Product listing ads (PLAs) have begun to have a major impact on consumer purchases. The image-based text ads prompting quicker clicks from consumers continue to attract more money from advertisers, between 5% and 20% in Q4 2013, compared with the prior-year quarter.
Google has not revealed too much about the success of PLAs, but search agencies have. Raymond James analyst Aaron Kessler wrote in a research note after speaking with three firms that PLAs continue to boost ad spending and conversions worldwide. Some believe the positive results could lead engines to focus more on image-based search ads, compared with text.
The numbers tend to support that theory. Rimm-Kaufman Group said PLAs rose 85% in Q4 compared with the prior year, while the cost per click (CPC) now equals the price of text ads -- up from 10% to 20% below, per Kessler. Covario said marketers spent about 70% more on PLAs in the quarter compared with last year, and CPCs now cost marketers about 5% more than text ads.
The adoption of PLAs, along with mobile search, continues to fuel international growth for these search companies, Kessler explains. Covario, which mainly supports technology and consumer electronics companies, said Asia-Pacific grew about 20% in the fourth quarter, followed by Latin America. Larger companies primarily in the United Kingdom and German have seen improvements, along with stronger growth in the Nordic region.
Marketers know that a click costs money and means nothing unless it prompts a consumer to purchase a product or take another type of action. Overall, RKG said average order values (AOVs) rose 4% in Q4, compared with the prior year, although the shorter holiday season did not impact growth. Performics noted strength in conversion rates and AOVs due to improvements in strategy, experience, and integrated promotional activities.
Performics said clicks rose 17.5% in the quarter compared with the prior year -- and 9% sequentially -- while CPCs fell 3.9% and rose 2%, respectively. RKG said clicks rose 19% in the quarter, compared with the prior year and 13% sequentially. CPCs rose 3% and 7%, respectively. Covario indicated that clicks rose 16% and CPC 10%. Kessler attributes the stronger growth in clicks and lower CPCs to mobile growth as well as PLAs.