Google Shopping is a service by Google that focuses on advertising products. When users search for a specific item, Google presents a widget displaying relevant products from various retailers, who are charged based on an auction-style cost-per-click (CPC) model. The key advertisements in this service are Product Listing Ads (PLA). Learn more about Google Shopping in this glossary entry.
Data indicates that about 17% of desktop search queries in Germany feature a widget with Product Listing Ads, while mobile queries show this at 13%. In the UK, approximately 15% of both desktop and mobile searches include a shopping ad box.
Google restructured and enhanced its shopping service to address user interest in transactional queries and compete with Amazon, a leading product search engine. Initially known as Google Froogle, the service was retailer-funded until it was rebranded as Google Shopping in 2013. It then shifted to an auction-based model, allowing retailers to list products via a feed in the Google Merchant Center, including the maximum price they are willing to pay per click. The highest bidder gets their product shown in the shopping ad.
In April 2020, Google announced that Google Shopping would primarily be free. Starting late April 2020, organic, unpaid shopping listings began appearing in US search results, with a global rollout planned for the end of 2020. However, paid product listing ads continue to exist. This change likely stems from disputes with the European Commission over competition and Amazon's dominance as a product search engine.
Google has faced criticism for its ad management, charging about 20% commission, leading several product comparison sites to sue for abuse of market dominance. The European Commission supported these claims in 2017, fining Google 2.4 billion euros and urging more competition. In response, Google allowed external Comparison Shopping Services (CSSs) to bid for ad spaces, joining them in the bidding process. Retailers must use an external CSS or Google to place ads, as a minimum of 50 online shops must be managed to qualify. These CSSs use lower CPCs, reducing margins compared to Google's 20% commission.
Since then, diversity has grown. Google holds a 51.1% market share, while 35.1% of ads are managed by marketing agencies offering CSS services. Price and product comparison sites like idealo, PriceRunner, and RedBrain hold an average market share of 13.8% across the UK, Germany, and France.
Competition has intensified compared to last year. Previously, Google's share was 68%, with 32% from external CSSs. Notably, new CSSs, mainly online marketing agencies, dominate the external ad market share, while traditional comparison sites remain a smaller segment.
A Product Listing Ad (PLA) features a product image, reviews, and retailer information, including pricing. It also mentions the CSS responsible for booking the ad. For instance, for "garden tools," Google ranks first, second, and fourth, with smarketer and Productcaster in third and fifth positions.
Other shopping ad formats exist, which are briefly introduced below.
Google Shopping smart ads are typical product listing ads created as part of a remarketing campaign. They appear not only in Google search but also across the Google Display Network, YouTube, and Gmail. The bidding process for these campaigns is handled by Google.
Showcase ads expand upon clicking a regular product listing ad in the search results, displaying related products instead of redirecting users to the shop. This format allows retailers to promote multiple products or categories, offering users more options before they select a specific product, at which point the retailer pays for the ad click.
To create a Google Shopping ad, online retailers must register with either the Google Merchant Center or a chosen CSS. As mentioned earlier, CPCs can be more affordable with an external CSS than through direct Google registration. Retailers need to set up a product feed and upload it to the Merchant Center or CSS. Ad placements on Google Shopping rely on product data from the feed, including name, description, price, brand, article ID, product image, URL, stock quantity, condition, and GTIN or EAN number.