In its second-largest acquisition, Amazon buys the company for $970 million.
The ads, which Google introduced in October 2012, enable retailers to display images of products along with prices on Google search results pages. The number of such ads is up 99% in November compared to a year earlier, according to new research.
Google Inc.’s year-old advertising format, Product Listing Ads, are being used by more retailers than ever during the month of November, according to a report by the U.S. Internet Research team at Jefferies Equity Research. Product Listing Ads feature product images and prices from merchants prominently in the central area of a Google search results page. Until late last year, Google included free, text-based ads and a type of ad that looked like Product Listing ads, but were free.
The number of Product Listing Ads in November increased 99%, effectively doubling, to 236,000 in November 2013 compared to the same month last year, the Jefferies report says. The number of advertisers increased 55% to 8,700.
Among the companies that are now investing heavily in Product Listing Ads is eBay Inc., which was absent from Jefferies’ searches the previous November, accounted for 4% of the Product Listing Ads tracked by Jefferies in the recent study.
“EBay’s full-force return to PLAs confirms the effectiveness of the ad format, and suggests that even the largest online retailers see value in paying Google to acquire traffic,” the report says. The report also lists retailers such as Macy’s Inc., which accounts for 3% of the total PLA ads in the study. Other retailers that use Product-Listing ads include Walmart, Home Depot and sites owned by Amazon.com Inc. such as Zappos and 6PM. Macy’s Inc. is No. 12 on Internet Retailer’s Top 500.
Consumer reports show that more consumers are using Amazon for product-related searches and that Product Listing Ads are Google’s attempt to win back e-commerce traffic from the e-retailer. ChannelAdvisor Scot Wingo, however, doesn’t see Product Listing Ads as a real threat to Amazon.
“Google is clearly losing share in e-commerce to Amazon and PLAs are a step in the right direction, but ultimately we believe Google will have to build a marketplace to have a consumer experience as good as Amazon and eBay, especially on mobile,” he says.
One of the key reasons for the ad format’s growth is the return on investment that comes with Product Listing Ads, according to Kenshoo, a digital marketing technology company that helps retail clients bid on Product Listing Ads. Product Listing ads on average generate $9 in sales for every $1 spent, the agency says.
Kenshoo provides search engine marketing for 10 of Internet Retailer’s Top 500 and Second 500 e-retailers, and provides social media marketing services for Amazon.com.
Jefferies’ U.S. Internet Research team uses a proprietary script that runs more than 150,000 commerce-oriented search terms through Google’s search engine. The team then tracks the number of Product Listing ads in the search results and collects data like the name of the advertiser, the number of ads per advertiser, and category of each ad.