How Google Shopping Changes Impact Merchant Traffic - Part 1
By Ina Steiner
Online sellers received bad news in May when Google announced it was eliminating its Google Product Search offering that drove free traffic to product listings and was moving instead to a pay-to-play model.
For the past 2 months, merchants have been struggling to adapt - but was the news as bad as some predicted?
EcommerceBytes talked to three companies to find out what effect the Google Shopping changes have had on their clients and get advice on what sellers can do to adapt. Frank Kochenash is Vice President of Product Services at Mercent; Larry Weeks is Director of Performance Marketing at Channel Intelligence (CI); and Mike Effle is CEO of Vendio.
All three panelists said they saw a drop in free traffic from Google to their merchants' product listings immediately after the announcement, and then saw clients boosting their budgets for Google Product Listing Ads (PLA). Here's more on what they had to say.
EcommerceBytes: Google said it would spend the summer testing Google Shopping exposure on Google.com. What changes have you observed, and how do they impact online merchants?
Larry Weeks (CI):Free traffic dipped right after the announcement of Google Shopping and the decrease in free (traffic) accelerated in June, and at the end of June and into early July, PLA traffic increased and surpassed free Google traffic in our CI index. If we break out and look at apparel, trends were slower with the change than other verticals in our index.
Frank Kochenash (Mercent): Google indicated they would test in May and shift all traffic to a paid Google Shopping model by October 1. It's definitely happening. For Mercent clients, GPS traffic is down 60-70% on a year-over-year basis and we have yet to see PLA traffic bridging the gap.
Mike Effle (Vendio): We expect Google to continue to test and optimize ad formats and placements throughout the summer and obviously continue optimizing post October 1. We are already seeing this behavior and other tangible differences that are already requiring merchant changes.
The first step in the transition from Google Product Search to Google Shopping has already taken place. Google unified their advertising policies, which were all transitioned to the more stringent AdWords policies.
Some merchants can no longer list the breadth of their product catalogs due to newly prohibited items such as knives or tobacco products. While not a change that impacts all online retailers, it created a significant impact for those affected. Retailers have minimized the impact by retaining their Google participation in the product categories that are allowed using SingleFeed's SKU-level exclusion functionality.
More unanticipated changes like this are likely, so online retailers that use tools to automate their various programs across online channels will again be the ones that not only survive, but prosper from them.
We quickly observed that many listings were displaying in the new Product Listing Ad (PLA) format and no longer see any standard (old) listing formats in Google search results. We are also seeing Google experimenting with several display formats in the search results in an attempt to utilize their "above the fold" space as effectively as possible.
In aggregate, merchants we've sampled have experienced an overall decrease in performance from Google since July 1st. (Google Product Search made up 38% of revenue from all major Comparison Shopping Engines in July 2011. That declined 29% to 27% in July 2012.)
EcommerceBytes: How have merchants who use your services reacted to the change from free to paid, and are they looking at alternative ways to generate traffic to their products?
Larry Weeks (CI): Surprised but not shocked as most of our retailers were already on and testing PLAs.
Our merchants are also moving budget to PLAs as the channel is great for new customer acquisition as Google connects the consumer with the retailer directly, PLA tends to have a higher conversion rates than other similar shopping channels and allows cost control through bidding.
Frank Kochenash (Mercent): Yes. Mercent retail clients are looking for alternative sources of traffic but there aren't many options that scale at the level of GPS. This said, our retail clients are generally increasing budgets to participate in PLA.
Mike Effle (Vendio): The Google Shopping changes are some of the biggest changes in online commerce in some time. Since launching as a free product nearly 10 years ago as Froogle, by our review it has attracted 80% or more of the merchants in the IR 500 and 85% of our merchant base. A lot of merchants are therefore being affected.
These merchants were drawn by an online shopping audience that ranks behind only eBay and Amazon in visits and one that appears to have an even higher average purchasing power than eBay.
Given this disruption risk, merchants are currently split in two on their reaction:
1) Those who are pulling all their feeds in a quick reaction to avoid the issue;
2) Those identifying how to thrive as the world changes. This second group are splitting their time between identifying the best way to leverage the new Google Shopping that will continue to provide valuable traffic to a now smaller number of participating merchants, and learning about alternative sources of traffic and sales for their business.
Some will be adding eBay and Amazon to their marketing mix, channels that currently aren't used as much. Most are going to be evaluating other Comparison Shopping Engines as well.
Some are understanding that the remaining free traffic Google can provide is directly tied to search engine optimization (SEO) strategies, and they are therefore increasing their content and social engagement initiatives.
To Be Continued
In Part 2, EcommerceBytes asks the three panelists if merchants should continue to send their product feeds to Google Merchant Center even if they are not participating in Product Listing Ads, and how merchants should decide which items to advertise. Each interviewee also talks about how selective merchants are in choosing which listings to advertise on Google through its PLA program.
"How Google Shopping Changes Impact Merchant Traffic - Links"
In Part 1 of this series, panelists look at what changes merchants have been seeing over the past 2 months since Google's bombshell announcement and how they reacted to the news.
In Part 2, EcommerceBytes asks panelists how merchants should decide which items to advertise to get exposure on Google Shopping and what merchants should know about getting exposure on Google Shopping.
In Part 3, panelists offer specific advice about bidding for clicks on Google Product Listing Ads and how to manage their product feed to optimize their advertising efforts.
Part 4 wraps up the series by identifying the biggest challenge for merchants in coping with the changes and revealing specific strategies and tactics retailers are using as they go from free Google Product Search to the new Google Shopping platform.
About the author:
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to email@example.com.
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