In previous installments of Online Selling Trends, our panel of ecommerce leaders discussed the challenges and opportunities that lay ahead for online sellers in the New Year and answered the question, Amazon – friend or foe?
In today’s installment, panelists discuss how Google Product Listing Ads have changed ecommerce.
EcommerceBytes: How have Google Product Listing Ads changed ecommerce?
GoDaddy SVP of Productivity Apps Steven Aldrich: What are PLAs? PLAs are ads on the search results page that showcase an image and details of a product being sold. Google morphed their previously free Google Product Search into the paid Google Product Listing Ads (PLAs) (in 2013). E-tailers big and small are the target advertisers for this.
How widespread are PLAs? By the end of the Thanksgiving shopping season of 2013, these ads showed up in 40% of Google’s search results. Google answers more than 1 billion search queries a day. So PLAs appeared on 400 million page views a day by end of the Thanksgiving shopping season.
Ecommerce behemoths forced to share the bounty with Google: The immediate impact PLAs have had on ecommerce is that they push down organic search results for companies like Amazon and eBay. The lower the organic results the lower the likelihood for a potential customer to click on them, making it critical for Amazon to spend on PLAs to still get the same exposure that was previously free. This is a way for Google get a slice of the commerce pie and it seems to be working. In the beginning of the year, Amazon accounted for 1% of PLA ads. However, by the end of the year, they accounted for 2%.
E-tailers who are willing to spend on search marketing have an alternative to Amazon and eBay: A second direct impact of the ad format has been that Google performed stronger than Amazon this year on Cyber Monday. Online sellers saw a 54% increase with Google as opposed to Amazon’s 23% increase. This means retailers using PLAs benefited more than Amazon third party sellers.
Long term impact:
PLAs position Google to regain relevance as a driver of ecommerce sales and bring it closer to Amazon in the space. Since Google’s ranking philosophy has been focused on relevancy while Amazon’s is about the seller reviews, fulfillment and shipping, etc., this changes the ecommerce landscape. However, Google has started emulating Amazon in how they rank product results so it is possible the innovation on this stays driven by Amazon. Overall though, the PLAs seem like the beginning of Google’s renewed focus on retail. In the long run, this means more options for online sellers, greater competition for their business from the likes of Amazon and Google but also the likelihood of higher customer acquisition costs as search clicks shift from organic to paid results.
Endicia General Manager Amine Khechfe: Google Product Listing Ads have certainly upped the ante when it comes to online competition. Showing up on that first page of search results is of such incredible value that businesses will be vying for the attention.
Unfortunately, that may mean that the business with the biggest advertising budget will win.
Note: StellaService CEO Jordy Leiser abstained from this answering this question, as Google licenses StellaService data for use in several products, including Seller Ratings & Profiles, AdWords Review Extensions and Google Trusted Stores.
This year we extended this feature to include the perspective of some sellers. See the interviews in Online Selling Trends Part One, “Rising Cost of Shipping Presents Challenge”; Part Two, “Standing Out in the Crowd,” and Part Three, “Fakes Spell Trouble for Vintage Goods.”
And stay tuned for the next and final installment of Online Selling Trends 2014.