Google Product Listing Ads: higher click-through at lower price (for now)

A benchmarking report into Google Product Listing Ads shows rapid adoption of image-based product listing ads by retailers based on positive consumer response. The analysis found that by July this year click-through rates were 21% higher than that of text-based search marketing ads, and that they remain cheaper, although prices are rising.

The report, from Marin Software, is titled ‘Google Shopping Ads: Product Listing Ads Deliver for Retailers‘ and consists of statistics and trends uncovered through an examination of the Marin Global Online Advertising Index, which is based on advertising data from global brands that manage more than $4 billion in annualised paid search spend through Marin’s platform.

The high click-through rates (CTR) of Product Listing Ads (PLA), coupled with a 93% year-on-year increase in click share, leads Marin to suggest a dramatic acceptance of PLAs by online shoppers. Retailers, in turn, are responding by increasing their investment in the ad type as they prepare for this year’s holiday shopping season.

PLAs came to the fore in February this year (in Australia – earlier in other markets) when Google transitioned Google Shopping results to a sponsored format, causing a rise in PLA impressions and clicks.

Marin Software’s report shows shoppers find PLAs more relevant to their product searches than they do text ads. Year on year, the share of PLA clicks to standard text ads increased 93%. Likewise, in July 2013 the CTR of PLA ads – the number of individuals that view an ad and subsequently click on the ad – was 21% higher than the CTR of text ads.

Advertisers continued to increase their investment in PLAs between October 2012 and July 2013, the share of PLA spend to standard text ads increasing 59% in that period,  with retailers allocating as much spend in June 2013 towards PLAs as they did  during the popular holiday shopping month of November 2012. Marin foresees the level of spend directed to PLAs increasing further in the last quarter of 2013.

Marin’s findings indicate the cost per click (CPC) of PLAs is also rising. In July 2013, PLA CPCs increased 53% year on year, while the CPC of standard text ads increased 10%. Despite the rise in cost, PLA CPCs still remain lower than the CPC of text ads.

Matt Ackley, chief marketing officer at Marin Software, says PLAs are a break through format for advertisers, but also a big step toward improving the online shopping experience for users. “Google Product Listing Ads showcase what happens when users encounter relevant, engaging ads. There is no doubt the online shopping landscape has been significantly changed by PLAs and we expect even more notable results this holiday shopping season.”