A Profitero study showed Target’s online prices were 25% more expensive than Wal-Mart’s, which were just slightly more expensive than prices on Amazon.
Why advertise a product for a penny? Here’s why.
The popularity of Google’s Product Listing Ads (PLAs) is growing. In fact, AdGooroo research found that the number of U.S. retailers selling via PLAs jumped more than 25% between March and July this year, from 18,514 to 23,171.
What’s more, the number of PLA impressions generated during the period rose nearly 87%. For comparison, traditional text ads grew just 2.5% during the same time.
With such dramatic increases in usage, we grew curious about the types of products these retailers are advertising and found some surprising extremes in terms of pricing and products on both the high and low end.
To explore this phenomenon more formally, we examined Product Listing Ads with product prices greater than $100,000 and less than 10 cents that displayed on U.S. AdWords in August 2013, as well as those that displayed on U.K. AdWords in that month with product prices greater than 50,000 British pounds or less than 5 pence.
Hey Big Spender (“Watch” Your Wallet)
There were 1,410 Product Listing Ads with prices greater than $100,000 that appeared on U.S. AdWords in August (0.005% of all PLAs displayed). Ads for Patek Philippe watches, ranging from $120,000 to $1.75 million, represented 24% of these high-priced offerings. Watches, in fact, were easily the most common high-priced product offered in the U.S., with ads for expensive watches across all brands accounting for 49% of the PLAs above $100,000.
The next most commonly listed items at $100,000 or more were jewels and jewelry, recreational vehicles, generators (including wind turbines), lap pools and industrial machinery. Among the most unusual expensive items listed in PLAs in the U.S. were an Eames chair, a 65.5-foot Christmas tree (with lights installed), a demolition robot, and a 24k gold-plated vacuum cleaner (at $999,999).
In the U.K., we found 633 PLAs on AdWords in August with price points greater than £50,000 (0.014% of the total number of PLAs displayed, which is 2.74 times the frequency of high-priced ads on U.S. AdWords).
Watches also dominated high-priced U.K. PLAs, with a variety of brands such as Hublot, Audemars Piguet and Tourbillon accounting for22% of the offerings. Other high-priced items found were 12.5 kilo gold bullion bars at £340,000), black diamond nail polish (267 carats in the bottle) at £160,000, a Burberry Mid-Length Alligator Leather Trench Coat (£75,000) and Steinway grand pianos.
How Low Can You Go?
8,775 Product Listing Ads appeared on U.S. AdWords in August (0.032% of all PLAs displayed) with prices less than 10 cents, while only 17 U.K. PLAs displayed a price less than 5 pence in August.
The low-priced ads in the U.S. and U.K. were dominated by products with low per-unit prices:
- plastic items (wristbands, stickers, rope sold by the foot)
- golf tees
- medication (e.g., 5 mg Prednisone tablets for pets)
However, there was also a fair amount of low-end PLA pricing on U.S. AdWords, in particular, being used to get the consumer “in the door” so they could be upsold. Examples include custom PCs and furnishings at a base price of 1 cent with discretely priced add-ons, and cell phone hardware and plans listed at 1 cent or free, but requiring long-term phone contracts.
You Better Watch Out (for Pricing Errors)
One very practical application of examining PLA pricing is to reveal errors in an advertiser’s Merchant Center feed. And find them we did. For instance, the PLA with the highest price listed was for an Engraver Router Machine (see below) costing $12,973,896. A call to the company confirmed the decimal point was misplaced—it’s actually a $12,973 product.
Other obvious errors included $423,220 hair extension loops, vacuum filter bags for $980,000 and a Casio Projector for 1 pence.
We recommend PLA advertisers closely examine their ads with the lowest and highest price points, especially before the holiday season gets going in earnest, since misplaced decimal points in the Merchant Center feed can produce costly errors and confused customers.
AdGooroo, a Kantar Media company, provides search marketing data and competitive intelligence.