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Google has launched two products in recent weeks that should allow the company to capture more ecommerce marketing spending and help the growth of the ecommerce industry overall:
- First, on November 5th the company announced a new hosted enterprise search product, Google Commerce Search, which powers search functionality on e-commerce sites.
- Then, yesterday Google introduced Product Listing Ads through AdWords. Product Listing Ads enable e-commerce companies to use pictures and more product detail like product image, price, and merchant name in their AdWords ads. Importantly, with these ads, Google is paid per sale, not per click.
THESE PRODUCTS SHOULD HELP GOOGLE CAPTURE A GREATER SHARE OF E-COMMERCE REVENUE
Long labelled a one-trick pony (almost all of its revenue comes from search ads), Google is diversifying its revenue through fixed fees tied to e-commerce activity and cost-per-action (CPA) fees, which essentially are commissions everytime someone buys a product through a Product Listing Ad.
For example, with the site search product, Google’s data sheet explains that the company charges e-commerce sites an annual licence fee based on the number of products and searches served on their sites. This is not click-based revenue, but a fixed, recurring revenue stream based solely on e-commerce inventory and searches.
In addition, Google’s Product Listing Ads are charged on a cost-per-action (CPA) basis, which means Google only gets paid if a product is bought by someone who clicks on the ad. Therefore, the more e-commerce transactions Google drives, the more money it makes.
Here is a sample of a Product Listing Ad that illustrates how images, merchants, and prices are now prominently placed in the ads, versus the previous text only ads:
THESE PRODUCTS SHOULD ALSO BOOST OVERALL E-COMMERCE GROWTH
Google Commerce Search should help smaller ecommerce sites, as it improves e-commerce sites’ conversion, shopping cart abandonment, and repeat business rates. Search functionality for independent sites is difficult to develop and often does not help consumers find the products they want as much as it could. Even small improvements to these factors should drive incremental e-commerce sales.
THE PRODUCTS Will ALSO HELP INDEPENDENT E-TAILERS COMPETE AGAINST AMAZON AND EBAY
All of these developments help independent e-commerce companies better compete against Amazon and eBay by enabling better advertising practices on Google and by making it easier for shoppers to find items on their sites.
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