Product Listing Ads in Google Shopping: PPC paying off for retailers

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Product listing ads drove 28% of Google's non-brand paid search clicks in Q4 according to a new report from RKG.

Product listing ads are a relatively new way for PPC advertisers to sell products online via Google.

Whereas traditional Google advertising involves AdWords, text ads, keywords and creatives, product listing ads use a large product image, seller info and price, using information pulled directly from a seller's Google Merchant Center products feed.

Online businesses now have to pay for their products to feature in the US version of Google Shopping, which was a previously free search service. Google UK will start switching Shopping results to paid product listing ads (PLAs) on February 13.

The new moves, therefore, are under much scrutiny from online analysts: but it seems to be paying off.

The RKG Digital Marketing Report shows the cost per click on a PLA is 26% lower than AdWords text ads.

Non-brand ROI for Google ads is now 22% higher than with Bing, according to the report.

A similar report from Adobe found product listing ads have seen a 34% higher clickthrough rate than non-PLAs.

Google announced its earnings for Q4 this week, with PLAs apparently responsible for around 15% of sales, according to Forbes.

Etsy, the online marketplace, has invested $250,000 in product listing ads for its sellers. The strategy appears to be paying off: with year on year revenue up by 73%, to $117.8m in December 2012.

Etsy says it is extending this investment into 2013. The trial, started in the US in October, saw Etsy invest a quarter of a million dollars on product listing ads - which then drove 14 million visits to the site.

Product listing ads have been available in the UK since 2011. From February, Google wants all its Shopping results to take the form of PLAs.

And from summer, it will start to charge for clicks in Shopping searches on a PPC basis.

Online businesses which currently get free traffic from Google Shopping will need to convert their inventory to PLAs in time for the switchover in February, to be fully prepared for the launch of a paid-for Shopping model sometime in late Q2.

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