Last year Google was rolling out their private beta of Product Listing Ads, and this year most people are eagerly anticipating the public launch. The program has been taken out of Google Affiliate Network and is being merged into the Google AdWords program. The platform switch should allow much greater control and more intelligent penetration into consumer’s retail based searches. The control will come from better management capability for bidding around both CPC and CPA based options. The search penetration is simply growing steadily.

Google Product Ad Listings: CPA vs. CPC

I was afraid CPA was going away, I admit it. CPA has always been a bit of a mythical animal, rarely spotted in the wild. So many companies have tried to do CPA based retail programs, and to date only Amazon has made it work well. With the transition of PLA to the AdWords platform, there were rumors that the CPA program would give in to CPC only. CPC is good because it potentially allows much cheaper conversions if the product actually sells. Spending $.10 on a click to sell a $100 item is a pretty good investment. However with CPC the security blanket is removed, because a retailer could easily get an avalanche of clicks with no sale at all. This is one area where Google shines because they offer a real option of using CPA or CPC, and variable rates can be set up within the same product catalog. Kudos to Google for striking a balance between merchants who prefer one method over the other.

Product Listing Ads vs. Product Extensions

As a quick note, Google is offering and pushing both programs together, however they really aren’t in the same ballpark. One program gives a retailer prime real estate on the upper right corner of a search result page, and the other gives retails a small ‘+’ icon on the AdWords paid listing which very few people click. One merchant I’ve spoken to said that about .003% of people clicked on the icon needed to expand the Product Extension Ad and clicked on a product. Not exactly great penetration.

Expanding Product Listing Ads

So in budgeting for PLA, things can be difficult to judge. The reason is that PLA is still expanding and being tested constantly. I’ve worked to put together some information to show comparisons of different searches across time, however because Google is constantly testing ads, it’s very difficult to judge what kind of reach the ads have. For example, try searching for “Huffy Bicycle” a few times. Sometimes you get a PLA section, sometimes you don’t. Additionally, since PLA is driven by product selection, the ads will only have as much exposure as the current product selection allows. For example, if no merchant selling widgets is enrolled in PLA, then no ads will show for a widget search. Most ads you find now center around Walmart, Target, Meijer, Kohls, and other large brands.

However, as more merchants are getting on board through the beta program, more ads are surfacing. Google seems to stay away from generic words, so ‘teddy bear’ and ‘toys’ don’t pull any PLA results. A search for ‘bicycle’ currently has one result from Kmart, but then “girls bmx bicycle” gets the full PLA treatment including Product Search based one-box listings.

It seems the Toys category in general is getting much more exposure in time for the holidays. I remember doing some searches about 3 months ago and not finding much. So for budgeting, the best way to see what traffic and sales will be like, is to just launch the program.

Matched Listings

One evolution happening is that more and more are ads are now showing matched listings in the results. Below is a screen shot attached for a search on “red wagon”. In both PLA results the listings are matched between 3 separate merchants on the same item. The behavior of these listings will be very similar to the Buy Box on Amazon. For comparison sake, let’s call this the Buy Link.

In this example, RidingStores.com and Cymax have the primary buy link where most consumers will click. The title and image for the product both go to the primary link to the winning merchant’s site. The competing offers from Kmart, Target, and Diapers.com can only be accessed if the merchant name is clicked on. This creates relatively small coverage where only a small percentage of the ad will lead to the non-winning offers. To make it worse, merchants with a  long store name are essentially penalized. In this example, Home-Improvement-Superstore.com has such a long name, than Google can’t fit the name in the ad. You can only see “Home…” as the merchant name, which could be almost anyone from a consumer’s perspective. As the ads develop, merchants will need to be increasingly competitive to win the primary buy link, and also hope their names are not too long to be identified.

Overall, Product Listing Ads continue to evolve in new directions and will likely grow to include more frequent exposure. The ads will likely develop to include more information including components such as product reviews. Since the market will only grow, merchants not already using this platform should work to get on the band wagon as quickly as possible.

The big buzz centered around Like.com’s impressive image reading technology. Like has pioneered this effort for years, and with their last round of $32M in funding, they were able to build impressive amounts of traffic. To build their business case outside of raw traffic and image search technology, Like also came up with creative strategies around CPC and modified ROI incentivized programs. It seemed like Like was the most likely candidate to break through to the upper esceletion of shopping engines until the Google purchase. The main question is, what happens next?

The obvious answer is that Google covets the image technology that Like developed and is looking to fold this into their technological arsenal. Based on Google’s ambitions at differentiation from Bing, they will likely seek to roll this image technology out to several platforms including perhaps Google Maps for additional location identification, beefed up image search technology for image only results, and possibly even using this as an additional piece of their natural algorithms to better rank pages. From a retailing stand point, it seems like a simple step to bring the image search feature to Google Product Search. Google has put enormous of energy into making Product Search into a premier retail destination and the image functionality could be an important differentiator in the same ways Like was using. The only part is, that the image search feature helped Like, but it wasn’t a game breaker.

So what of Like.com?

I’ve seen mixed signals, and it may be safe to say that no one knows for sure. If this were Vegas, 4 to 1 odds Like.com goes away and is absorbed into Google. When your homepage calls out that you have been acquired, and you scale back your traffic buying, the Magic 8 Ball says that signs to point Like going away. Of course, the 8 ball has been wrong before…

My initial reaction was disappointment, because I had grown fond of Cashback’s Shopping program rolling in increasingly higher sales while still maintaining easy to manage ROI, based on Microsoft’s brilliant adjustable rate commission system. The hope was, that the program would continue to improve and grow in size as there should have been a lot of updates in the program’s maturation including more responsive content processing, better results pages, and the eventual move to Microsoft skimming some of the commission off the top. However, that never happened, and like most people I am looking for ways to replace performance after July 30th, when the shopping program will move to generating free natural traffic which will likely pull down sales significantly.

Now looking back after a few weeks to take it all in, there are several big takeaways from this announcement.

1) Making a commission based program work, is very very difficult.

Amazon makes it look easy, but really, how easy is it? Google has yet to get a successful program into production. Sure, Google Product Ad Listings is commission based for some, but Google is now putting together a CPC component, so how long will a commission based system be available before perhaps a move to the CPC structure is finalized? Personally, I think Google is accustomed to CPC programs, Google Ad Words  users were used to it, and that’s the direction this is going. So, all of this would have left Microsoft as the best and easiest option, not requiring an order integration beyond placing a tracking pixel, which most retail sites have in abundance anyway.

Microsoft’s attempts to bank roll the program for 2 years, ultimately was deemed to be a losing system because not enough traffic was being funneled through on a consistent basis (ie, not the mass adoption needed). It would have been nice, to set up a commission cut that would have justified keeping the program running longer to see what could be done. However, this seems to indicate the main commission based selling platform will continue to be Amazon.

2: Microsoft is great at killing things.

Really, that’s not fair. Any big company which acquires other companies and technologies, will naturally see some not integrate or die off. Take Google, which acquired and killed Dodgeball, the precursor of Dennis Crowley’s Foursquare. However, after pushing Cashback and Kin out the door recently, it does seems there is some momentum loss from the big launch of Bing. So, when looking at Microsoft programs that are not time honored institutions (looking at you Office 2010), it may be best to have a Plan B when planning ahead.

3. Q4 2010 is going to be very different from Q4 2009

Working within many tightly controlled retail calendars, I can say that almost everyone agrees the October through December defines the success of the year. There is such a flurry of sales in this period, that half the year should be devoted to planning it. That means when looking forward to Q4, a few expectations should be understood now:

A: Google and Amazon will be dominant.

The resulting hole in the traffic network which Cashback resided in, will likely most benefit Google and Amazon as both will become default destinations for shopping. Consumers will be plugging in a product search on Google.com, and those shoppers will be led through a network of well tuned Google shopping networks, including moving through Google Product Search, Google Product Ad Listings,  Google AdWords (not really Product Extensions, too few people click through), and Google’s natural results. Within those networks, Amazon will siphon some traffic away, even while increasingly larger numbers of people are starting in the first place, Amazon.com

Amazon’s site structure and ability to feed the right products to the right people, with a site layout and order satisfaction emphasis that ensures happy customers, Amazon continues to set the standard for what comparison engines wanted to be.

B. Consumers will look for discounts, still.

The Cashback program did show that discounts are still very compelling for consumers, it’s just those consumers need something simple instead of waiting 60 days to see if they get their discount. In addition to constructing discounts, retailers should explore any alternative selling technique that offers a discount, from participating in group discount sites like LivingSocial or GroupOn, to offering discount loyalty rewards on social networks like Twitter and Facebook. More and more, it’s clear that online sales are about communicating to people, not just placing an obvious checkout button.

So, 2010 does continue to be interesting in the realignment of online shopping, so I would expect some more key changes by the time October comes around.

Nearly all major comparison engines push their merchants to install tracking code. On the engine side, its a valuable resource to know what is happening with traffic. For shopping engines, they work to send high quality traffic that is converting, however they don’t really know what is happening with that referral traffic unless their tracking code is present on the merchant side to show a sale. Seen from the channel perspective, this is an essential ingredient to know what their merchants partners are seeing and how to ensure the traffic service makes sense from a business perspective. This ensures the comparison engine can and does deliver a valuable add financially.

The key is pairing this interest with the more tightly centered interest of the merchant.From the merchant perspective, they are looking for immediate results. From recent experience, then PriceGrabber’s code should be considered.

First, PriceGrabber has managed to greatly extend their reach this year by adding Yahoo Shopping’s network of traffic to their family. While working with other major sites like CNet, PriceGrabber has an impressive network of partners sending traffic. The key is differentiating how this traffic performs. The PriceGrabber code helps report on this network, but then PriceGrabber’s account managers proactively work with the data coming their way. While some companies have greatly scaled back customer service in cost-cutting maneuvers, PriceGrabber has made their staff much more aggressive in 2010, by seeking opportunities and ways to grow client business. By adding the PriceGrabber tracking code, a merchant should expect to see increases in ROI as the data is gathered.

To be fair, there are other important items from other comparison engines. For example, NexTag also does a good job in working with their ROI tracker to improve results, and Shopzilla’s customer survey code can create a huge amount of benefit by aggregating costumer reviews on both the Shopzilla network but also on Google Product Search. However, for this write-up, PriceGrabber’s ROI code deserves a second look if it has not been tried already.

If you are a Google Product Search merchant, and don’t know what I am talking about, then you need to go check your inbox where an email from Google probably didn’t catch your attention. Google is requiring all merchants with a Google Product Search account to claim and verify their site by May 18th or face pausing of the account.

Since Google is working hard to push traffic to and monetize the Google Product Search program, currently through integration with Google AdWords and the Google Affiliate Network, Google is requiring that merchants can prove the site being advertised is actually owned by that account. This should help weed out any unauthorized affiliates, and add an additional level of ground work to Google’s penetration into the retail space.

From the merchant perspective, site verification needs to be done first, which is accomplished through Google Webmaster Tools. Either a meta tag needs to be placed on the retail site, or an HTML file needs to be uploaded to the webserver where the site is hosted. Once this is done, Google can be notified via Webmaster Tools so Google can crawl the site or the HTML file and link the Google Account with the site. Next, the site needs to be claimed. This can be done through Google Merchant Center (formerly the GoogleBase administrative panel). By clicking on “Settings -> General”, a single click can now be made to claim the site. The below example shows where this is (where the black fill covers actual merchant info).

So procrastination is natural, by bringing down an account is not. Take care of Mother’s Day first, but then make sure this project is being taken care of.

Still unsure of what to do? Visit Verify and claim a Website URL.

Product Extensions Keyword Targeting

Google Product Extensions can be activated by a merchant through their Google AdWords account. However, how can a merchant control what is being listed? Currently Google takes an educated guess based on the product content available. For example, if  a consumer does a search for ‘jeans’, Google will use the product data available to populate product listings in the product extensions as seen to the left.

So how can a merchant control this? Well, they can’t totally, but they can heavily influence what is happening by using the “adwords_prefer_for_query” attribute available in their Google Product Search feed. By adding this attribute to all products, and then adding the keyword ‘jeans’ in this example on targeted products, a merchant can instruct Google they want particular products to be found for particular searches. Essentially this takes some of the guess work off Google’s plate and allows product extensions to be better targeted from the merchant side.

Google Product Extensions Tracking

Google also offers additional attributes to help in the tracking where Product Search and AdWords overlap. Currently the product links from an extension ad will default to the links provide by Google Product Search NOT the Google AdWords link. So, by clicking on the products in this Lucky Brand Jeans ad, the link activated will actually be the Google Product Search provided product URL. To better track this ad, additional attributes can be added in the product feed. The ‘adwords_queryparam’ attribute can be used to provide additional tracking parameters to be appended onto the Product Search URL. Or, if a completely different link should be used, then Google can be told to use a redirect link via the “adwords_redirect” attribute. For merchants looking to differentiate the two programs, this will greatly help in tracking the effectiveness of these ads and manipulating to get better performance.

To review these parameters and Google’s overview, visit Updating Merchant Center accounts with product extensions attributes.

Understatement of the year? Perhaps. However, it’s a legitimately good statement that most advertising platform users are not very aware of what the average consumer looks like on a given platform. Recently, Shopping.com was kind enough to issue some information about their users. Great data, and worth taking a look at:

• Young: Median age is 45
• Affluent: Median income is $70K+
• Educated: 61% are college grad/post grad educated
• Balanced: a 60/40 split of females (60) and males (40)
• Active buyers: 70% bought online in the last 30 days

For age, if you are familiar with Harry S. Dent’s research (if not, check it out), then you know age is extremely important when calculating what a person will spend. The median age for Shopping.com is an excellent indicator that the average person on this site is old enough to make a decent amount of money, and young enough to have things and people to spend that money on instead of conserving for retirement. The median income is also tied into the concept that users on Shopping.com have the resources to do something with the income online since they are likely have disposable amounts of that income to use. The amount of educated users is interesting as well. It would make sense that if a person has spent the time and effort to complete school, they may be inclined to perform a good amount of research before a purchase is made. It’s an interesting theory, but it’s more likely correlated to the income distribution. That is, if you have money, it’s probably because you are educated.

The gender equity is important. Some sites like SHOP.COM slant heavily female, while Shopping.com has more of an even split. Important depending the product selection being advertised, and this case balanced enough reach both Full Moon and football enthusiasts.

In my opinion, the best part of the data is the online shopping bit, where 70% have purchased in the past 30 days. Since there are still people who have not purchased online, and more importantly, people who may not have purchased recently, this is wonderful indicator showing that on average the majority of people viewing a Shopping.com advertisement, are those viewers ready and willing to pull the trigger.

Since I don’t have data like this available on other shopping engines, I will be following up with a post on breaking down the demographics or other engines using Google/Double Click’s Ad Planner as a reference. As a merchant, if you can’t see each individual out there, it’s good at least to know what the crowd looks like.

Don’t worry. It’s a processing issue on Google’s side and they are working to correct it (if not already done).

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