With its paid on performance model for the newly launched beta of product listing adverts, Google has the potential, in addition to lowering the barriers of entry to paid search, to over night become the worlds biggest paid search affiliate company.
The two key features of Google’s new product ads (in addition to that it shows a big nice image), are:
- You only pay for results. Instead of paying per click, brands are charged on a cost-per-action basis (CPA). Since you only pay when someone actually places an order, there’s next to no risk for brands to try out this new feature.
- It will list your entire inventory. As discussed in an earlier article, Google is investigating paid search without keywords, and the new product ads looks like a first step towards this approach and make paid search more approachable. Google will use information available in the Google Merchant Center to determine what products to show against what search queries.
So what does the above features of Google product ads actually mean? Will you no longer need to bother about running your own ppc campaigns, and what about your affiliate search partners?
Simply put, since Google is only charging for sales, it will optimise to maximise its profits by showing products with the highest conversion rate and CPA. This means that unless this simple algorihm is making you come out on top of your competitors, you will either need to increase your CPA or will likely be dropped from the Google product ads. Nothing surprising, but important to understand and setting expectations. So even if you have an acquisition focus, it’s not guaranteed this will be a better option than running your own campaigns or deal with existing affiliate partners.
Google Product Listing Ads (image from adwords.blogspot.com, click for larger image)
Exactly how the product listing ads will work in conjuction with Google’s double bidding rule (where one advertiser can only show one advert against any one search query) is unclear. Depending on this, Google product ads could possibly be an interesting way to compliment the own PPC campaign as when the Google product listings do show, they are likely to get a very strong click-through-rate due to the use of product images.
Google product ads also indicates why Google has been given paid search affiliates a particularly hard time lately, as Google itself wants to be the aggregator, comparison site, and now the performance marketer and affiliate.
What’s your thoughts – is it scary that Google is closer to control all parts of the marketing and sales funnel, or are these features ultimately good for brands and users alike and does everyone else just need to adapt?
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