Google Shopping Ads Explode, Igniting Interest From Retailers (Including Amazon)

PLAYou’ve come a long way, baby.

Product listing ads (PLA), which some consider the crown jewel in Google’s commerce crown, didn’t cost a thing in 2012. Today the paid search product, now referred to as Google Shopping Ads, may be bringing in as much as $8 billion for Google, according to Evercore Partners estimates.

Based on data from Merkle-owned search marketing agency RKG, which saw 70% year-over-year growth in client Google Shopping Ad investments, along with IAB and PricewaterhouseCoopers figures showing retail’s percentage of overall online ad spend, Evercore figured Google Shopping Ads constitute 14% of Google ad spend this year.

Although these estimates served as a proxy for overall Google Shopping Ad growth, the results show that the format is definitely gaining traction.

At RKG alone, Google Shopping Ads drove 50% of non-brand search clicks, up from 35% last year. Adobe Q3 Digital Index data similarly indicated Google Shopping Ads outperformed other search-engine marketing spend, with 34.8% growth year-over-year.

Google began migrating merchants from PLA campaigns to Google Shopping Campaigns in April, and rolled out a number of new features – data-management capabilities that let advertisers categorize based on item ID, price, or merchant name.

“With better reporting from Google’s new Shopping Campaigns, we’ve been able to identify top (and poor) performing product IDs, break them out and optimize more granularly to give us better control over performance,” said Sana Ansari, VP of media operations for agency 3Q Digital.

As Google Shopping Ads become less of a black box, and as Google moves the image-centric ads into a more centralized spot on the search-engine results page, “they are definitely accounting for larger portions of advertisers’ budgets [and driving] higher click-through rates, more traffic and of course more revenue,” Ansari said.

Holiday Shopping (Ad) Spree

The last three months of the year are the Super Bowl of retail marketing.

Last year, Google Shopping Ad cost-per-clicks spiked 70% in Q4 alone, and Google Shopping Ads accounted for 22% of clicks for Google search ads, according to Adobe Digital Index data.

“Q4 is a big retail quarter with the holidays, so you see a big spike in Google Shopping Ads,” said Sid Shah, director of business analytics for Adobe Digital Marketing. “We saw this 35% jump from September to December last year, which was mostly seasonality, but if you look at the share of spend of Google Shopping Ads with respect to the rest of the text ads on Google, we expect it to be a quarter of all Google retail search spend. So $0.25 of every dollar spent on search in retail in Q4 will be spent on Google Shopping Ads.”

Retailers are investing heavily in the format. In an analysis of consumer-electronics keyword spend across 2,500 retailers between Nov. 1 and Nov. 22, search engine intelligence platform AdGooroo found Best Buy dropped the most dollars on Google Shopping Ads at $7.2 million, which was markedly higher than the $2.6 million they spent on standard text ads. Coming in second was, which spent close to $2 million on Google Shopping Ads and $2.8 million on standard text ads.

Amazon ranked fifth on the list – the e-commerce company reportedly spent $3 million on text ads in the first three weeks of November alone. Its investment in Google Shopping Ads, however, was immaterial. But that’s not to say that Amazon hasn’t considered Google Shopping Ads in its search strategies.

According to a report issued last week by AdGooroo, Amazon, which spent close to $158 million on Google AdWords campaigns last year, had invested for the first time in Shopping Ads – in France.

In a survey of top-ranking Google Shopping advertisers on Google France in October, reportedly spent $980,000 for close to 20 million impressions. Whether Amazon’s search activities in France are indicative of its domestic investments is still unclear, but as AdGooroo notes, Amazon’s historic absence from the Google Shopping Ad program “may be giving its competitors a sizable advantage on the search engine results page.”

The investment may reflect a realization on Amazon’s part of the growing influence of Google Shopping Ads, particularly in mobile. 3Q Digital found mobile Google Shopping Ad impressions grew from 7.8 million to nearly 10 million impressions year-over-year in the third quarter.

“Compared to TV, social media, and display, search is very low funnel and practically at the purchase point,” said Adobe’s Shah. Factor in mobile and “a price and picture right in the ad, and that makes it compelling for more clicks. The rapidity in which we’ve seen growth [in Google Shopping Ads] is surprising.”


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