Kenshoo recently released some research about Google’s Product Listing Ads (PLAs), the ads that power Google Shopping. The report indicated that PLAs are more effective than text ads, with higher return on ad spend, clickthrough rates, and conversion rates and lower cost-per-click.
Today, Adobe released some new findings on the U.S. search advertising industry, with more ubpeat news for PLAs. We spoke with Sid Shah, Director of Business Analytics at Adobe, who walked us through the findings. According to Shah, Google’s PLA model has had a major impact on overall retail.
He says Google increased its marketshare of retail spend by 0.6% in a year to 86.5%, and that almost all its growth came from PLAs. In Q4, PLAs accounted for 10.7% of overall spend, he says, indicating that Google’s PLA program is only a little smaller than the Yahoo Bing network, which is 13.8% of total retail ad spend, he says.
Perhaps this has something to do with why Bing has been campaigning so hard against Google’s switch to the current PLA-based Google Shopping model. Shah would not comment on Bing, but tells us he thinks the marketplace is moving toward this kind of model, noting that Amazon also has a PLA program. Any savvy search engine, he says, will try different formats.
“The growth of PLA spend was gradual,” says Shah. “As Google transitioned its Google Shopping program to the paid model in early October, PLA spend and impression share increased with the onset of the holiday shopping season. By mid December PLA spend accounted for 17% of all advertiser spend on Google. As the holiday season ramped down, PLA spend dropped too. Thus, it remains to be seen at which final level PLA spend stabilizes.”
“Comparing PLA vs. standard text ads provides us with some interesting insights,” says Shah. “First, PLAs have a 34% higher Click Through Rate (CTR) than non-PLA ads, which is not surprising given the ads pictorial format (compared to standard Google text ads). Second, the average order value (AOV) for PLA ads is 12% lower than standard ads. Again, this is not surprising given that prices are shown on PLA ads. We surmise PLAs attract more bargain conscious shoppers who pick retailers offering the lowest price for a product of interest. Third, ROI and CPCs on PLA ads are comparable to standard ads too. Thus, the market has seamlessly rationalized the price of PLA ads so that their performance is comparable to the standard ad ROI.”
One of the main takeaways, Shah says, is that retailers should consider how PLAs played such a significant role during the past retail season, and think about optimizing coming PLA campaigns for from both the bid and feed management perspectives.
For more of Shah’s findings, take a look at his blog post, which also looks at some interesting trends in mobile and tablets.