Google’s latest way to win over retailers focuses on loyalty programs

Google first rolled out a pilot for merchant loyalty program integrations in May 2021, and 12 months later added the ability for advertisers to attract new loyalty members when they use Performance Max campaigns. The company has been testing the feature with retailers like Ulta and Sephora and said it will expand out of beta within the next few months. Ulta is testing out Google’s Customer Match loyalty program integration, while Sephora tested out the merchant loyalty program.

Over the years, Google has expanded efforts to make it easier for brands to sell on Google. For example, Google made its marketplace free for sellers to list on during the pandemic in the hopes of growing its merchant base. Google has also added more retail-specific ad features to its ad tools, such as allowing brands to create Shopping campaigns that promote inventory localized to a certain area. Now, particularly at a time when more customers are pulling back on discretionary spending, Google is pitching retailers on using its ad products to rope in new loyal customers.

With prices being top of mind for customers due to inflation, it’s important for retailers to be tapping into a deal-hungry customer base and building it forward, said Tina Weyand, senior director, product management for retail ads at Google during a company event for retailers last month.

“We have some new formats that we’re working on that will allow brands and retailers to feature [different] types of loyalty programs, and attract those customers when they are in that moment of wanting to purchase that product,” Weyand said.

Retailers can showcase their loyalty program benefits to shoppers in the U.S. by integrating their loyalty programs in Merchant Center. The search giant also said retailers using Performance Max campaigns can leverage Customer Match to put their loyalty program promotion in front of new customers at the right time.

“We continue to expand these efforts and make more loyalty benefits available for customers,” a Google spokesperson said in an emailed response.

“A retailer’s mobile app is a critical lever to help them better connect with their customers during the holiday season,” a Google spokesperson said in an emailed response. “We continue to expand these efforts and make more loyalty benefits available for customers.” Last year, findings from a Google survey showed that 74% of consumers are likely to be loyal to a brand if its app is seamless and easy to use.

The tech company has been running a pilot for its latest loyalty integrations with retail giant Ulta.

“We’re excited to be partnering on this customer loyalty pilot, it seems very appropriate for how we want to showcase our loyalty program. Our app users within our loyalty member base are really, really critical,” said Prama Bhatt, Chief Digital Officer at beauty brand Ulta, that has 37 million members as part of its Ultamate Rewards program. Bhatt made these remarks at the Google roundtable for retail ads held last month.

In an emailed statement, Ulta Beauty said that since launching, Performance Max had driven a 20% lift on return on ad spend compared to existing campaigns. “We believe the campaign finds the right mix of inventory and formats across Google’s advertising channels to help increase sales online and in-store,” an Ulta spokesperson said in an email.

“Having Customer Match has been really important for us as we continue to elevate and evolve and optimize our search capabilities,” she added. Customer Match lets advertisers use online and offline data to reach and re-engage with customers across search, the shopping tab, gmail, YouTube, and display.

Experts said Google’s efforts come at a time when retailers are placing a greater focus on loyalty programs.

“It certainly makes sense for Google to be expanding its offering in retail membership and loyalty programs,” said Jason Goldberg, chief commerce strategy officer at Publicis. “Largely driven by the success of Amazon Prime and Costco, many retailers have shown renewed emphasis on their paid membership programs in an attempt to win customer lifetime value rather than individual transactions,” added Goldberg.

Correction note: This article has been updated to clarify the different features that Ulta and Sephora respectively have tested, as well as to specify that retailers can leverage Customer Match within Performance Max campaigns.