Report: Google Shopping Ads Taking Over Ad Spend from Traditional Formats
Google Shopping ads – aka PLAs or Product Listing Ads – activated more than three-quarters of all retail search ad spend in the first quarter of 2018, according to a new report from search intelligence company Adthena.
The report, which analyzed more than 40 million ads from the U.S. and the U.K., used machine learning technology to develop a perspective of paid search visibility and ad spend. Most importantly, the research shows how consumers are interacting differently with new advertising formats and points to ad innovation as an essential brand investment.
Though text ads are still the most popular ad format for several search-specific categories, for retail, Google Shopping ads are completely taking over. In both the U.S. and the U.K., the spend/click ratio is significantly better for Google Shopping campaigns than for Adwords or text ads.
Even the sports and fitness category, which spends the least amount on Google Shopping ads, garnered almost 80% of clicks from those campaigns.
“This suggests that the value of Google Shopping ads has still not reached saturation point,” the report states, “and there is still scope for advertisers to grow Google Shopping campaigns.”
The report reveals that consumer electronics retailers in the U.S. spend the most amount of money on Google Shopping ads, amounting to just over 86% of all search ad dollars. These retail brands were shown to be spending less than 14% of their ad dollars on text ads.
Also in the U.S., fashion and apparel advertisers dedicated almost 85% of ad spend to Google Shopping ads, gaining almost 90% of all clicks.
Brands are also matching their ad spend on mobile to what they spend on desktop—though desktop ads continue to generate more clicks. Again, the consumer electronics category leads the charge on mobile ad spend in the U.S., contributing 48.4% of its budget to mobile PLAs. The “occasions and gifts” and “business and industrial” categories follow closely behind, spending 42.9% and 42.7% of their advertising budgets on mobile, respectively.
“At a category level, the data indicates that there is still return on investment to be gained from cross-device Google Shopping ads in both the U.S. and U.K.,” the report states. “In both territories, we can expect spend on PLAs to increase on both desktop and mobile, as retailers continue to test the format and move proportionate spend from text ads.”
Adthena’s research found that many shopping ads are propelled by non-branded search terms and focus instead on the generic searches that consumers tend toward.
“Our research indicates that the adoption of Google Shopping ads has been driven by non-brand or generic search terms,” the report states. “If the current trend continues, the influence of Google Shopping advertising formats will continue to increase across categories and product-based consumer searches. Advertisers can expect greater levels of competition, as PLA adoption continues to grow among advertisers looking to optimize campaigns and their spend-to-click ratio.”
According to the report, 66% of all Google Shopping ads in the U.S. are motivated by non-brand search terms. By using a wide range of keywords, brands may be attempting to further influence consumer decisions at different points in the path to purchase.
Adthena’s examination of these ad campaign spending trends points to brands further optimizing and scaling PLAs this year. The report recommends that retailers especially focus on understanding consumer search behavior by analyzing search term categorization and that they work to increase agility around advertising to respond to changes in the market.
Read the full report at Adthena.com.
April Nowicki is a staff writer at Street Fight.