Amazon has recently begun to test PLAs on Google Shopping because of several e-commerce marketing advantages. You may remember Amazon stopped testing ads after they became paid. It continued to operate the standard Google text ads but now believes PLAs have more benefits to offer.
We’ll talk more about why Amazon put these ads on the back burner below. But you can expect to see greater competition on Google Shopping if Amazon rolls out full site inventory.
“While Amazon has just begun advertising on Google Shopping again and we’re not yet certain of the scope they intend on pursuing, the impact of their presence is already being felt,” Pat Petriello, Head of Marketplace Strategy at CPC Strategy said.
While Amazon was taking advantage of Google text ads, PLAs have gained considerable ad traffic tied with popular e-commerce searches on Google. For example, PLAs generated approximately 50 percent of all retailers’ Google search ad clicks related to non-brand queries during Q4 2016. So, 2017 could turn out to be a more successful year, especially with digital ad spending increasing through the upcoming months.
Let’s look into the history of Amazon’s investment in PLAs.
Amazon’s PLA History
So, why did Amazon refuse to continue participation in Google Shopping? One reason is competition with Google. Amazon believed that utilizing PLAs would empower Google to become a bigger shopping priority to consumers, with product searches that could outperform.
Another reason is Amazon would have been losing money each month to Google Shopping, putting more of a dent in its e-commerce marketing efforts. De-listing was an attempt to save money as well as independently achieve all the traffic Google would have netted Amazon.
It has been approximately five years since Google Product Search changed to a Google Shopping “pay to play” model. And more and more product searches are likely to take place on mobile devices, which is influencing Amazon’s change in decision.
Besides, Google is considered the default search provider for users on the two prominent mobile platforms. Therefore, Google’s popularity in the search industry has surged in recent years. On top of this, PLAs typically generate more ad clicks on mobile than desktop thanks to less competition of real estate on phone results.
Amazon has a substantial product inventory, big spending potential, a celebrated brand, and customer loyalty, meaning it could have a swift impact on just about any advertisers competing for PLA real estate. And just imagine if Amazon displayed its entire inventory with PLAs. It would be taking shares left and right, making it harder for businesses on all levels to gain higher impressions and CTRs.
“What makes competing with Amazon a significant challenge for existing Google Shopping advertisers is their trusted brand and Prime membership program,” Petriello said.
Now, let’s review some excellent areas for Amazon to incorporate into PLAs.
Potential Competitive Areas
Based on testing data, Amazon is likely to show for home goods retailers, which are experiencing an impression share of up to 25 percent. In addition, holiday best sellers could prove effective for desirable e-commerce marketing outcomes.
Besides, over 72 percent of Amazon customers worldwide shopped using a mobile device during 2016’s holiday season. And many people used Amazon’s free mobile app to shop during this time, leading to a growth of 56 percent. If Amazon chooses to focus on top-performing products, here are areas that we expect to witness rising competition in:
- Audio & Accessories: Panasonic ErgoFit In-Ear Earbud Headphones, AmazonBasics 6-Outlet Surge Protector, Power Strip, Sonos PLAY:1 Compact Wireless Smart Speaker for Streaming Music
- Baby: Baby Einstein Take Along Tunes Musical Toy, Nuby Octopus Hoopla Bathtime Fun Toys (Purple), Baby Banana Infant Training Toothbrush and Teether (Yellow)
- Fashion: Levi’s Men’s 501 Original Fit Jean, Fossil Emma Large Zip RFID Wallet, Kate Spade New York Cedar Street Cami Convertible Cross-Body Bag
- Home: BLACK + DECKER 16V Cordless Lithium Hand Vac, Lasko Ceramic Heater with Adjustable Thermostat, Poo-Pourri Before-You-Go Toilet Spray 2-Ounce Bottle (Original Scent)
- Kitchen: RTIC 30 oz. Tumbler, Instant Pot 7-in-1 Multi-Functional Pressure Cooker (6 quart), Keurig K55 Single Serve Coffer Maker
- Luxury Beauty: Stila Stay All Day Waterproof Liquid Eye Liner, L’Occitane Shea Butter Hand Cream, BaBylissPRO Ceramix Xtreme Dryer
- PC: SanDisk Ultra 32GB microSDHC UHS-I Card with Adapter, Seagate Expansion 1TB Portable External Hard Drive USB 3.0, AmazonBasics Mini DisplayPort (Thunderbolt) to HDMI Adapter
- Toys & Games: Hasbro Pie Face Game & Pie Face Showdown Game, Scientific Explorer Mind Blowing Science Kit, Snap Circuits Jr. SC-100 Electronics Discovery Kit
- TV: Samsung 32-Inch 1080p Smart LED TV, Avera 32-Inch 720p LED TV, Samsung 40-Inch 1080p Smart LED TV
- Wearable Technology: Fitbit Charge 2 Heart Rate + Fitness Wristband, Fitbit Alta Fitness Tracker, Fitbit Blaze Smart Fitness Watch, Fitbit Flex 2, Garmin Vivofit Fitness Band
Of this list, electronics and toys are superb options. On Cyber Monday in 2016, Amazon customers bought about 46 electronics per second on a mobile device while 36 toy purchases were made per second.
What Does This Mean for You?
This e-commerce marketing update means a few things for you. One is that you should keep an eye on auction sights of Google AdWords. You get the chance to observe available retailer’s search programs and learn more about what Amazon is up to.
Furthermore, you should analyze impression and CTR share. Monitor them for changes, and determine if you can notice any unusual patterns now that Amazon is involved. This information can help you develop strategies to increase traffic in these areas if your performance begins to suffer.
You can also expect CPCs to increase with competition. Therefore, you will need to adjust your budget accordingly.
“If Amazon does continue to expand their presence on Google Shopping, existing advertisers can expect to see a reduction in their own impression share and increased CPCs for auctions in which Amazon is a participant,” according to Petriello.
What are your thoughts on this update? Amazon is predicted to bring some heat and gain more of a competitive edge against other advertisers. This will especially be hard on lesser known or newly started businesses. Want more information on Google Shopping? Go ahead and read How Feed Quality Affects Google Shopping.
