A Look at Paid Google Shopping—Smart Strategies for Product Listing Ads

By Amit Kumar

Google's new bid-based Product Listing Ads (PLAs) are designed to be a richer advertising experience that increase clickthrough rates by including additional product information (e.g., product image, price and merchant name) without requiring additional keywords or text to be added by retailers.   With the new Google Shopping, online merchants will also benefit from the ability to manage their feed advertising as well as the increased control over which products and categories to focus their ads on.

Unlike AdWords, no bidding on keywords is necessary. All the data comes directly from a merchant's product catalog and is automatically matched to the most relevant searches using that company's own target data. Businesses may also see a broader reach for their products, as it's possible for more than one PLA to be shown simultaneously for a given search term.

Impact on E-Commerce
Google's official good-bye to its free Product Search ads on Oct. 17 of last year left many smaller online retailers wondering where their traffic and revenues went. Many miss the results from free feeds and are now wondering just how much it will cost to pump them back up to previous levels.

Even if they're ready to pay, some online sellers just don't have the technical savvy or won't be able to transition quickly enough to take advantage of the new PLAs. While this new system does offer the chance at higher sales numbers, there's also a higher cost not only in clicks but also in development time on this more complicated model. Many merchants who aren't used to managing their own data feeds will have no applicable experience optimizing their product bids in their new campaigns. This demand for more marketing money and expertise might be a cost that some small business owners simply cannot afford to pay.

Google Shopping Strategies
Here are three tips for small online retailers to take advantage of Google's new PLAs:

Adapt quickly. Smart small business owners should sign up now so as not to miss out on these early opportunities to refine their strategies and experiment with these new ads. Timing is everything, and the max cost-per-click bids in a merchant's category might currently be lower than they'll be later in the year.
Get educated. The learning curve will be steep for some merchants who have little experience with online marketing, but the risks of not getting started are too great to be ignored. Several resources abound for self-starters. Check out how-to videos and more online. For those who aren't sure if they can make the leap alone, professional marketing agencies and services who offer shopping feeds and other web-based advertising services are a possible solution.
Take advantage of Google's other programs. As Google strives to compete with Amazon.com to become the default destination of online shoppers, sellers would be smart to take advantage of incentives to join Google's other programs like Google Trusted Stores and Google Wallet. Being early adopters of Google's newest offerings could help some sellers win big in this highly competitive space.

There's no doubt this move on Google's part will have a big effect on e-commerce in the coming months. Whether it's an e-commerce boom or bust has everything to do with how individual sellers react to this change in the near term.

Amit Kumar is the founder and CEO of Lexity. Amit can be reached on Twitter @akumar.