Google shopping is a new marketplace created to enable e-commerce businesses to sell their products directly from a paid listing ad that appears in the search results. While the idea is not new to Google, they have recently changed their model from free to paid listings. In this new system, Google has transitioned to a commercial model based on product listing ads that works with your existing merchant feed.
In addition to being a revenue generator for Google, the idea behind the transition was to clean up the user experience issues that the previous model had. In the free model, anyone was able to create product listing ads which led to them being inconsistent. Due to the new “pay to play” model, many of the businesses which used the platform have left the arena. This has allowed for more established businesses to showcase their products under a much more regulated and cost driven system.
Google currently offers two models in which you can pay for your product listing ads:
- Cost per click (CPC): Advertisers will pay in Google’s standard format for each click they receive on their advertisements.
- Cost per acquisition (CPA): Advertisers pay per completed transaction (requires coding on website) as a percentage of the total sale.
Not all shopping feeds are compatible with Google Shopping, so it is recommended to verify which cost model can work for a specific feed.
How Google shopping differs from traditional AdWords advertising is how auctions are won for product listings to show in the search results. Instead of bidding on keywords, Google reads the descriptions within the shopping feed of the e-commerce shopping cart to pull product name, features, etc.
An example would be if I were to search for a Kindle Fire. Notice directly below the traditional text ads you see on Google, there are the shopping feeds. Google will group products together based on the specifications listed within the shopping feed (the more specific the better). Searching for something as generic as Kindle Fire allows for multiple products to display, so the user can then choose which model they would like to see in more detail.
These products are also grouped within the shopping section of Google, and will tell you exactly how many merchants have these specific products available (under the price on the right, it lists how many stores have this product).
In order to set up your website in Google Shopping, a business needs both an AdWords account, as well as a Merchant Center account.
This new model by Google, allows e-commerce based businesses to sell their product directly from the search results. This eliminates web traffic that would typically come to the website to shop and compare products. Instead, they can compare and shop through the search results, then choose the store that matches what they are looking for.
Additionally, if using the cost per acquisition model (CPA) explained above, you are able to set bids that are based on profitability of specific products. By doing this, it allows a business to stay more competitive across multiple product lines individually.
Google Shopping’s new commercial based model changes the game for e-commerce businesses to list products and compete directly within Google search results. They are allowing these companies to bid based on a set percentage of the sale, and largely bypassing searchers in the early stage of the buying process who are not ready to make a purchase. Given its ability to work with your existing shopping feed, Google Shopping can drive significant results to any online business’s bottom line with a properly constructed program.