Google, Merchants Transition From Free To Paid Ads

by Laurie Sullivan, Aug 14, 2012, 5:28 PM

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Merchants trying to meet Google's Wednesday deadline to create product listing ads in Google Shopping will receive an automatic monthly credit of 10% through the year, but even with the incentive, many are finding it tough to make the transition. The company said in May that it would change Product Search to Shopping, moving from a free to a paid ad inclusion model.

A Google video explains how to opt-in all products to Product Listing Ads (PLA), from creating a merchant account to managing bidding. The Merchant Center allows companies to view active and disapproved products, submit investments and check unprocessed items, or review individual product status and check missing links to AdWords.

Google head of platforms Jon Venverloh said data should contain attributes or other descriptions that allow shoppers to search for items in other places across Google's network. Once data is entered into Merchant Center, it should show up in product listing ads, AdWords text ads via product extensions, and in mobile search.

As Google moves merchants from a free product listing model to a search marketing bid model, a variety of platform companies have begun to release services that aim to make the process easier. Now it's about merchants combining ad bids with product catalog updates.

That requires a combination of search marketing tools from companies like Kenshoo, and comparison shopping tools from companies such as SingleFeed, VersaFeed and GoDataFeed.

Lexity introduced a Google Shopping app to support the transition from Google Product Search. The dashboard combines automated bidding and product catalog upload, according to Amit Kumar, Lexity CEO. "There's a lot of anger from some merchants that relied on a specific business model, but some are finding they can recoup losses," he said.

Kumar said based on internal data, the free feeds from companies generating between 80% and 90% continue to gradually disappear as Google makes this transition. "We see about a 40% drop in clicks for merchants since Google started the transition, but they typically achieve better results once they make the move to Google Shopping," he said.

Internal data shows ROI for PLAs can exceed ROI for SEM, and merchants can gain revenue lost from free feeds via Product Ads.

Google's move to paid Shopping, while controversial and troubling for some small businesses, could actually become a "blessing in disguise," as it frequently outperforms engine marketing in internal tests, Kumar said.

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