Saturday, February 6, 2016

Perspective - Google Adwords: Product Listing Ads || Charu Gupta || IIM Kozhikode || December 2015 edition

Google Adwords: Product Listing Ads

Charu Gupta
IIM Kozhikode

Google AdWords is a platform for businesses to advertise on Google and Google Partner websites. It caters to all businesses in all parts of the world that seek to expand their business by exploiting the power of the Internet. 
Via the Internet, businesses can:
1. Reach out to a much larger chunk of the population as compared to any other media of communication
2. Receive adequate feedback from customers that can thereby be used to improve their offerings
3. Come up with innovative schemes, contests etc. to spread awareness and get people talking about the brand and the products
4. Keep an eye on what competition is doing and the pulse among the customers with respect to the brand and its competitors
5. Keep in touch with brand followers in real time Google AdWords Text Ads is the most commonly used and popular category within Google AdWords. 

They are roughly 8-11 in number per search page, and are located above, to the right and to the bottom of the organic search engine results. Google Product Listing Ads (PLAs) are another category
within Google AdWords. They include richer product information, such as product image, price, and merchant name, without requiring additional keywords or ad text from the advertiser. It allows users to search for products on online shopping websites and compare prices between different vendors, without actually having to visit these sites. Therefore, it is much easier for the user to compare product offerings, including price, across a number of e commerce websites, as all
the data is available at the same place.

A fundamental difference between the functioning of PLAs and Text Ads is that unlike the latter, the former does not rely on keywords. Instead, it uses Product Data as stored in the Merchant Account by the advertiser. The product data submitted by the advertiser through Merchant Center contains details about the products she sells. Google uses these details when it matches a user’s search to the advertiser’s ads, making sure that the most relevant products are displayed to the user, thereby drastically increasing chances of conversion. Google PLAs look like the photo above.

Benefits of Google PLAs over Google AdWords Text Ads
• More traffic: Many businesses experience significantly higher click-through rates (CTR) with PLAs compared to text ads shown in the same location for shopping-related searches. In some cases, advertisers have experienced double or triple standard click-through rates.

• Better qualified leads: As a merchant, the advertiser can increase the quality of her leads by featuring product information directly in her ads to help shoppers make informed purchase decisions. This makes shoppers more likely to complete a purchase on her website.

• Easy retail-centric campaign management: Instead of keywords, Product Listing Ads use the product attributes you defined in your Merchant Center data feed to show your ads on relevant searches. Browse your product inventory directly in AdWords and create product groups
for the items that you want to bid on.

• Broader presence: More than one of the advertisers PLAs can appear for a given user search and, if relevant, a PLA and a text ad can also appear at the same time. This means that the advertiser’s reach with shoppers for a single search could double.

• Powerful reporting and competitive data: Advertisers can see how their products are performing at any level of granularity they want. For example, they can see how many clicks a particular brand of shoes got just by filtering their products view – no new product groups are needed. 

Benchmarking data can be used to get insights into competitive landscape. Growth opportunities
can be identified with impression share data and the Bid Simulator tool.

Value Proposition

The value proposition for Google AdWords is:
Google AdWords is a performance-based advertising program that enables businesses large and small to advertise on Google and its network of partner websites.

The value proposition for Google PLAs is:
They’re more than a text ad – they show users a photo of your product, plus a title, price, shop name and more. These ads give users a strong sense of the product that you’re selling before they click the ad, which gives you more qualified leads.
The difference for the advertiser with respect to the additional value provided is clearly evident. With Google PLAs, the additional features add considerable value to the ad posted by the advertiser.

How Google Ads work?

Google AdWords displays ads based on the search terms entered by the user. This helps ensure that the ads displayed are relevant to the end users of Google’s platforms. A user of Google is said to convert into a customer of a client of Google as per the criteria specified by the client itself. Google PLAs are displayed when a product that is sold online in searched by the user. The user can subsequently see ads from various advertisers, along with certain details like price. This makes it easier for the user to compare products from multiple advertisers at the same time.


The biggest source of competition for Google AdWords is the presence of alternate media that display ads that are much more customised to the end users as compared to Google AdWords. Since Google has almost 70% market share globally in the search engine domain, it is a market leader and does not face competition from other search engines and portals like Yahoo! and MSN. The two platforms that have the power to threaten Google’s dominance in the online ad space in the coming future are:
1. Social media like Facebook and Twitter
2. E Commerce giants like Amazon and eBay

This is so because these platforms have ample data regarding the end users and their preferences, choices, likes, dislikes, habits etc. This user specific data can be exploited to display ads to them that are specific to them and are customised to their personalities and behaviours. Hence, the likelihood of converting such users into customers of clients of these platforms is much higher as compared to Google. Google PLAs make it easier to combat the rising threat from social media and ecommerce companies, since Google can address issues related to users visiting e commerce websites directly instead of using Google to search. Also, since the PLAs displayed are related to user’s search terms in real time, the relevance of the ads to the user customised to their requirements and preferences in real
time, thereby increasing the chances of conversion for the advertisers.

Some of the PLAs as displayed on Facebook are:

Apart from PLAs, businesses can also advertise via their
Facebook Pages, as below.

Some of the additional advantages that Facebook PLAs & Pages have over all formats of Google ads are as follows:
• Reach to a huge number of interested users, ensuring greater chances of converting them into the businesses’ customers
• Posts are highly customised to what the users want
• Businesses can keep a constant tab on the pulse of the customer(s). This can help them to come up with new promotional campaigns or to address rising and viral issues.
• Businesses can get immediate feedback about their initiatives, actions, products, services etc., in real time

Twitter is also expanding rapidly in the online advertising domain. Businesses can tweet to reach out to their followers. Real time feedback can be obtained and actions and initiatives can be undertaken. In the recent past, HCL used the Twitter platform for recruitment. It posted questions and candidates replied using its Twitter handle. Candidates were then shortlisted and the process was carried on. On the other hand, ads displayed on ecommerce websites are completely in reference to the search performed by the user on the ecommerce website, in real time.

Following are some of the ads on Amazon. The following snapshot shows ads that are displayed to the user about what other users who performed the same search did on Amazon. This is related to the product in question.

The following snapshot shows ads of products related to the product that the user has searched. 

Since the products displayed are highly relevant to the user, the chances of conversion are much higher.

The following snapshot shows ads displayed from other ecommerce websites.

Some of the advantages that PLAs on ecommerce websites as compared to Google PLAs are:
• Chances of sales of associated products or competing products increases thereby increasing the chances of higher revenues
• Users can conveniently check reviews, ratings and feedback from other customers who bought the product. This can greatly help the user to make her final decision regarding the purchase of the product
• Product bundling is possible, therefore increasing the chances of higher revenues for the advertisers
• Product specifications are provided in greater detail

The user can perform other actions related to the purchase funnel, e.g., the user can save the product for later, or add it to her list of desired products. These actions increase the chance of future conversions.

Customer value

Google’s clients realise revenue once a conversion has been made. For example, customers can subscribe, buy their offerings etc. The costs realised are the bids placed for displaying the ads. The clients have to bid in realtime a user carries out a search on Google and Google Partner websites. The actual bid amount paid is that required to be just above the next player in the auction. So, the actual cost incurred with respect to the bid is lesser than what the bid was on the ad. There are various costing strategies employed, like cost-per-click and cost per 1000 impressions. All clients are provided with a free tool, Google Analytics. Clients can use this tool to assess the performance of their ads and compare with competitors. Clients even receive customised suggestions.


• Reaching out to and convincing businesses to advertise on Google. Small businesses in particular, have huge future scope due to their large numbers.
• Educating clients about the usage of their services, like the various reports, to their advantage
• Poor infrastructure and limited penetration of the Internet, though it is increasing rapidly
• Increasing penetration of small screen devices, like smartphones and tablets. This limits the number of ads that can be displayed upon each search, thereby limiting revenues for both Google and its clients
• Increasing penetration of social media platforms and e-commerce websites
• Changing behavior of Google’s end users with respect to the searches performed. For example, users may look for an ecommerce site in specific, like Amazon, instead
of a product sold on it
• Google PLAs can lead to cannibalization of Google Ad-Words Text Ads as both ads are displayed side by side. Advertisers would focus solely on their own conversions and would dedicate a fixed amount of budget to their Google AdWords account, without dividing their focus onto PLAs and Text Ads. This may imply that Google would receive revenue from PLAs at the cost of Text Ads, which have, till date, been the primary and largest source of revenue for Google.

Opportunities for growth

• Regions across the world seeing rising Internet penetration and improving infrastructure to support Internet
• Customization of ads displayed to the users of Google’s platforms, for example, by using cookies, Google+ profiles etc.
• Expanding Google PLAs to more countries; it is currently available in 23 countries
• To limit cannibalization of Google AdWords Text Ads by Google PLAs, Google can change the costing strategy for the ads. Or, it may have a policy of limiting the Text Ads that can be displayed when PLAs are being displayed, or vice versa.
• Advertising on competitors’ websites. Though this may not help in expanding market share in the online advertising domain, it can lead to increased revenues for both Google and its advertisers, thereby ensuring that Google does not lose its existing share of advertisers.


Gaurav Pradhan said...

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