Google Shopping: Get Ready for the Big Changes!

"…..feed optimisation will sit at the core of advertisers paid search strategies from February onwards…"

Google has announced its shopping space, Google Shopping, will, for merchants, shift to a paid model of Product Listing Ads (PLAs). This will be rolled out in countries where PLAs are currently live - UK, Denmark, France, Japan, Spain, The Netherlands, Brazil, Australia and Switzerland. The migration will commence 13 February 2013 and completed in Q2 2013.

Presently, both the paid and free (show organically) results are displayed in the search engine results pages (SERPS) concurrently and merchant advertisers can discern the free from paid clicks. However, over the period of migration it will be a mix meaning advertisers won't be able to do so.

Come July, the results will be only in the format of paid PLAs and the previous natural shopping results will no longer appear. Thus, it is of high importance for merchants to optimise their feed according to the PLA requirements.

Advertisers will be competing in the new system as they currently do for PLAs. Products displayed on users' Google results will be based on relevancy, i.e. QS (Quality Score) and the maximum cost per click (CPC). PLAs will either appear on the top or on the right hand side of the SERP. In the new setting, natural search will remain relatively unaffected whilst advertisers will be charged when a user ends up on their site. Clicks to the shopping space will be free.

Fig 1: Future SERP

Google Shopping 1

Google Shopping 2

Google says the update will improve users' shopping experience. It believes free and paid imagery of products crowd the SERP, potentially causing duplication.

So what does this essentially mean for advertisers?

  • Google will display one view of the Product Universe whilst effectively 'forcing' merchants to provide improved quality of inventory and accuracy of data. So Advertisers will need to optimise and manage their product feeds, which for many will require further expertise and ultimately more time and resource. Furthermore, the feed will need to be optimised in real-time and in line with Google's product feed specification


  • As the majority of retailers will populate the Merchant Centre with their feeds and run PLA activity across Google Shopping, competition will increase. This in turn will inflate CPCs, by as much as 15-20% . Ultimately this could see some advertisers competing on position in the PLA space together with their price points


  • From both a cost-efficiency and market share perspective, retailers that manage to make a quick turnaround and adjust rapidly will be in a better position


  • Retailers that don't or can't find a compelling offering / struggle with the additional cost, could find themselves pushed out by the competition. Small retailers in particular might well find the new paid channel/forecast increase in CPC to be too costly/unaffordable


  • With PLAs appearing in a more prominent position, standard ads in the paid space of the SERP could be cannibalised/their performance could deteriorate


  • Retailers may find it even more difficult to see the benefit in bidding on generic keywords


  • Advertisers may have to think of Google Shopping as a separate channel, one which is further along the buying circle commanding relatively low cost per acquisition (CPA)

Advertisers may benefit from an enhanced quality of leads and incremental growth as they obtain more control over who is landing on their site, based on products that they decide to push via PLAs.

How will Google Shopping be viewed under the new circumstances?

Many merchants acquire a significant amount of revenue from Google Shopping, for instance one of Greenlight's retail clients earns an annual revenue of £500,000 from Google Shopping. Being made to pay for what is in effect a channel in its own right, may be a bitter pill for many to swallow - ultimately Google stands to gain huge $revenues from this move.

The new product universe might end up being a major focus for Google and one it may well seek to create optimisations, tests and betas around, in a similar fashion to how it has radicalised the core search space over the years.

There are questions aplenty that still remained unanswered. Will advertisers eventually focus on investing more on PLAs and pull back on standard ads? Will the new SERP be overtaken by product images? How will the new format of Google Shopping be seen by advertisers, will it be considered as a separate channel or just another step down the PPC buying funnel? Finally will there be a clear distinction between clicks from the SERP and the Google Shopping space?

What we do know is that Google is planning to have a universal feed across all industries, i.e. finance, travel and retail, creating a universal shop that is run with the same feed. In the course of time, we may see consumers using Google Shopping as a search engine for purchasing services and products considering that product information will be displayed adequately and comparing goods will be much easier.

Given these advancements it is imperative advertisers and agencies alike are aligned with the new approach and take into account feed optimisation, as it will undoubtedly have to sit at the core of their paid search strategies from February onwards.   

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