About a year ago Google released Product Listing Ads (PLA) from limited beta, allowing all retailers to participate. Ever since, we’ve emphasized to our clients the importance of this online retail for growth.
Here I offer a quick overview of our experience last year and some thoughts on this channel for 2012. In short, it’s growing and every retailer needs to be engaged on PLA.
We analyzed a cohort of retailer clients consistently active on paid search (i.e., text ads, referred to as Adwords below), Google Product Search (GPS), and PLA throughout 2011. As a group and for each individual merchant, client sales and traffic from PLA grew significantly, with growth particularly accelerating in Q4. As a percentage of client paid search text ads sales, their PLA sales accounted for ~19% of attributed sales in December for these clients. By the end of the year, their PLA sales accounted for about 13% of their total Google attributed revenue (GPS + PLA + Adwords). These results are typical of our client base that activated PLA later in the year. The figure below shows the acceleration.
The growing importance of Google PLA:
Analysis of sales from a cohort of Mercent clients
In short, Google’s PLA is growing and every retailer needs to be engaged and selling through this channel.
Additional observations:
Retailers can grow both GPS and PLA simultaneously. Use of best practices saw a fair number of Mercent clients drive achieve growth in both of these programs. Growing GPS was no small challenge in 2011, but if merchants continuously monitor performance and competitive positioning, optimize their Google Merchant Center (GMC) feed, and maintain high data quality they performed well on both programs.
PLA does not appear to cannibalize paid search text ads. We cannot scientifically assert this one way or another with certainty yet (that’s a future project). But, we did not see any evidence of cannibalization of or negative correlations with paid search text ads. If anything, they seem to grow together. This is obviously a key question for marketers so we plan to pay close attention to this.
PLA performs well. Typically we see clients generate ad spend to sales ratios for PLA that are similar to their best performing CSEs. As such, PLA is now effectively perceived as a major CSE within their CPC and PPC program. The continued attraction of PLA, though, is that the volume opportunity seems substantially greater than that of most other CSEs, at least in the near term.
PLA optimization is a lot of work. If you think clicking the button to make your feed items available for PLA and adding a bid is enough to do well, you’re missing optimization opportunities. Not only must the text in your feed be optimized, but promotional copy needs to be added. The biggest chunk of work is properly structuring your product targets in your feed, taking into account past performance for each SKU as well as logical product category structure, so that you can implement effective and successful bidding strategies. And your feed quality needs to be as good as possible.
Quick thoughts on PLA for 2012:
- Expect more growth and distribution of PLA. Google has every reason to grow the program and we expect them to do so. In fact, in November they announced PLA launching in Europe which is a good indicator of their intentions (http://adwords.blogspot.com/2011/11/product-listing-ads-rolling-out-to-uk.html).
- Free up more budget specifically for PLA. I would look at PLA not as a testing channel but as a growth channel in 2012. I don’t mean to be a cheer leader for Google, but I think retailers need to be here.
- Competition will increase (doesn’t it always) making A/S ratios harder to attain. But, I believe (expect?) Google will open up the supply side of the equation enough so that good results can be widely attained.
- Do not abandon GPS or sacrifice any efforts to optimize your GMC feed. If anything, do more. The best feed wins. It’s still true. PLA success depends primarily on the quality and structure of your product feed. Effective bidding is dependent on the targeting enabled by the feed.
- Measure Google traffic and performance holistically. Look at your total return from Google (sales from GPS, PLA, Adwords, and organic) and divide it by your total spend on Google. I’ve previously called this the Return on Google. For practical reasons you will still need to manage channels somewhat individually, but the interconnections between programs at Google and the extent to which their algorithms do or do not use signals across programs are complex and probably unknown, or at best unclear. Therefore, I encourage you to consider Google as an aggregator of an audience - measure how much of that audience you get, what it costs you to get your share, and how much you get from it. It’s easy to get super-granular but keep the big picture in mind, too.
