Game changer Google: online shopping in transition

In the past, Google has drastically changed the rules of the game in the area of ​​Google Shopping. Another turning point is currently taking place, with serious consequences for the industry. A contribution as part of our Dmexco theme week.

Froogle, Google Product Search, or Google Shopping. History has produced various titles for Google’s shopping universe. In 2002 Google started the “Froogle” project in the USA and Great Britain, and since 2008 the Google product search has also existed in Germany. Even then, it was possible to influence the display and ranking of products in the organic search results: the more rich the data feed sent to Google, the better the cards. Optimizing shopping feeds was a lucrative business model for agencies that suddenly cracked when Google stopped displaying products for free.

Product listing ads: Shopping ads cost money

At the beginning of 2013, Google introduced the chargeable Product Listing Ads (PLA) in Germany . From then on, advertisers had to spend money to display their products on Google. While the organic presence of product results gradually collapsed, the new PLA appeared in the top positions of the search results pages. The paid version was well received because the investments paid off: Compared to the regular Adwords ads, the new PLAs stood out due to their higher conversion rates and, on average, lower cost-per-clicks (CPC). The Google Shopping ads established themselves as highly relevant traffic and sales drivers in e-commerce.

From feed optimization to shopping campaigns

For advertisers and the agencies at their side, the change meant a realignment. While the optimization of product data feeds was the focus of efforts so far, the new system required the data feeds to be linked to Google Adwords. If you wanted to advertise successfully via Google Shopping, you had to learn to set up shopping campaigns. The core competencies consequently migrated to search engine advertising (SEA). A high quality product data feed is still essential for a successful shopping campaign. In order to play this out, however, you need sophisticated and delicate campaigns that are controlled via Google Ads (until recently Adwords).

EU Commission condemns Google to record competition penalty

The importance of Google Shopping grew so much by 2017 that the European Commission began to listen carefully. Only products from its own price comparison site, Google Shopping, were found in Google’s search results. On the grounds that the US group had “placed its own price comparison service at the top of its search results and downgraded the comparison services of the competition”, the EU imposed a record competition fine of 2.42 billion euros on Google and ordered the giant to make its shopping playground for others Open product searches and price comparisons.

Google opens up the world of shopping for external price comparisons

At the end of September 2017, shortly before the EU Commission’s 90-day deadline, Google announced that it would decouple its Google Shopping service, which had previously been integrated into the web search . Since then, the Google price comparison has had to book ad spaces itself on the search results pages and is in competition with other so-called “Comparison Shopping Services” ( CSS ). In order to enable competition, Google granted the competition a not inconsiderable margin on the click price on shopping ads. However, these measures had little effect. Apparently, the existing price comparison sites with their business model could not make a profit from the new auction system. You accused Google of distorting competition again earlier this year. AA study by Seachmetrics confirmed Google’s unbroken dominance of shopping ads: In December 2017, the search engine still controlled up to 99 percent of PLA.

The problem: The price comparison sites faced several major challenges. In the fight for the display of their shopping ads on Google, they competed with the advertisers and specialized agencies who benefited from their know-how in setting up shopping campaigns. The click prices to win the auctions were apparently too high for Google’s competitors, despite the margin granted.

Google is pushing competition, CSS landscape is flourishing

For some time now, especially in Great Britain, it has been possible to observe what Google has been striving for for over a year: the competition for ad space on Google Shopping is booming. This trend is currently spilling over to Germany. Instead of “From Google”, external price comparison sites are increasingly visible under product ads. What are the reasons for the suddenly emerging competition? Google has managed to convince service providers such as tech providers or agencies to get involved in the CSS environment. On the one hand, Google promises merchants who run their shopping ads via CSS, lower click prices. In addition, Google started a time-limited incentive program called “Spendmatch”, which offers advertisers financial reimbursements in Ads accounts under certain conditions.

Price comparison site as a heavyweight in competition

The race to build price comparisons is in full swing. It sets the entire industry in motion and even throws it a bit into chaos: If CSS providers and companies benefit from the lower click prices, there is soon a risk of a price war among the product searchers. Many questions arise. How are advertisers dealing with the new situation? If you import your ads via an external CSS, you can either reduce the click prices by the margin estimated by Google or keep them stable and expand your reach. How long will Google maintain the additional financial incentives? Price comparison sites are sprouting up like mushrooms right now. Will Google soon tighten the requirements for price comparison sites in order to curb the hustle and bustle? Hopefully

What plans Google still has for its shopping channel remains exciting. There are first indications that Google Shopping could in future have a shopping cart to position itself in the fight against Amazon – that would be another game changer for the entire industry.

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