Just a couple of days ago, Google announced that they will be effectively retiring the free version of Google Shopping. This has led to a number of people complaining about the potential revenue loss and questioning the ethics of Google in using a “paid inclusion model”.
We aren’t here to judge ethics, or complain, but rather to review the changes and ask the following questions:
1)How does this change the marketing landscape for ecommerce merchants?
2)What are the positive and negative impacts?
3)What opportunities are there for enterprising businesses?
The change in how Google decides who shows up, and how the search page is setup will be very big once the transition is complete.
Below is more detail on each of the specific changes:
Unfortunately, the party is over. These shopping results have generated up to 30% of our clients overall gross revenue, while the Product Listing Ads (paid version) have been often more minimal. It’s been free money for a lot of people, and now the party is over. You must pay to play now.
We’ve seen that the product listing ads have been some of the best investments for our clients. They generate up to 50% of all PPC revenue for our clients, at a much lower cost per sale. As the results have become more prominent over the past few months, merchant revenue and results have risen. With the new changes, the shopping results are poised to generate quite a bit more money for savvy e-commerce businesses.
We used to preach to clients that this is a “data war”. The more detailed data you had, the higher you would rank. In the new eco-system, relevancy will be only half of the equation – clients bid price, CTR (click through rate) and their product price will be a much bigger element of performance. On the positive side, many clients struggle with getting detailed data. Being able to launch and get exposure, traffic and sales without 100% of the “optional” data will allow many smaller players who don’t have data entry resources to better compete.
However, it is still very important to get a better optimized feed, as Google doesn’t allow you to bid on keywords to show products. Rather they analyze your feed and identify relevant keywords based off of that. In addition, we theorize that Google will apply a “quality score” to better feeds. In this potential scenario, having more data will lead to lower CPC’s, and lower costs per acquisition.
Shopping Results Layout
As seen above, there used to be 2 different product results showing. The paid one would be in the “ads section”, while the organic one would be below. This probably leads to a lot of confusion on the searchers side, as people’s eyes are naturally drawn to the images / prices, which previously was in 2 places. Now, with the images being much bigger, and being front and center, we believe that the percentage of users clicking on shopping results will be far higher. This means that ecommerce optimization is absolutely essential for every ecommerce business, as SEO & PPC text clicks will be cannibalized by Google Shopping!
In the past, merchant reviews were a big element of ranking. This lead to a catch-22, where smaller merchants couldn’t get as many reviews as quickly, which meant it was harder for them to rank and get more sales to increase their reviews. In the new model, we believe that merchant reviews will be minimized (potentially adding logo’s at the bottom, getting bigger CTR’s and quality scores) in the equation, and we will be able to use higher bids to get in the game for smaller clients.
Google’s Review Sources
In the past, Google used reviews as a major element of ranking. They used to take it from users who purchased through Google Checkout, as well as using major players like Bizrate & ResellerRatings. (We recommend all clients install Bizrate for reviews, as it is free (unlike ResellerRatings). However, now Google has launched in beta “Google Trusted Stores”. This will be a badge you can put on your website, as well as most probably going on search results as well.
We love this idea, and will applying to the Google Trusted Store program immediately.
Having a Google Branded Approval badge can most probably give a decent increase in conversion rates, which in turn will make merchants more money. Additionally, this encroaches on some of the other services out there like Buysafe, that offer money-back guarantees to customers to increase confidence. They report increases of 7% up in conversion rates, so this is definitely valuable.
Previously, a lot of marketshare opportunity was lost, because Google would list your site as one of dozens or hundreds of merchants selling that product. As mentioned above, the people up on top tended to be the big players like Amazon. Additionally, SKU tied products tended to rank higher, as Google gave them more authority. This left a lot of challenges for non-brand name products. This will change, as according to Google’s screenshot, merchants will now have their own site showing up on the main result pages, even if there is SKU tie.
1)Google Shopping is going to be a much bigger portion of online traffic/sales through Google Shopping. If you aren’t already professionally optimizing your feed, you should do so YESTERDAY.
2)The playing field is going to be leveled a little, as ad spend will replace some of the ranking factors that initially skewed towards bigger companies.
3)Data quality is still extremely important, however, we will be able to launch campaigns without some of the hard to obtain data. Once we do optimize, you will see a lower CPC and show up for more searches.
4)Budgets for existing/new clients will need to be raised for PPC. However, the investment will most probably provide a better ROI than it is right now overall.
5)Diversifying to other channels is much more critical, as this change hammers home the fact that relying on 1 channel is a bad idea.
6)Google is incentivizing merchants to hop on the bandwagon before August. We highly recommend taking advantage of the new potential opportunities.