As sponsored results continue taking over more and more space on the search engine results pages (SERPs) another small revolution is going to change the way merchants approach their SEM strategies.
In May 2012 Google announced that Google Product Search will transition to a “commercial model” built on Product Listing Ads (PLA) and the new platform will be known as “Google Shopping”. The transition, already launched in the US, will be completed in the UK by the end of Q2 2013 with the first major changes to take place in February.
Google Product Search is turning into a paid comparison shopping search engine. On the US website Google states: “payment is one of the several factors used to rank these results.” We can assume that the rank is based on factors similar to the ones used to determine the Ad rank for PPC text Ads: quality of the landing page, historical CTR etc. Rank will not be as crucial as it is for PPC text Ads as users will be able to sort the products by price, but the statement leads to an obvious conclusion: merchants who will not be willing to pay for clicks on the shopping results will see their traffic current driven through Google Product Search disappear when Google Shopping replaces Google Product Search.
Have you been Scroogled?
Many in the industry see the change as a further boost to Google’s profitable Advertising business. Product listing Ads will be entirely managed through AdWords which needs to be linked to the advertiser’s Google Merchant Centre account. Paid Ads already dominate the SERPs and when organic results will disappear from Google Shopping, merchants will have to rethink at the way they allocate budget between SEO and PPC. The biggest critic so far has come from Google’s biggest rival in the search engine market, Microsoft. Last week, the Tech giant launched an aggressive campaign to inform consumers that Google is misleading them providing search results not based on their relevancy but on a pure auction model.
To tell the truth, Google has not made easy for the ones who don’t work in the industry, to understand that the results listed in Google Shopping are paid Ads and the information about how Ads are ranked are rather vague. However, Microsoft seems to have missed something: the bid is only one of the factors determining the rank. Google’s paid Ads model is based on relevancy. The more relevant the results are, the more clicks they generate; the more clicks an Ad generates, the more money Google makes. Relevancy is the crucial factor for Google’s success and the transition will not have a big impact on the consumers. They will continue to see relevant results. The big change will be for merchants: they will have to pay for something they now get for free.
One may argue that Google is using its dominance in an unfair way, charging for services that were once free. But it does so because it is still the best search engine available on the market and users trust it as they believe it provides the best results. An example? Microsoft created the website Scroogled.com to promote their campaign against Google. Search the word “scroogle” on Google and Bing. Surprise: Scroogle.com ranks 1st on Google but it ranks only 5th on Bing!
New Opportunities and Challenges
Accordingly to CPC strategy Google Product Search is at the top of the 10 biggest Comparison Shopping Engines rank based on traffic, revenue, conversion rate, ROI and other minor factors. Google is experimenting new SERPs layouts with more visibility to shopping results thanks to bigger images and central position. In the UK the number of online shoppers continues to grow and the eCommerce sales expect to grow once again in 2013. Google Shopping will definitely be an opportunity to generate traffic and conversions and merchants will have to adapt quickly to the new situation to make the most out of it.
The new Google Shopping will require a higher level of technical management. Merchants that are now only submitting their data feed to the Merchant Centre will have to manage their campaigns through AdWords. The feed will need constant optimisation as every click will cost some money and the goal of every merchant is to maximize the return on investment which means continually monitor the results and trying to reduce the cost-per-click without compromising the CTR.