In October 2012, Google successfully shifted its shopping search to a paid-search platform based on Product Listing Ads (PLAs). Since the transition, retailers have quickly adopted the new ad format. What could have been a detriment to retailers’ advertising campaigns has turned out to be one of the most effective advancements to paid-search marketing in recent years. In fact, according to our Trends in Paid Search Report, Q4 2012, during the last quarter of 2012, PLAs accounted for 13.6% of total Google spending for advertisers running PLA campaigns.
Although this increase in PLA popularity has occurred over the past five quarters, PLA clicks surged in Q3 and Q4 2012. Searchers are finding PLAs to be valuable research tools, often times more than normal, text-based ads. As a result, advertisers are incorporating PLAs into their paid-search campaigns at an increasing rate.
PLA Total Click graph is based off of indexed data.
As more advertisers get on board and competition for PLA space increases, CPCs have been steadily rising. According to our report, PLA CPCs increased by about 85% from Q3 2012 to Q4 2012, after a downward trend that spanned the previous four quarters—a significant jump that aligns with the product’s relaunch.
So why are retailers embracing PLAs so strongly? A few reasons:
- Consumers receive relevant, engaging content. PLAs help Google connect consumers with content that satisfies their search queries more efficiently than standard text advertisements. PLAs provide users with more product information than a standard text ad can, including price, pictures, and reviews. Although non-paid Google Shopping listings also included these details, Google has convincingly claimed that charging for clicks ensures listings are updated frequently and remain more relevant.
- PLAs enhance the consumer buying experience. Text-based paid ads have always appealed to searchers ready to make a purchase, but have been less effective at helping consumers compare a variety of brands or products. With more product information available, searchers can conduct research without leaving Google, and advertisers can direct motivated customers to the appropriate pages on their site.
- PLAs offer greater adaptability and increased ad inventory. With PLAs, retailers can more easily choose the ad format most conducive to their marketing goals. In addition, by opening up Google Shopping inventory to advertisers, advertisers already familiar with the concept of bidding for keyword placement have a way to reach a valuable segment of searchers. Retailers who found Google’s previous, non-paid shopping engine an effective sales tool have been inclined to expand their AdWords campaigns, or to purchase paid ads for the first time.
So, all of the recent chatter about PLAs is well founded. The new paid-search format is proving successful for marketers looking to improve ROI, and for searchers looking for relevant information that satisfies their search queries. We suspect PLAs will continue to gain traction with marketers quickly in 2013.
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