How Google Merchant Center interacts with Google Ads in 2025

How Google Merchant Center interacts with Google Ads in 2025

Getting a product in front of interested shoppers at the exact moment they’re searching for it online has become a game-changer for Kiwi retailers of all sizes. At the heart of this capability sits the partnership between Google Merchant Center and Google Ads—a data-driven pipeline that powers visual Shopping ads, maximises conversion impact, and turns product catalogues into performance machines.

This synergy has altered the e-commerce equation in New Zealand. It provides transparency, choice, and immediate value for both sellers and buyers. Here’s a closer look at how this interaction works, what it means for local businesses, and how to sharpen your approach, whether you’re managing a small Christchurch fashion boutique or a national electronics chain.

Connecting the Dots: How the Integration Works

Before a single Shopping ad appears on a Google results page, a retailer needs two things humming in harmony: a verified Google Merchant Center account with an up-to-date product feed, and a Google Ads account. When these are linked, a retailer’s product data flows directly into the Google Ads platform, transforming how campaigns are conceived and executed.

The Mechanism

• Feed as Foundation: The product feed uploaded to Merchant Center contains all the inventory details—titles, descriptions, prices, images, and availability—that Google Ads draws on to serve Shopping ads.
• No More Keywords: Instead of traditional keyword targeting, Shopping ads rely entirely on the product information in the feed. Google’s matching logic cross-references user search terms with feed content to decide which products to show.
• Automatic Updates: Price drops, back-in-stock notifications, or special promotions updated in the Merchant Center are swiftly reflected in your live ads, minimising lag and keeping messaging current.
• Ad Formats: The linked setup activates advanced ad formats, including Product Shopping ads, Showcase Shopping ads, and Performance Max campaigns, allowing retailers to present products individually or collectively in tailored displays.
• Full Funnel Targeting: These linked accounts don’t just bring in new customers—they enable dynamic remarketing, showing users the very products they previously viewed to nudge them over the conversion finish line.

In practice, this is a two-way relationship: the Merchant Center powers Google Ads with raw product data, and Google Ads amplifies product reach, targeting, and analytics, keeping a loop of continuous improvement between what’s in stock and what’s in demand.

Image Source : Analyzify

Visibility and Reach in the New Zealand Market

With more than 93% of searches in New Zealand taking place on Google, the advantages of going all-in on the Google Merchant Center–Ads integration are clear. Local factors intensify the opportunity:

• New Zealand’s relatively small size (around five million residents) means focused reach is critical.
• E-commerce is mature but competitive, with $6 billion NZD spent online annually.
• High mobile usage changes campaign strategy: over half of site visits come from mobile devices.

Local businesses must think about unique considerations: currency must always be in NZD, and shipping/tax settings need to reflect what Kiwis expect (up-front GST, clear delivery terms). Getting this technical groundwork right translates into prime placement—your products show up where it matters, whether that’s a desktop search or a mobile scroll through the Shopping tab.

Table: Placement Options Unlocked by Integration

This breadth of reach and control is especially valuable for Kiwi brands vying both with domestic behemoths (like The Warehouse or Trade Me) and aggressive offshore sellers. Managed well, even a modest NZ retailer can be visible in the same digital spaces as international competitors.

Hands-On Campaign Optimisation

The efficiency of the Merchant Center–Ads integration means anyone can get started, but fine-tuning is what separates profitable campaigns from wasted spend. The science of optimising your product feed and bidding approach has become a specialty unto itself.

Essential Feed Optimisation Strategies

• Get the basics perfect: Every product must carry accurate and complete information, compliant with Google’s policies and local regulations (think GST, correct NZD pricing, shipping terms).
• Title and description best practices: Use natural language mirroring NZ search trends. For example, “women’s rain jacket” instead of “ladies raincoat” if analytics shows the former phrase converts better in Aotearoa.
• Standout imagery: High-resolution, clutter-free images consistently deliver a higher click-through rate. Google’s systems penalise images with overlays or poor lighting, so invest in visuals.
• Granular categorisation: Use deep, relevant Google Product Categories (not just “Clothing,” but “Clothing > Outerwear > Jackets & Coats”).
• Custom labels: Segment your catalogue with labels (e.g. “Summer23,” “High Margin”) to enable campaign and bid adjustments on the fly, including for local holidays or special sales.

Don’t be afraid to use optional feed fields—things like product variants, sizes, colours, and even energy ratings for appliances. Richer information drives more accurate matching, better user experience, and improved performance.

Smarter Bidding and Budget Allocation

Google’s Smart Bidding options are now the default for data-driven Shopping campaigns, making use of machine learning to set bids dynamically. Retailers set a target (like a desired ROAS or CPA), and Google calibrates bids in real time across auctions.

How to allocate budget most effectively?

• Prioritise best-performers: Shift spend to SKUs or categories with the highest conversion rate or margin.
• Start small but intentional: Especially for SMEs, focus on a few core product lines first, measure, iterate, and then scale.
• Seasonal spikes: Temporarily boost budgets and emphasise seasonal/holiday products in peak periods—Boxing Day, end-of-financial year, winter apparel season, etc. Use custom labels to orchestrate these landing pages and feed segments.

Manual strategies still have a place, especially for retailers with thin data sets or a hands-on approach. Enhanced CPC bidding, for example, offers greater control but requires more sustained attention.

The Power of Audiences and Remarketing

One of the biggest advantages unlocked by this integration is the ability to build and target audience lists—everything from cart abandoners to past purchasers. Dynamic remarketing draws on the Merchant Center feed to create relevant, personalised product ads. It can be remarkably effective for nudging a “window shopper” back to buy that pair of boots they lingered on last week.

There’s also rich opportunity in combining Shopping campaigns with search or YouTube placements via Performance Max, deepening audience reach and staying visible during the modern shopper’s non-linear online journey.

Site Readiness and Mobile Optimisation

More than half of Kiwi online traffic now comes from smartphones. What happens after a user clicks a Shopping ad is just as vital as the ad itself:

• Mobile landing pages must load fast and function without friction.
• Product availability should match the ad (avoiding “out of stock” headaches).
• Pricing, GST, and shipping info should be clear and up to date.

Neglecting mobile experience can wipe out much of the advantage that Shopping campaigns bring. For resource-stretched SMEs, using mobile-responsive platforms (like Shopify or BigCommerce) linked to Merchant Center can eliminate many common pitfalls.

The SME Versus Large Retailer Equation

Small businesses and large chains see different benefits and challenges with this integration. SMEs enjoy the flexibility of pay-per-click (PPC) budgeting and the immediate analytics pipeline, making ROI adjustments in near real time. They often rely on turnkey integration (e.g. Shopify’s Google feed app) to keep administrative overhead manageable. But they may need outside specialists or agency support to optimise feeds, troubleshoot disapprovals, or make the most of advanced Analytics features.

Large retailers, on the other hand, can deploy dedicated teams for intricate feed management, handle multi-region set-up, and experiment with Performance Max’s most advanced features. These stores can link entire in-store inventories to Shopping ads, coordinate omnichannel campaigns, and build intricate attribution models. The flipside: there’s higher operational complexity, greater spend risk, and often a slower internal review process before changes hit the market.

See What’s Working: Metrics That Matter

A disciplined approach to reporting is the difference between data-driven momentum and aimless advertising. In Google Ads and Merchant Center, critical performance indicators include:

• Impressions and CTR: How often are ads seen, and how frequently do users click?
• Conversion rate and cost per conversion: Is the traffic actually buying, and at what price?
• ROAS and average order value: Are you hitting sales and profit goals?
• Impression share (and lost share): Are you winning or losing ground to competitors in your sector?
• Product-level analytics: Which SKUs drive the lion’s share of sales or suck up budget with little to show?

For best-in-class operators, KPIs are not just tracked—they’re used to inform merchandise strategy, shift budgets between campaigns, and trigger fresh feed updates. Google’s built-in benchmarking data and auction insights also let you see exactly how you stack up against the competition in real time.

Lessons From Kiwi E-Commerce Campaigns

Practical results from Aotearoa back up the playbook. Divergent Digital, an Auckland agency, propelled a mid-sized retailer to a 13× return on ad spend by refining product feeds, splitting campaigns by margin, and leveraging Smart Bidding with Performance Max. Careful feed optimisation (not brute campaign spend) delivered the best uplift.

Meanwhile, industry observers warn that even smart Kiwi SMEs frequently miss out by “setting and forgetting” campaigns, ignoring mobile formatting, or relying on broad search terms that eat up budget without strong intent. Discipline, clear reporting, and continual adjustment are the keys.

A variety of tools are available to help: Merchant Center’s diagnostics and performance dashboards flag feed or compliance issues; Google Ads surfaces product-level and group insights; and linking to Google Analytics extends this clarity across your site’s funnel. For more advanced reporting, Data Studio or similar BI platforms let you build unified dashboards blending all sources.

Sizing Up the Landscape

The bottom line: the interplay between Google Merchant Center and Google Ads has changed the game for retailers who want to target shoppers meaningfully, manage spend precisely, and let product data tell a story. Success rides on technical accuracy, local knowledge, and an ongoing commitment to optimisation—qualities that, regardless of size, help every Kiwi business punch above its weight online.