ron8kTvmvyJR49OL7fiA

The URL links to the product listed in your store and also includes the JWT token as pv2 parameter. When the customers clicks the shopping feed URL and gets redirected to your site, this JWT token must be consumed, you need to determine the suggested discount and apply it automatically in your ecommerce store. Pricing is dynamic, it must be applied based on the JWT token and not applied if JWT token is not provided.

 

A FEW PRACTICAL EXAMPLES

Imagine you’re selling a popular perfume priced at $140. To enable automated discounts, you configure the auto_pricing_min_price attribute to $130, representing approximately 95% of the listed price. If your cost of goods for the smartwatch is $110, you’ll need to ensure the [cost_of_goods] value is around $120 or below to comply with the requirements.

 

RAMP UP AND RAMP DOWN

Automated Discounts are based on A/B Experiments. The ramp up process comes into 5 different stages with each stage taking approx. 7 business days. Discounts are initially shown just to a fraction of the users and with each stage, this fraction is bigger.

Stage 1: Discounts shown to 1% of customers
Stage 2: Discounts shown to 5% of customers
Stage 3: Discounts shown to 20% of customers
Stage 4: Discounts shown to 50% of customers

Final stage: Discounts shown to more than 50% of customers

Google will gradually display the opted-in products to consumers, starting with an initial performance-based rollout of 10% over the first three days. After this, the ramp-up will increase to 90%. This phased approach allows for effective monitoring and optimization of performance.

The performance is checked regularly and if any issues are detected, a ramp down process may trigger. Discount exposition will start to degrade until it reaches 0%. In this case, you as a Merchant will get contacted with suggestions and tips for optimization.