EcommerceBytes-NewsFlash, Number 2987 - January 25, 2013     2 of 3

Will Google Shopping Become a Marketplace?

Email This Story to a Friend

Google announced earnings this week, and Wall Street analysts were trying to gauge the impact Product Listing Ads had on the company's advertising business.

Where online merchants were previously able to send Google a product listing feed to get free exposure on Google Product Search, Google killed the free model and moved its to a paid ad model, known as Google Product Listing Ads (PLA).

In a post earnings conference call, Google CEO Larry Page was asked about Google Shopping - "the consumer still needs to leave the site to transact. Do you anticipate a mechanism whereas users can actually transact on Google Shopping without having to leave?"

In other words, would Google Shopping become a marketplace where consumers can shop directly rather than going to the merchants' own website?

Page said in response to the question, "We've seen tremendous uptake from merchants and from users and I expect that quality of the site, the ease of buying things will improve over time and I am really excited about that. I am not going to comment on details about that, but we're always focused on making our user experience better."

Not a yes, but not exactly a no, either!

During the presentation, Nikesh Arora, Google Senior Vice President, Chief Business Officer, was talking about the company's investments in search, particularly in mobile and shopping, which he said were really helping clients.

"Now, let me give you an example. Front End Audio. This is the company that offers recording and light sound equipment sales. Sometime in mid-September, they deployed Product Listing Ads, within weeks these ads were accounting for about 15% of the total sales. They also tripled their click through rates and also reduced their cost per conversion by 75% to 80%. This is great for us, because the product we believe is in the interest of the end users. It's a great product for Front End Audio improves their economics and improves our economy."

In a note published after Google's earnings report, Wall Street analyst John Blackledge of Cowen and Company noted that Google would not say if PLA ads were cannibalizing other Google ad formats, but suspects merchants have increased their ad budgets.

He wrote, "While Google would not confirm the impact of PLAs impact on share of client budget or cannibalization of sponsored listings (for the same product), our channel checks on PLAs suggest that PLAs have increased client budgets, increased ROI (similar to the Front End Audio example) given higher click through and lower cost per conversion, while not cannibalizing sponsored ads. While it is still early for PLAs, we would look for more clarity around key PLA metrics/data points from Google."

Shawn Milne of Janney wrote in a report, "While Google remains noncommittal about the eventual shift towards more of an online marketplace, we believe the shift to PLA bears watching from an Amazon, eBay perspective - alongside other services such as Google Wallet, Offers, and other tests."


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 ina@ecommercebytes.com.


You may quote up to 50 words of any article on the condition that you attribute the article to EcommerceBytes.com and either link to the original article or to www.EcommerceBytes.com.
All other use is prohibited.