Last Friday, just as many e-commerce pros were wrapping up the work week, Google dropped a bombshell: The search engine will no longer show ads on the right side of the screen for desktop searches (with one notable exception, which I’ll get to). So much for a no-stress weekend …
Google had been testing this update in several markets since 2010, but the move leaves plenty of e-commerce marketers determining how to react. This week, a few members of the Sidecar team are in Palm Springs for eTail West 2016, and the word is that countless conference-goers are buzzing about the change and what to do next.
While the long-term effects of the update aren’t clear yet, here’s what e-commerce marketers need to know for the weeks and months ahead.
It’s All About the Benjamins
Google states that, “the layout is able to provide more relevant results for people searching and better performance for advertisers,” but like any good business, Google is out to make more money. “But wait a minute,” you might be thinking. “How will fewer ads served equate to higher revenues for Google?” It’s simple: better ad positioning and higher click-through rate (CTR).
We analyzed AdWords data from several of our large retail customers over the past 7 weeks (post-holiday). We found that the CTR for product listing ads (PLAs) on the top of the screen is (on average) 3x higher than the CTR for PLAs on the right side of the screen.
Google had been testing this update in several markets since 2010, but the move leaves plenty of e-commerce marketers determining how to react.
Since most advertisers pay per click, more clicks means more dollars for Google. Axing ads on the right side of the page limits the amount of SERP real estate that’s up for grabs, which could very well increase the cost of those clicks as advertisers compete for a smaller number of potential spots.
Furthermore, more paid ads at the top of the screen means that organic results will slide further down the page and potentially off-screen. Not exactly an ideal scenario for e-commerce marketers.
Now for the Good News …
But look on the right bright side. That notable exception I mentioned earlier? Product listing ads. Google will continue to serve these ads on the right side of the SERP (and atop the search results for some queries). So, e-commerce pros who were comfortable with their text ads appearing on the right side of the screen can shift more budget to PLAs and feel at home once again.
Plus, the text ads that were detracting from PLAs on the right side are gone now, giving the SERP a much cleaner look that goes back to Google’s roots.
With less clutter on the page, PLAs could become even more valuable for e-commerce retailers in the near future because shoppers will have fewer calls to action to entice them.
We consistently see strong performance metrics for PLAs, particularly for ads on the right side of Google’s SERP. Going back to our research, we saw that 58% of PLA revenue came from ads that were not at the top of the SERP. Additionally, cost of sale is 45% lower for PLAs when they do not show at the top of the page, so this revenue is won more efficiently.
Finally, we found that PLAs on the right side of the screen and within the Google Shopping interface have a 67% higher conversion rate and a 9% higher AOV than ads at the top.
Where to Go From Here?
The new SERP looks much cleaner without text ads on the right column as Google has returned to a simpler aesthetic. Now, the PLAs that do show on the right-hand side of the screen stand out even more. With less clutter on the page, PLAs could become even more valuable for e-commerce retailers in the near future because shoppers will have fewer calls to action to entice them.
During the 2015 Holiday shopping season, Google Shopping PLAs accounted for 15% of retailers’ e-commerce revenue, up from 9.6% during the same period in 2014. With this change from Google, I expect this number to grow even higher this year.
E-commerce marketers hoping to ride this wave should also be mindful of these distinct characteristics of PLAs:
- There is no precise way to optimize your page position. Advertisers cannot specify where their PLAs will go, nor can they move spend to focus more on top of screen vs. other ad placements. Your bids, feed quality, past ad performance, and relevance to the search query all help dictate where your PLAs end up, but it’s not an exact science.
- Products with higher bids are more likely to show for more popular search queries. These should be those items that you A) carry a good selection of, including multiple size, color, and quantity options on your product landing page, B) sell at a competitive price, and C) feel have strong relevance to your site or brand. These factors can help with brand recognition and new customer acquisition, even when your ads are not clicked.
- Even if your ads don’t appear at the top of the search results, all is not lost. Remember: Users who engage in the Google Shopping interface (or click the Shopping “button” at the top of most Google search results pages) are typically lower-funnel consumers with more specific search intentions. These people are more likely to buy, so don’t fret too much if you’re not on the SERP.
If you are on the fence about PLAs, or if you are active in the channel but wondering if you could improve your performance, now could be the time to roll your sleeves up and dive in. On that note, feel free to take a look at other posts we’ve written about Google Shopping best practices.
*Methodology: Total data is collected from 1.37 million Google Shopping user sessions on e-commerce retailers’ sites from Jan. 1, 2016 to Feb. 21, 2016.
