Yesterday, Google announced that the majority of its listings on the Google Shopping tab, which are currently paid, will be free starting in late April. This change is meant to benefit retailers and shoppers alike. Shoppers will now have a better assortment of products and more discoverable options while they’re shopping. Retailers benefit from access to free shopping-focused inventory on Google, which, for smaller shops unable to manage or afford paid shopping campaigns, gets them access to incremental traffic.
The retail space has become increasingly challenging as shoppers abandon the shopping mall experience and turn to large one-stop-shop eCommerce destinations. Google recognizes these challenges and is supporting retailers with the opportunity to reach more consumers for free.
Image from blog.google
Google is making this change to continue fighting for bottom-of-the-funnel traffic
One of the major retail challenges impacting Google and retailers is the rise of Amazon. In part, this announcement appears to be a continuation of Google’s recent efforts to make their SERP more shoppable in order to better compete with Amazon for bottom-of-funnel buyers. Google has rich data about advertiser’s products, and shifting from a paid to free model allows for better curation of the Shopping tab to provide a unique, relevant shopping experience for consumers. Enhancing its shopping experience and assortment is critical for Google to direct shoppers away from Amazon and gain traction on its other bottom-of-funnel focus, Shopping Actions.
This may seem like a surprising deviation in strategy, especially considering that Shopping is Google’s top paid ad format. However, this isn’t the first time Google’s drifted from its core traditional search formats to expand its influence throughout the purchase funnel. Last year, more visual Shopping formats like Showcase and Discovery Ads built momentum at the top of the funnel. This change, focusing on the bottom of the funnel, complements those efforts.
The actual impact of this change for most advertisers will be minimal
Across the web this change is being touted as a major change. However, we expect the immediate incremental impact to be minimal, if at all noticeable, for the vast majority of advertisers. The Shopping tab has traditionally accounted for a very small percentage of overall shopping clicks and revenue on Google, and most retailers are already getting traffic from that tab through paid ads. Additionally, while the majority of listings on the Shopping tab will now be free, the most prominently-placed ads at the top of the page will continue to be paid listings. The retailers that stand to benefit the most are smaller online shops that don’t have the resources to manage or afford paid shopping campaigns. These stores will now have an opportunity to reach shoppers on Google, potentially driving incremental traffic to their site.
What advertisers can do now to adapt to this change
Advertisers already submitting a product feed through the Google Merchant Center will automatically be eligible for these listings. Once the free format goes live, advertisers should monitor numbers reported in the Surfaces by Google tab in the Google Merchant Center closely to understand how much traffic they’re garnering through these placements.
Additionally, any retailers that have historically monopolized the Google Shopping tab with aggressive bidding should monitor paid performance to see if there’s any decline in their paid Shopping traffic. There’s no reporting that shows historical performance on the Shopping tab versus Google.com, so the only way to know if you’ve been prominently showing on the Shopping tab for key search terms is through one-off live searches (in incognito mode, of course).
With some uncertainty around how Google will determine which products to show in the free listings, now is also a good time to revisit your product feed to ensure that you’re feeding Google as much relevant, rich product information as possible. While optimizing for this free traffic is helpful, a keen focus on managing performance for paid shopping campaigns remains as important as ever before.
The more interesting forward-looking angle of this change is waiting to see what other trade-offs Google is willing to make to serve a greater strategic purpose of becoming the default shopping engine for customers. With this change, Google is sacrificing ad revenue in service of creating a better experience for shoppers and helping advertisers who are navigating unprecedented changes in the retail landscape. What other unanticipated shifts will Google make in coming months to continue evolving their offering up and down the funnel? We look forward to finding out.