In a recent announcement in the Telegraph and elsewhere, Google has said that it has, “Offered to ringfence its online shopping business from its dominant search engine in a bid to placate European competition watchdogs and avoid further multi-billion euro fines. Under plans expected to be revealed later this week, the internet giant will force Google Shopping to compete against other price comparison websites for advertising space in Google’s search results.”
Why is this being done? This is because Google has 90% of the search engine business in Europe and therefore by linking this to its own shopping channel, is in danger of contravening competition laws. As the article says, “By turning the business into a standalone unit it hopes to satisfy the European Commission’s demand that it stops abusing Google’s dominance in internet search to boost the shopping channel.”
Our Viewpoint on what this Means for Retailers and Consumers
The Google Product Ad is good for consumers: What Google has done for shopping has been great for consumers, as it helps them find relevant products quickly. With images of exact relevant products, rather than just text ads and a link directly to the seller’s product page, they can quickly and easily buy the products they want.
Why they have to act: The reason they are having to act is because Google has the shopping ad and no one else is allowed in it – no other shopping comparison sites. Previously, other shopping engines such as Kelkoo or Shopzilla would be advertising in the search results and the consumer might choose to visit their website, to then find the product they are looking for. What Google has done is to create an ad unit which puts products directly in front of the consumer, so they don’t need to visit a comparison listing site and can buy quickly from the retailer. The issue is that this is potentially in contravention of competition laws, as the ad unit is not available to other shopping engines.
The PLA will stay but mechanics may change: The Product Level Ad (PLA) is here to stay, as consumers want it. It is better, faster, more relevant and it makes no sense to add more steps to the discovery process. We have noticed in the last couple of weeks that Google is adding a ‘by Google’ under each ad. So it’s possible that there would be a ‘by Kelkoo’ or ‘by Shopzilla’ as well. It would ruin the consumer experience and add extra steps in the product discovery journey by making them go to one of these engines’ websites and then to the retailer’s product page. So it’s likely that it will redirect through these engines, but still land the consumer directly to the specific product page from the retailer selling it. If this doesn’t happen, it will add unnecessary steps for the consumer and lessen the experience What the shopping engines may be able to do in showcase ad units is more interesting.
Retailers to resurrect old partnerships: Retailers may now have to think about listing their products again with multiple comparison engines, something they have not had to do in many verticals for a few years now, which adds complexity for the retailer (and the platforms helping them do this).
How will rankings work? Will it become massively complex for retailers? Google’s investments in data quality would give it some substantial advantages over the older comparison platforms when it comes to the auctions, as relevancy has to be number one. How will bids on different engines work, when as a retailer, you are aiming to achieve the end game? Will retailers “choosing” to list and spend more with Google Shopping be seen as vindication for them?
So an interesting announcement, with more in the coming days and weeks and we will see how it changes the experience for both the consumer and the retailer.