From today, Google Shopping will begin the migration to a fully commercial model in the UK.
Back when these changes were coming to the US, Google’s VP of Product Management stated the following:
“We believe that having a commercial relationship with merchants will encourage them to keep their product information fresh and up to date. Higher quality data - whether it’s accurate prices, the latest offers or product availability - should mean better shopping results for users, which in turn should create higher quality traffic for merchants.”
This is a stark contrast to the statement in their 2004 Founders’ Letter, in which Larry Page and Sergey Brin wrote under the heading “Don’t Be Evil”:
“Our search results are the best we know how to produce. They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating….We believe it is important for everyone to have access to the best information and research, not only to the information people pay for you to see”.
Data released last week in regards to performance of commercial Google Shopping Ads provided some insight into what we can expect here in the UK once the migration to an exclusively paid model is completed sometime in June.
Until then, the Ads shown from mid February onwards will still be a mix of free Google Shopping and Paid listings in the form of Product Listing Ads (PLAs).
Promising statistics from PLAs in the US
The statistics confirm the following:
Google Shopping ads (in the US) see an increase in clicks and impressions during 2012
- New research from Marin Software suggests that advertisers that have launched Product Listing Ad campaigns in the US have achieved a great deal of success.
- More than 100,000 retailers had inventory in Google Shopping by the end of September 2012 and reaped the rewards during the holiday season.
- The click share for PLAs increased in the US from 2.1% in January 2012 to 6.6% in December 2012, indicating that shoppers are finding the ads increasingly relevant to their search queries.
- Furthermore, one month ahead of the transition from free to paid, the share of impressions of PLAs compared to standard PPC text ads was 4% to 96% respectively, but by the end of December this had increased to 6.1% impressions.
- On top of the increase in click share and impressions, PLAs ended 2012 with a higher click-through rate (CTR) and lower average cost than text ads.
These statistics all seem very promising, but this data could also be interpreted differently. New research from Marin Software suggests that advertisers that have launched Product Listing Ad campaigns in the US have achieved a great deal of success.
The question is, would these businesses have achieved the same level of success without having to pay for it? Could this ‘great deal of success’ still be applicable even if retailers were still able to use the free version of Google Shopping?
- More than 100,000 retailers had inventory in Google Shopping by the end of September 2012 and reaped the rewards during the holiday season.
Again, would this have still been as successful if not a commercial model? Not only that, but by measuring success in Q4, these statistics may be skewed by the seasonal YoY trend?
The increase in PLA click share in 2012, indicates that shoppers are finding the ads increasingly relevant to their search queries.
Prior to the changeover to a commercial model in October, click share would be lower – after all, what business would want to pay to show their products when there was still a free service available? Therefore, the PLA click share would have increased, as businesses that wished to continue using Google Shopping would be filling the gap using PLAs. In terms of users finding the ads ‘increasingly relevant’; how was this measured? With small businesses no longer able to compete, how many bargains are consumers missing out on?
- Furthermore, one month ahead of the transition from free to paid the share of impressions of PLAs compared to standard PPC text ads was 4% to 96% respectively, but by the end of December this had increased to 6.1% of impressions.
If your business relied on selling a product based on what it looks like – for example, apparel, wouldn’t you want users to actually see your product before visiting your site? By removing the free service that Google Shopping provided, which did exactly that, many businesses would have seen more value in using a PLA than a text ad, and furthermore, not only are they more likely to be relevant as the product shown matches what is in your data feed, PLAs will also stand out far more than a text ad!
- On top of the increase in click share and impressions, PLAs ended 2012 with a higher click-through rate (CTR) and lower average cost than text ads.
Lower average cost = Not as many advertisers doing it yet? Higher CTR% = Nearly two-thirds of SERP’s above the fold are now paid listings?
So, is there any good news?
There sure is, but be ready for the migration well in advance. Not only will this give you an advantage over your competitors, but you will already have historic data you can make informed decisions on, rather than setting a PLA campaign live a few days before the deadline.
More good news is that in the US, Amazon has already decided not to enter into the commercial model of Google Shopping, which opens up a huge portion of the market with the shopping giant dropping out of the running, providing Amazon UK follow suit.
If you didn’t rely on generating revenue from Google Shopping previously, chances are you won’t feel the need to begin using PLAs, and you could find that your business could be improved if you do decide to begin using PLAs.
And if you did use Google Shopping, the new paid model will, to a certain extent, provide merchants with more control, as the free Google Shopping model gave no guarantee that products would be shown, and no accurate way of measuring how you were performing against your competitors’ listings.
By matching products to your data feed, which can be optimised and tested over time, you can ensure that the ads you serve are high quality, which should, in turn, lead to better conversion rates. And with the addition of negative keywords and a well planned bidding strategy, you should be able to manage what you’re prepared to bid on more effectively.
You can also bid as little as 1.p - so if you have a low margin product, why not stick a tiny bid on it? After all, you’ve got to be in it to win it!
You will also be able to include unique selling points on some PLAs, which again gives you a better chance of your ad being clicked.
And any more bad news?
Perhaps for smaller online retailers, and perhaps for consumers too. Many people have claimed that this move is also going to impact on consumers’ shopping experience rather than enhancing it. With the commercial version of Google Shopping, consumers will find it harder to sniff out products with the lowest price; as only retailers that pay to be on Google will appear in the search results. This will not only mean that consumers will miss out on deals, but will also eliminate smaller online stores from the results altogether, limiting the choice the consumer has further.
If small businesses do choose to still go ahead with Google Shopping, in order to be able to bid competitively, chances are they will end up raising their price, which in turn makes the end up being less competitive.
Big brands are able to finance a huge advertising budget, which also means they can probably afford to advertise on Google without substantially raising their prices to absorb this additional cost.
Unfortunately, this change does seem to cause more impact on revenue for smaller businesses, and it does seem to be a lose-lose situation - pay to advertise, increase product prices and lose out to a lower-priced company, or choose not to advertise and miss out on being seen by potential buyers. The impact on small businesses has already been felt in the US.
What do you think of Google Shopping moving to a paid model in the UK? Do you think this change will affect your business in a positive or a negative way, and if you are a consumer, do you think that you will lose out?
