October 20, 2011, 2:14 PM

Google’s new paid search program ties retailer inventory to ads

The search engine says Dynamic Ads can increase ad clicks by up to 10%.

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Google Inc. today launched a search marketing program designed to enable retailers to better tie their online ads to products that are in stock.

Google has tested Dynamic Search Ads with an undisclosed numbers of web advertisers, says Baris Gultekin, Google’s director of AdWords product management.

He describes Dynamic Search Ads as a “whole new approach” to Google’s AdWords program, which places relevant paid ads on search results pages. He says the new advertising program reflects the high rate of inventory and product changes increasingly found on e-commerce sites.



Here is how Dynamic Search Ads works: Google’s web crawlers keep track of participating merchants’ inventory. When a consumer searches for a product on Google, Dynamic Search Ads can create an ad based on the both the search query and the merchant’s most relevant landing page. The new ad enters the Google paid search auction as would other ads through AdWords—but Google says it will not display the Dynamic Search ad for any search is already bidding for ad placement on that keyword. That prevents the new Dynamic Search ads from disrupting retailers’ existing paid search campaigns, Gultekin says.

The new Google ad program is hardly groundbreaking, as some online marketing agencies offer their own tools that provide similar functions. For instance, Kenshoo Inc., which sells software that helps manage paid search programs, has offered its RealTime Campaigns since 2009, says a spokesman for the company. But the new Google program enables retailers to work with some of the same technology without buying software from a vendor.

Retailers taking part in Dynamic Search can decide whether to target their entire e-commerce sites, or pages with specific words, products or URL strings, Gultekin says. Retailers also can set up negative keywords within the program. Negative keywords can help protect retailers from paying for ad clicks for search queries that are similar to but not related to the merchant’s product, or that are not likely to lead to sales. For instance, a high-end apparel brand may want to bid on “women’s cardigans,” but not “cheap women’s cardigans.”  

Gultekin says testing so far has shown a 5% to 10% increase in clicks for Dynamic Search ads compared with regular paid search ads, and a “positive return on investment.”

Performics has tested Dynamic Search with a large multichannel retailer, says David Langert, account manager for the online marketing firm. That retailer has enjoyed a 7% increase in revenue, a 4% increase in conversion and a 44% decrease in cost per click when compared with its other paid search efforts. “Dynamic Search Ads are particularly suited for retailer sites where inventory is continually changing,” Langert says.

Based on testing so far by Performics, Langert offers this advice for retailers that will use Dynamic Search:

• Add negative keywords and URLs to the campaigns.

• Use a targeted list of category landing pages instead of the e-commerce home page.

• Set bids below the retailer account’s average cost per click to avoid cannibalizing keyword traffic.

• Dedicate 5% to 10% of the paid search budget to Dynamic Search.

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