By James Carswell

Google Shopping, which previously allowed merchants to list their products for free, will be switching to a purely commercial model in the UK. Lets explore what this means for everyone.

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Google announced in November that its Google Shopping system, which previously allowed merchants to list their products for free, will be switching to a purely commercial model in the UK, following a successfully completed migration in the USA.

Product Listing Ads

The change will involve a migration to what Google call Product Listing Ads (PLAs). These ads can most easily be created within AdWords and link to a merchant's product feed. The product listing ads will show in Google Shopping but will also be eligible to appear on Google's regular search result pages. PLAs have actually been around for a while already and we have seen some great results from clients who are using them to show product ads within the search results.

The image below shows an example of how product listing ads can appear in the search results. The top right ads with product images are PLAs:

Product Listing Ads

Scroogle?

Google have taken a lot of flak for the move to a commercial Google Shopping model in the USA, most notably from rivals Bing who created the Scroogled campaign that is running both online and in print (image below via Danny Sullivan).

Scroogled?

Bing complains that Google aren't transparent enough in labelling the listings as paid, that the change took place under the radar for consumers and that products are not ranked by relevance but by bid, making them less useful and misleading to searchers.

These claims, however, are not exactly true. Google DOES label product listings as "sponsored":

Google Shopping disclosure

OK, maybe it could be more obvious, but does it really need to be? Google DOES rank products by relevance. OK, bid is certainly a factor in that ranking, but you won't be able to get a product ranking for an unrelated keyword just by bidding high.

How will the change affect users?

Personally, I'm often frustrated by clicking on Google Shopping listings in the UK that lead to products that no longer exist, are out of stock or are now twice as expensive as promised in the listings. It's a poor user experience and there is little incentive for merchants to keep their listings up to date when every click is free. The change to a commercial model should encourage advertisers to keep their product feeds accurate and up to date, knowing that they will waste money if they don't. In this respect, it should be a positive change for users.

There are negatives for users too. In the USA Amazon refused to pay for clicks on their product listings, so they don't show up at all in Google Shopping (though search for many of their products and you'll still find AdWords text ads, so why are they happy to pay for a text ad but not a shopping ad?!).

Fifty Shades of PPC

The lack of Amazon listings in Shopping results turns into an advantage for other advertisers, particularly small, independent stores and websites who often struggle to compete with the big boys. However, if other large advertisers followed suit this could become more problematic, making Google Shopping increasingly useless. How many people would continue to use it if the majority of the country's largest and most well known retailers didn’t appear in the results?

What about for advertisers?

While the added cost of driving traffic via Google Shopping is an obvious downside, especially for low margin products, the addition of a bidding element to the ranking of Product Listing Ads on Google Shopping will provide advertisers with greater control over where their products appear. For highly profitable products, merchants will be able to bid more aggressively to encourage greater traffic. Previously, the only way to influence rankings was by playing around with product titles and descriptions which involved a lot of trial and error and no guarantee of success.

Google will become much stricter with the product attributes that must be provided in merchant centre feeds by requiring things like GTINs (global trade item numbers) and MPNs (manufacturer part numbers), unique product identifiers. This will allow them to clean up the results pages and improve the quality of listings. As a result, traffic quality should increase as people become accustomed these improved results. Advertisers in the USA have also reported an increase in CTR for their regular AdWords text ads when one of their PLAs shows on the same search results page.

It's happening

Whether you like it or not the change is happening, with stage one of the migration taking place on February 13th 2013, from which point there will be a mix of paid and free listings, and the full switch to a commercial model taking place in June.

Stay ahead of your competitors

Early preparation is essential for making the most of the transition to product listing ads. With stage one of the migration, Google will begin to show paid listings on Google Shopping and these will take priority above free listings. It's possible that Google could even begin small scale testing before then, so there could be further benefits for setting up PLA campaigns early.

Incentives

To encourage advertisers to switch to product listing ads sooner rather than later, and ensure that their listings don’t disappear, Google are offering two nice incentives.

  1. Merchants who create a product listing ads campaign before 12th April will receive £75 credit within their AdWords account once they have spent £25 on the PLA campaign. To receive this, advertisers must have had an active Google Merchant Centre account as of 1st December 2012 and must be promoting EVERY product in their new PLA campaign (low value products can be given a 1p bid).
  2. Merchants will receive a monthly credit for 10% of their Product Listing Ad spend from 15th February to 30th June 2013. Again, every product from their product feed must be targeted with PLAs.

We would be interested to hear your views on this switch to a purely commercial model. Let us know your thoughts in the comments below.

We'll follow up this article with some advice on optimising your merchant centre feed and Product Listing Ad campaigns to improve performance very soon, so make sure you subscribe to our blog feed and follow us on Google+ and Twitter.