May 31, 2012, 3:41 PM

Google kills free clicks

In a major change, Google will phase out the free clicks on Google Product Search listings. Instead, retailers will bid for placement of their products in search results, in a new program called Google Shopping.

Thad Rueter

Senior Editor

Lead Photo

E-retailers can start saying goodbye to free listings on the Google Product Search comparison shopping service. In its place will come paid product listings ads through a new online program called Google Shopping.

Google Inc. today announced that it has begun testing and rolling out Google Shopping, which is designed to give shoppers more up-to-date information about prices and discounts, and give merchants more control over where their products appear, says Sameer Samat, vice president of product management, Google Shopping.

“Google Shopping will empower businesses of all sizes to compete effectively, and it will help shoppers turn their intentions into actions lightning fast,” he says. “Today’s changes are a first step toward providing technology, tools and traffic to help power the retail ecosystem.”

Google Shopping will be built on Google’s Product Listing Ads. “Ranking in Google Shopping will be based on a combination of relevance and bid price—just like Product Listing Ads today,” he says.

Instead of bidding on keywords for paid search ads, merchants buying Product Listing Ads bid on the amount they will pay if their product listings in search results attract clicks or result in sales; retailers have the option to select a cost-per-click or cost-per-acquisition model, a Google spokeswoman says. Product Listing Ads can include a product’s price, an image and the name of the retailer selling it.

“This announcement represents a fundamental shift in how Google participates in the e-commerce market,” says Eric Best, CEO of Mercent Corp., which helps retailers sell online through marketplaces and comparison shopping engines, and which today released software to help retailers sell through the new Google format. “Previously, Google monetized shopper traffic. Google is now directly monetizing shopper intent. Retailers will need to manage and optimize Google Product Listing Ads with the same sophistication and technology they apply to their AdWords campaign.” 

Google plans to test and roll out the new format over the summer and complete the change during the fall, Samat says. To help make sure the launch goes smoothly, Google is offering merchants that create product listing ads by Aug. 15 a monthly credit for 10% of their total product listing ad spend through the end of 2012. Google also is offering merchants that now take part in Product Search $100 worth of credit toward the product listing ads.  

Google says that consumers using Google to shop will soon be seeing a revised format, as the search engine experiments with how it lists the product information and ads for consumers doing searches. For instance, a shopper looking for a tent now generally sees paid AdWords ads at the top of the search results page, followed by free search listings and free Product Search listings.

According to an example provided by Google, the new format might include fewer AdWords ads at the top, followed immediately by paid Google Shopping listings—that is, images of five tents with their prices and links to retailers below the pictures—and which are labeled “sponsored.” Immediately below the row of tent images are links that will enable shoppers to browse by tent type—for instance, by clicking links labeled “backpacking,” “ice fishing” or “mountain.” Below those links are free search listings.

“While Product Listing Ads and Google Product Search results are now separate, they'll be combined into a single Google Shopping box in the new [format],” a Google spokeswoman says.

Consumers also might see a larger ad along the upper right corner of the search page that displays a larger product image and information such as customer ratings, a line or two of product description, price, and links to retailers selling the product.  And as it prepares to roll out the new format, Google also is encouraging merchants to take part in its Trusted Stores program. Merchants can display a digital badge that shows consumers such customer service data as average on-time shipping rates, along with a guarantee that if an issue arises with the order Google will work with the e-retailer on the customer’s behalf to address the problem.

In the United States, Google Product Search drives about $650 million in annual sales for online retailers, estimates Scot Wingo, CEO of e-commerce services provider ChannelAdvisor Corp., whose services include helping retailers sell on such online marketplaces as Amazon and eBay.  “The cost of using Product Listing Ads to replace those sales is $130 million per year,” he says. “Every retailer needs to quickly assess the impact and start planning their mitigation strategy, as this has the ability to disrupt annual revenue plans and spend plans dramatically.”

Globally, Google could earn up to $250 million annually from the new program, Wingo says. “Google says these changes were made to improve the user experience,” he says. “Since this will be a paid program, I believe the [product] selection will go down dramatically.” He says retailers will send to Google only data about items that they believe will lead to enough sales to offset the fees Google will charge, whereas now many retailers send Google data about all their products because Google has not been charging for clicks on Google Product Search listings.

Best, from Mercent, said retailers eventually should benefit from the new program and its focus on paid listings. “It ultimately creates less competitive noise and more overall volume for retailers—at a price,” he says.

Comments | 7 Responses

  • This has *always* been on the cards, always. Anyone who couldn't see it coming has been blind. This is all about value. Clicks have value. Google know the value of a click better than any organisation on the planet. If you don't want clicks, don't bother having a website, or an AdWords account. If you don't want to sell stuff online, forget about Google. You too, absolutely have to *know* the value of your clicks. They are absolutely right that a commercial relationship is critical to this - too long has there been so much junk around that people can't be bothered clearing it up because "it's free" (well, actually, that's misguided anyway, nothing on the Internet is "free"). Why do you think G gave us Conversion Optimizer?? So you could call the financial shots, not them. What did they get in return? Commercial DATA. The value of clicks and Sales. I call it "Follow the Money" - earn more than you spend, then spend it all. In Jerry Maguire, it was "Show Me The Money!"

  • I never figured out how Google determined which images are used for the shopping results even having optimized my feed and images. In my niche, it seemed that Amazon and Ebay figured out how to get their images there and get the free clicks. This is great, now I can rotate images and bid against the Marketplaces. For transactional queries users won't have to bypass Google and go directly to Amazon. Not a bad thing for small retailers.

  • Any time I read "businesses can bid" to compete for listings, my conclusion is often that small businesses will ultimately suffer the most. Larger and more profitable companies will almost always win this game, since they will have more money to bid on better listings with their much larger Marketing and Advertising Budgets. I realize I will need to read more about this change in Google's program, but I'm disappointed - albeit far from surprised - to learn of it. My business benefited greatly from this program, largely because it was free. Yes, I get that Google recognizes that, and has every right to ask me topay for those benefits. Still, it doesn't make me any happier about it. In my opinion, it points to the evolving trend in online retail. Initially, there was a premise that the eCommerce was The Great Equalizer, where small companies can compete on the same playing field as the big guys, but over time, it's becoming increasingly clear that the little guys will gradually get elbowed out by those with bigger bank accounts. I guess that's Free Market Darwinism at work!

  • Isn't Google devaluing its search engine by doing this? What is interenet shopping all about? Price comparison over the web. If Google starts charging for searchs and big box companies start pricing smaller retailers out of the Google platform, aren't consumers going to start doing their price comparison shopping elsewhere? if a consumer is looking for a product at a great price and the only retailers that come up in a Google search are the big box stores, well why wouldn't the consumer just go down the street and buy the product from the local big box and save the shipping cost and wait time hassle? What makes Google great right now is that consumers get to see all options for the products that they are looking for. If Google starts only showing products from retailers that pay for spots in its search engine results, well then consumers will only be seeing a small section of what's available. When they start realizing this they will start using other search engines and Google traffic will decrease. I really don't see how this helps Google increase its value as the search engine for consumers. I think the opposite is more likely to happen. That internet shoppers will use alternative search engines to find the best bargin for the products they are looking for because they will start to realize that Google doesn't have everything on the web available any longer. I think internet shoppers are far more savvy than Google is giving them credit for being. And a lot of internet shoppers are specifically looking for unique products that only small retailers carry or are looking for socially conscious companies to buy from. I think most big box companies do not meet the criteria of most internet shoppers and that is why those people shop onlne instead of running down the street to the local big box, they want to find companies that appeal to their values. Google is going the way of the big box companies and it will start to see fewer internet shoppers using its search engine because it is allineing itself with those huge companies that only care about one thing, profit.

    • Agreed with you. But I think Google relys on being so well known, so people will continue to use it (just habits). I understood recently that almost all shopping search engines show products of those retailers that paid them. Now Google is not an exception. And we are talking about a lot of money after all.

  • Great points so far. I run the internet marketing division of a relatively small online plumbing and home improvement store . We currently get a large percentage of our new online business from the free Google feeds to upload. This new strategy they are imposing on us is going to cause us to implement a combination of the strategies below. 1. We will only be able to show high profit products on Google shopping as opposed to being able to display all of our listings on product search. 2. We will have to raise our prices on products due to the nearly 20% take estimated by some for Google due to this new policy. 3. We will have to effectively end our other online marketing strategies and reallocate that money to buy advertisements on Google Shopping. 4. Since our bottom line for selling on the internet is going to be raised we will have to become even leaner in our shipping and warehousing strategies. Google is also going to begin to feature their shopping results as well as other advertisements before organic search which will again hurt us in and our efforts to increase our SEO. All of this is creating a hell-storm for me at work, I have to begin to re-evaluate the programs I have in place and begin to look for alternatives to Google Product Search. The really unfortunate thing is that I can almost guarantee that our large box store competitors will not bat an eye at the increase to their bottom line as they have greater buying power and economy of scale. I think that it is a sad day for Google. I believe as you do that this will inevitably be looked at by many tech savvy people as another step towards the commercialization of the internet. The rich will continue to get richer and small companies like mine will inevitably get smaller and have to fight that much harder to gain any relevance.

  • Just because Google "can" make these changes and make more money by doing so, doesn't mean they "should". Wouldn't it be wonderful if Google acted in the best interest of consumers and small businesses? Just how much money does Google really need to make? Someone please list all the other search engines we can use and get a movement away from Google going here so small business can continue to offer all their product selections for us. Consumers want choice...not just what Google allows a business to afford to offer.

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