Google Update

Once Controversial, Google's Product Listing Ads Now A Big Hit

When Google revamped its shopping service last May, it said it would begin charging merchants to list their products. These Product Listing Ads, as they’re called, set off a firestorm of controversy because they represented the first time Google had eliminated a search service that had free listings and made it paid-only.Although Google posed the move as a way to improve the quality of listings, merchants squawked that this would raise their costs to appear in shopping search results. But even more broadly, the move raised doubts in some people’s minds about whether Google’s search engine could still be seen as fair and impartial if its results were affected by who paid it for shopping listings.Well, so much for that issue. Not that it has gone away completely, but by several accounts, Product Listing Ads are a big hit with both advertisers and consumers. A study released this morning by ad management service Marin Software indicates that the share of clicks PLAs got as a portion of overall search ad clicks last year more than tripled. They were still a single-digit percentage of text search ad clicks, about 6%, but Google only rolled them out widely in October.Marin also says that whether merchants wanted to pay or not, they did–increasing their investments in the ads sevenfold, to 3% of their search ad spend as the holiday shopping season peaked. Some retailers spent up to 30% of their search budgets on PLAs, to the tune of hundreds of millions of dollars overall. The ads also had a higher click-through rate and a lower average cost than text search ads, though Marin doesn’t get specific about those measures. “It appears Google’s bet has paid off,” says Matt Lawson, Marin’s VP of marketing. “This is a piece of how Google is competing with Amazon, which is becoming a commerce search engine.”

This isn’t the first report to document the success of Product Listing Ads. Adobe also said recently that by the peak of the holiday shopping season, in mid-December, PLAs accounted for 17% of all ad spending on Google. And search marketing firm RKG said PLAs accounted for 28% of non-brand paid search clicks in the fourth quarter.Apparent success doesn’t make the ads less controversial, at least among search engine watchers like Danny Sullivan. It just looks like that controversy isn’t enough to keep merchants from using them to make more money.