Google slashed prices on Shopping ads in Europe because advertisers weren't buying the ads, according to Colin Sebastian, analyst at Baird Equity Research.
Last week the analysts at Baird Equity Research technology and services spent some time in London to attend three industry conferences. The group spoke with people from Amazon, Google, Shopify, Sizmek, Adobe/Magento, Big Commerce, and others.
One of the tidbits they walked away with is that Google put shopping ads on sale in Europe, with the focus on discounted commerce-related search advertising in the EU.
Google launched the comparison shopping partner program in Europe in May 2018 to comply with EU competition directives.
The company gave advertisers a 20% discount on the cost per click for Google Shopping ads. But advertisers didn’t take advantage of the sale at the time, so the company recently began offering promotional discounts called "Matching AdCredits.”
These “Matching AdCredits” provide another 20% to 30% discount in the form of credits on future ad purchases, the recently published research note from Baird explains.
“While it is unclear how much of the discounts will drag on revenues (vs. drive higher spending), in a downside scenario we estimate a 2-3% impact to advertising revenues (i.e., 20% discount * 40% of Google Search retail-related * 25% of regions impacted, plus the impact of any "matching" discounts.),” according to the research note.
Even with this discount, per the note, many retail advertisers have not opted into the program.
Another piece of news worth mentioning is that Baird analysts noticed early forms of monetizing voice platforms -- specifically local services -- that are “a positive step for Google.”
The UK is seeing experiments with product recommendations through voice platforms such as “it’s raining today, would you like to pick up an umbrella at the local Target?"
About 22% of consumers in the UK now use digital assistants, according to one presentation cited by analysts.