This document is intended to provide marketers and commerce specialists with a perspective on Google’s announcement that search results on the Google Shopping tab will consist primarily of free listings, helping merchants connect better with consumers, regardless of whether they advertise on Google.
Usually, a digital commerce business would need to pay for its ad placement on Google Shopping. Google has now announced that it will now allow brands that manage a store on its marketplace platform list without paying. It’s worth mentioning that Google shopping started out offering free listings (through Froogle), and moved away from it. At the time, many of the free listings didn’t contain strong data integrity due to various factions (out of stock, different SKU, etc…).
To capture its fair share of the digital commerce growth, Google Shopping needs to accelerate its network effects and begin onboarding more retailers immediately. Google needs a bigger and richer product catalog in order to compete with both Amazon and the emerging Walmart Marketplace. Given the financial struggles these retailers are facing due to the pandemic, the current pay-to-play route doesn’t allow for that.
How it Works
Any business with a ‘Merchant Center’ account with offers targeting the US is eligible to participate in free listings. Those listings will appear on the shopping tab only. Google will be providing reporting tools to track their performance. Meanwhile, Google is still not giving up all its product evenue as the shopping ads will continue to exist and appear on top of the Google search results if users search for product keywords, as well as on the top of the Shopping tab. Google estimates that 10% of paid shopping ads’ clicks come from the shopping tab, and that adding organic shopping listings to that tab will results in a 3-5% increase in aggregated clicks. It’s worth noting if you’re an advertiser that doesn’t have their own D2C solution, they will not be able to utilize from “free listings”.
The Value For...
Retailers: Free exposure to people that come to Google for their shopping needs.
Shoppers: a wide range of assortment offered by multiple retailers discoverable on their shopping tab.
Advertisers: paid campaigns can now be augmented and made shoppable with free listings.
Google: strategic opportunity to expand its role in ecommerce in the midst of a coronavirus-shaped boom.
Like Amazon, Google leverages personalization to create a homepage that’s unique to each shopper. Unlike Amazon, it alerts consumers to potential savings, allows them to shop local stores, and even find products (and inspiration) through Google Lens. Of course, these differentiators won’t really matter if they don’t bring retailers onboard. On the merchant’s end, Google is also partnering with PayPal to speed up setting up merchant accounts and for accepting online payments. Furthermore, by working with ecommerce inventory management companies like Shopify, Google is ensuring that companies operating mostly through their own websites can quickly shift to selling on Google Shopping. Advertisers: For those paying for an ad on Google shopping, now that ad is going to be above a very long and extensive list of high and low quality sellers, which could potentially negatively impact the number of clicks and conversions generally driven by ads.
D2C brands & Small Businesses: Now that the cost of amplification and driving exposure might seem as a none barrier, more brands and maller retailers may be more willing to experiment with ecommerce as another channel to drive revenue.
What This Could Mean For...
SEO & Performance Content Prioritization: Now that search results on the Google Shopping tab are moving directly to the organic search space, it’s paramount to properly optimize all product pages for this new form of discoverability. Deploying search engine visibility tactics, utilizing structured data, and ensuring authoritative visibility by folding into your SEO strategy are all key areas of focus for ongoing optimization management moving forward.
Retail Media Networks: Recently, retail media networks have been monetizing and scaling Co-Op Shopping Ad opportunities. With the shift to an organic approach on the “Shopping tab”, there will be less pay-to-play opportunities for CPG brands, especially those that rely on retailers to appear on Google Shopping. Additionally, retail media networks may lose out on revenue and have a more difficult time scaling their ad offering with the shift.
Advertisers: For those paying for an ad on Google shopping, now that ad is going to be above a very long and extensive list of high and low quality sellers, which could potentially negatively impact the number of clicks and conversions generally driven by ads. DTC brands & Small Businesses: Now that the cost of amplification and driving exposure might seem as a none barrier, more brands and maller retailers may be more willing to experiment with eCommerce as another channel to drive revenue.
Department stores: With state regulations enforcing closures and many retailers and department stores relying more on their websites to offset the decline in their sales, we may start seeing more department stores listing more products on Google Shopping
Tactical Short-term: Will Google get a referral percentage or transaction fee upon conversion (instead of CPC)? Strategic Long-term: Would Google be able to compete with Amazon through a tech platform approach without providing fulfillment or delivery services?