Google Shopping Product Search Kills Free Listings

Google will begin limiting its Google Shopping search results to paid ad listings only over a period of some months, according to Sameer Samat, VP of Product Management for Google Shopping. Currently merchants must send feeds to Google in order to have product listing appear in Google Shopping search results. While merchants jump through hoops to get the feed into the right format, Google has never charged them fees. But by the fall, merchants will have to pay in order to get exposure in Google Shopping - including Google Shopping widgets on Google.com search results pages.

The move officially makes Google Shopping a Comparison Shopping Engine. Merchants who want exposure to shoppers searching Google will have to participate in the company's Product Listing Ads program in order to have their listings appear in the Google Shopping tab and in the Google Shopping widget that appears on the Google.com search results pages.

Currently when consumers go to Google.com and enter a search term for a product, they see organic search results as well as two "widgets" - one called Product Ads, which are paid listings only; and one called Product Universal, which pulls in paid and free listings from Google Shopping (aka Google Product Search). Update: Google informed me that Product Universal only pulls in free listings.

Above: Google.com search results page as it appears today.

When the transition is complete this fall, shoppers will see only one "widget" in Google.com search results - a Google Shopping widget that includes only paid listings.

Shoppers can also continue to access Google Shopping via a pulldown menu on Google.com (or they can type in shopping.google.com).

Above: Google.com search results page as will appear by the fall - only paid listings will show in the Google Shopping widget.

Merchant Reaction
An executive at a niche marketplace who asked to remain anonymous said this will have a negative impact on his merchants' sales. How does he know? When his marketplace listings were briefly dropped thanks to a change in feed requirements (Google rejected the feed because it did not conform to new requirements), his marketplace took a 20-30% hit in sales, he said.

Samat told EcommerceBytes that having a commercial relationship with merchants will encourage them to keep their product information fresh and up to date, so when shoppers click on a product listings in Google Shopping, the price and availability will be correct. "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," he said.

The marketplace executive predicted the change would result in animosity on the part of retailers, and he predicted the move would backfire. "Shoppers are going to Google to look for pricing," he said. "By having to pay to appear in search results, retailers will have to increase product prices - so the lowest price products will not necessarily be included in Google Shopping search results (after the transition)," he said.

A Blow to Merchants
Andrew Davis of CPC Strategy said Google Shopping has been the top comparison shopping engine for more than 2 years now in its study of CSEs.

"It often sends the most traffic, revenue, and has the most conversions, while simultaneously being 100% free for merchants to use, which puts it at the head of the pack every single time," Davis said.

Asked for his opinion about what moving to a paid-only model would have on merchants, Davis said, "That would be a huge blow to merchants in terms of time and resources. If it was paid, merchants would then need to learn how much, where they're spending the most, and optimize their product placement, probably through a product and category CPC bidding system.

"Since the volume from Google Shopping is relatively high compared to other comparison shopping engines, this CPC bid optimization would need to be done multiple times a week, depending on category, # of products and traffic."

Davis predicted it would hurt merchants in two ways: the new CPC charges merchants have to pay, and the time and resources involved in optimizing their campaigns and continuing to manage it over time.

Is Google Becoming Evil?
Search engine guru Danny Sullivan wrote a blog post yesterday about Google's move toward "paid inclusion."

"Paid inclusion was one of the original sins Google listed as part of its "Don't Be Evil" creed," he wrote. But these days, Google seems comfortable with paid inclusion, raising potential concerns for publishers and searchers alike."

However, Sullivan said despite Google's original attitude that paid inclusion was evil, it isn't. "The bottom line is that Google is doing very good disclosure of its current paid inclusion implementations. There's room for improvement, but it's far better than how many of its competitors disclose paid inclusion, if they do at all."

Samat confirmed that Google's organic web search remains unchanged. "Any results in organic search today are unaffected by this change."

Timeline and details for transition to Google Shopping

May 31, 2012:

• Launch new initiative to create a better shopping experience on Google
• Experiments start on Google.com
• Merchants invited to participate in new experience by setting up Product Listing Ads campaigns

This summer (transition period):

• Begin transitioning Google Product Search from a free to a commercial model, based on Product Listing Ads (PLAs), called Google Shopping.
• Merchants have the option to participate in Google Trusted Stores. We’re also offering two incentives to help merchants with the transition:
• $100 AdWords credit toward Product Listing Ads to those who sign up before August 15, 2012
• A monthly AdWords credit for 10% of their Product Listing Ad spend through the end of the year if they begin running PLAs before August 15, 2012

Fall 2012:
Transition to the fully commercial Google Shopping experience will be complete.

Online merchants - take our survey about the impact of Google Shopping on your traffic and sales - we'll share the results with readers.

Comment on the AuctionBytes Blog. Also see, "How Will Google Shopping Changes Affect eBay, Marketplaces?" on the EcommerceBytes Blog.

Note from the Editor: Article edited for clarity 5/31/12.