Changes to Google Shopping have been met with mixed reactions from marketers, with some lamenting the loss of free traffic from the platform, while others welcome the prospect of increased control. The Drum takes a look at the impact the changes may have on UK retailers.
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February saw the rollout of changes to Google Shopping in the UK, with the introduction of Product Listing Ads (PLAs) meaning the model is no longer free for retailers listing their wares. Retailers will no longer benefit from free traffic from Google product search, but on the plus side will have more granular control over product listings, bids and traffic. So what do these changes mean for online retailers’ paid search strategies, and how important is the platform as part of a wider e-commerce strategy?Google Shopping may not have been a priority for retailers in the past, says Tobit Michael, director of paid search at iCrossing, but these developments mean it should now be a key element of any online retailer’s marketing strategy. “Retailers running on Google Shopping but not running product extensions (PEs) or PLAs are missing a trick, and probably a lot of revenue,” he argues. Michael says the agency has typically seen PLAs contribute 10 per cent of direct non-brand sales in the past, with this set to increase to upwards of 30 per cent if stats from the US are anything to go by.Indeed, statistics from the US, where PLAs were introduced in October 2012, suggest huge benefits for retailers who implement early. Digital marketing software company Kenshoo analysed 270m global impressions and clicks aggregated from merchants managing Google PLAs through the company, finding that PLAs outperformed text ads across a number of dimensions, including click-through rate (73 per cent higher) and return on ad spend (46 per cent higher).Kenshoo product manager Irina Bukatik explains the reasons behind improved click-through from PLAs compared with the text-based model: “PLAs allow retailers to be more creative and visual in their paid ads. They can look forward to improved click-throughs and conversions while reducing their CPC expenditure. We really believe it’s a win-win for retailers and they should at least experiment early on rather than wait.”This sentiment is echoed by iProspect global search director Kate Crowley, who argues that retailers not using the platform will miss out: “There’s just no comparison between trying to describe an individual product in your standard 95 character text ad and displaying a large, full-colour picture of the same product in the product listing section.”Paid search is a crucial part of Shop Direct Group’s online marketing mix according to head of paid media Mike Wheeler. So how does the company, which includes Very.co.uk and Littlewoods, see PLAs impacting on its paid search strategy?“We hope to see some short term gains and market share opportunities. This is due in part to the announcement coming in the middle of the retail financial year, which for some advertisers may have meant challenges in securing additional budget to cover their existing data feed volumes,” explains Wheeler. “In addition, some advertisers who submitted a feed when it was free to do so may no longer be in a position to continue,” he adds.Wheeler explains that the group’s profitable volume from paid search comes from the campaign long tail: “The more prescriptive the searcher’s term, the more likely the conversion as they navigate towards the transactional end of the customer journey.”He also explains the place of Google Shopping within the group’s approach, saying that users of the platform have more intention to purchase. “Google Shopping sits in a similar space based on our findings – more intent to purchase, less browsing. It’s also generally anticipated that the change to a commercial model will improve the quality of the data within the advertiser’s feed that is being displayed to searchers.”The biggest expected drawback is the loss of free traffic retailers will experience as Google Shopping shifts from a free model to a paid one for advertisers. iCrossing’s Michael highlights the increased costs as a challenge for advertisers, partly due to the lack of benchmarking in what was previously a free model: “Advertising costs can increase significantly and without benchmarks which makes forecasting less reliable. To date, the tools that Google has supplied have not proved entirely accurate. However, this will improve in time.”There is also the suggestion that reporting may suffer from a lack of clarity when multiple product listings are served from the same search, explains Michael, who argues this may make “accurate measurement of cannibalisation challenging”.The overall consensus is that despite advertisers having to pay for traffic they previously received for free, the paid element of the service will mean retailers and users are more incentivised to make use of it. The previous model is described by iProspect’s Crowley as “the Wild West of shopping experiences”. She adds: “Irrelevant products jostled for position with the relevant ones and you’d be lucky to see one whole page of products related to your search.”Now Google’s review process is far more rigid, higher quality results will ensue, in theory meaning that consumers are more likely to use the service. According to Kenshoo’s Bukatik, when Google Shopping was free, the apathy of retailers when it came to keeping product feeds relevant and updated meant that shoppers simply couldn’t rely on it.“As a paid for service, there’s going to be much more incentive to ensure the most current, accurate information is maintained on retailers’ product feeds. So shoppers will have more trust in Google Shopping and will be more likely to use it – producing more clicks and conversions for retailers,” she says.Google’s latest development has no doubt caused controversy in the world of e-commerce, as advertisers strive to adjust budgets in order to minimise the impact on their Google Shopping results. The good news, however, is that as Google is now making money out of the platform, functionality is likely to improve, enhancing the overall experience for both advertisers and consumers. What’s understood is that Google will only continue innovating as it improves its retail offering – and UK retailers need to take this seriously to use it to their advantage and avoid missing out.How can retailers optimise their paid ads?
“Set budget for PLA, so as not to cannibalise existing PPC spend”, advises Shop Direct’s Wheeler. He also recommends retailers review sections of their product feed to ensure product information is complete and up-to-date, and suggests retailers “review the Google Shopping product feed specification” to ensure their product feeds comply.Adobe’s Beeston says retail marketers need to be “aware of current trends so they can prioritise campaign management efforts and create a strategy and testing process to discover the optimal campaign structure.”Bidding the right amount for ads is also an important issue for retailers, who should consider a PLA-specific bidding strategy, according to Kenshoo’s Bukatik.“We recommend using a PLA-specific bidding strategy, accounting for the nuances of PLAs vs. text ads bidding, such as the lack of position for PLAs. Product-level performance information is essential to bidding decisions and most granular optimisation.”The best way to optimise ads starts at the feed, argues iProspect’s Crowley, who advises: “Make sure that your product names are as descriptive as possible as Google Shopping defaults to the ‘Relevancy’ view when you first click through.”She adds: “Google places emphasis on relevancy in all its search products, and Product Listing Ads are no different. If your feed is poorly constructed then your placements are going to suffer and you’ll be paying more for your traffic.”This feature is published as part of The Drum's search supplement, which is available for subscribers to download or for purchase below.Buy the full 24 page report nowThe supplement was published in partnership with Marin Software.