In December last year Google announced plans for rolling out Google Shopping. These new and more distinct looking shopping ads are based on Product Listing ads (PLA) and appear both in a stand-alone shopping section and blend with traditional sponsored links. The change means an end to the free product listings, pulling in advertisers own product SKU feeds, that have been in place for years. The new format will use the same data feeds with enhanced presentation and of course will charge for each click. The new PLA format has been trialed in the USA and Google plan to start introducing it across the UK and Europe, Brazil, Australia and Japan starting in February 2013.

Implications : To clients

Mindshare has run PLA activity in both the USA and Germany. For clients running PLA we have observed between 1-5% of overall paid search budget going to Google shopping. Most clients have experienced an above average CTR compared to traditional sponsored links on the search results page. Good news for advertisers who now no longer rely on text only to attract clicks on the search engine results page but can include images of their products and display them more prominently. In short, initial findings are reassuring from a consumer response and campaign efficiency perspective.

To Google

The days when Google looked more like a one trick pony than a global conglomerate are long gone. Years of pursuing growth through an acquisition strategy has paid off: Google is no longer dependent on revenues from search only. The world’s biggest search engine experienced years of organic growth in the search space but now the question is how it further monetizes with growth slowing to a pace that doesn’t satisfy Wall Street. Google has up to 85% marketshare in most markets. The new model will help re-invigorate growth and no doubt become a staple format alone with the long-established sponsored links top, right and sometimes bottom of the search results page.

Summary

Google’s first step in generating further revenues from paid search is through Product Listing Ads (PLA) – already accounting for 11% of overall paid search spend in the US according to Adobe. In fact, according to Abobe almost all of Google’s search market share growth in the US came from PLAs in the 12 months to January 2013. In the wider context of online commerce this move isn’t surprising. E-commerce is experiencing double digit growth globally and Google wants an even bigger piece of the pie. Selling your products, with Google as the middleman, was never going to be free forever and Google’s has the power over retailers to start charging – or closing the opportunity! Google PLA will undeniably be a success as many retailers simply cannot afford not to be present on Google product listings as they look to grow their own revenues. Those retail advertisers not already using PLA should get onboard quickly –never mind Google eating into their profits. Most advertisers will be used to paying Google for sponsored links anyway. New format old monetization model!

Martin Vinter

A GroupM Company