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How Product Listing Ads Are Stealing Your Conversions

June 05, 2013
23
AdWords Tips

If you’ve ever done a Google search, you know already that Google ads are occupying more and more space on the SERP. What you might not know is that the fancy Product Listing Ads you see are commercial intent-sucking monsters and are stealing all the conversions from both the organic and non-PLA search results.

Today, when someone searches for anything related to a product name, Google automatically populates most of the above-the-fold space on the SERP with PLAs and other blinged-out ads:

Product Listing Ads

When I search on “keurig coffee maker,” about 80% of the screen is devoted to sponsored results featuring keurig products– I have to scroll below the fold to see more than two organic listings. All the ads you can see here make use of extensions (such as offer extensions, location extensions, etc.) but the PLAs are especially compelling because of the image and price information.

Last year, we did some research on ad-filled SERPS like this and found that about two-thirds of clicks on commercial searches go to the ads, leaving less than half of the clicks for organic results.

Here’s what you may not have realized before: The third of clicks that are left, after you take out the people that have clicked on ads, are significantly less valuable to your business.

Why? Because all the intent has been sucked out of the SERP.  How exactly does this happen?

RELATED: Do Shopping Campaigns Work?

Commercial Intent in Search is a Zero Sum Game

When people execute a search like “keurig coffee maker,” some of those people are going to be further down in the funnel looking to buy now, while others are just looking to learn more about them.

The people with higher commercial intent who know exactly what they want – for example, a Keurig Elite single-serve coffee maker – are drawn right to the ad that shows them:

  • The name of the product they’re looking for
  • A picture of the product they’re looking for
  • The price
  • Where they can order it from

PLAs make it super-easy for people at the end of the funnel to go ahead and convert, because the ads show searchers exactly what they want and take them right to an e-commerce landing page so they can buy.

On the other hand, the people who are scrolling past those ads and clicking on organic results very likely have less commercial intent. They’re probably in the research phase of the funnel – they may be looking for reviews or just trying to figure out what a Keurig is – so they are less likely to buy during that search session, and may never convert to a sale at all.

Ad Text

It’s Not Just About SEO: PLAs Steal Intent-Driven Clicks from Other PPC Ads

Is commercial intent in search really a zero sum game? It would normally be difficult to prove a claim like I’m making – that PLAs are intent-vacuums, sucking all the commercial intent out of a SERP.

However, in AdWords, it’s currently possible to display two ads for the same keyword – both a standard text ad and a PLA. Companies that have just started running both kinds of ads have a rare opportunity to A/B test how the addition of PLA’s impacts their regular text ads.

At the Search Insider Summit in Florida last month, I attended a roundtable discussion on product listing ads with several big-brand PPC managers who all revealed the same thing: their PLAs were kicking ass but also sucking conversions away from their run-of-the-mill text ads.  

Meaning, the increase in ROI from running PLA’s was at the expense of the other text ads they were running – you can’t double your sales by running both types of ads. As a result, all of the advertisers I spoke to were primarily shifting budget from vanilla plain text ads towards PLA’s as opposed to creating completely new budgets.

I believe this is because the PLAs are so information-rich. Prospective customers know exactly what they’ll be getting when they click on the ad, including the price. With a standard text ad, on the other hand, you run the risk of getting the click and then losing the sale, if people decide they don’t want to pay that much for your product or that it’s not exactly what they were picturing.

If You’re an E-Commerce Business and You’re Not Using PLA’s, Good Luck!

PLAs are just one more way that GOOG is sticking it to non-advertisers. Google is creating an environment in which you have to use AdWords to compete in search. You may still be able to rank on the first page for your product keywords, but those listings are not only getting pushed further and further down the page, they’re significantly less valuable since the commercial intent has been drained out of the SERP already by the competing Product Listing ads at the top of the SERP.

And it’s not just about SEO vs. PPC. It’s getting to the point where standard-issue text ads aren’t enough – you have to use all the bells and whistles that Google makes available to you. Otherwise you can’t hope to compete. If you’re an e-commerce company, it’s crucial that you set up a Merchant Center Account so you’re eligible for PLAs and dynamic remarketing.

If you’ve tried running PLAs and regular text ads on the same keywords, what were your results?

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Comments

Tally (not verified)
Jun 05, 2013

Hi Larry,

Great article - we were just discussing this at the office. Any ideas as to how we can measure the degree to which this cannibalization is taking place? How do you measure the frequency of double-serving? I'm guessing there are some assumptions taking place...? 

Tally

Larry Kim
Jun 05, 2013

it's really hard to measure. In my article, i explained that I spoke to numerous large brand advertisers (big fortune 500 companies that you probably did business with in the last month)  were able to measure the impact only because they previously had regular text ads running, then added PLA's. All reported improvement in CPA's for the PLA campaigns, combined with a decrease in performance for non-PLA regular search ads.

 

Interesting post! I have never really considered that my PLAs are 'stealing my conversions' from other PPC formats. I can imagine how some people might believe their PLAs are canibalising their standard search ads but I think that's a bit of a negative way to look at it. PLAs are awesome for ecommerce sites and it's another way to own more of the paid search results page, in addition to the standard text ads. If managed properly, PLAs are extremely effective alongside standard text ads. I have a client for which we run both and we are able to see that in some instances PLAs are more effective than standard text ads at converting so we put more daily spend into them. In other products PLAs aren't as effective so you can exclude those products from being used in your PLA feed. PLAs are also awesome because they generally have a lower cost per click than standard text ads in my experience, so the conversions you get via them are cheaper than those of standard text ads - why wouldn't you want people to convert this way if it's costing you less?! If you've got your product targets right, are using negatives and have product exclusions set up well then you can control to what extent PLAs overlap with your text ads. I also think that people should look at all the 'bells and whistles' Google give you in a positive way, rather than seeing them as extra work, because they enable you to gain competitive advantage in an advertising space which is becoming more saturated all the time.

Larry Kim
Jun 05, 2013

Hi Tara - thanks for your comment. I think we are in agreement!

I completely agree with you about PLAs being a good thing for advertisers in general, but where it gets difficult is with clients that cannot set up a Google Merchant Centre feed, but they're competing against PLA ads. While clearly they can't split test, the PLAs certainly seem to have an impact - it's a challenging time. While that's not necessarily a bad thing (it can make us up our game!) it's undeniably a very different market and that won't suit everyone.

Larry Kim
Jun 05, 2013

Hi Katie - i think image ad extensions will help. This would in theory, allow a non-ecommerce vendor to compete with the blinged-out PLA's by infusing image information into their text ads. they're currently in beta.

Thanks Larry, I read about image ad extensions right after reading this post and that was what I thought. It'll be interesting to see how they pan out.

Very good post here. I have definitely seen this for a while now, but would add another level to that for high-dollar items.

We can call it the shiny object issue, and that is when someone is utilizing a more genral branded search, but still branded and the items have a higher price point. The bounce rates on high dollar items are significantly higher than traditional category-level pages for those search. This has a lot to do with people seeing that shiny object hovering out there to the left, bypassing the text ad that will take them to a category page with more options and then leaving due to price point or the item not being exactly what they wanted.

High-dollar items need some coaxing and that can be difficult to do on an item page from a more general query. It really makes businesses re-evaluate their item pages and offer more options from that space.

Larry Kim
Jun 05, 2013

Thanks jeff!

Great post Larry, I've seen the same thing at the PPC agency I work for. We've had tremendous success with Product Listing Ads but in nearly every case it's rendered text ads almost useless. However the CPA on PLA's is undoubtedly lower than would have ever been possible prior to product listing ads, so this is great news for advertisers. Not to mention that eCommerce sites were historically one of the toughest markets to get a good result with PPC, due to low margins and broad searches. I know of agencies that flat out refused to work with eComms because of the shear hours it would take each week to get even close to a good result. PLAs have changed all that for ever and that's great for everyone, eComm'ers, PPC agencies and most importantly end consumers.

Larry Kim
Jun 06, 2013

Yes - agreed.  a win for ecommerce types doing PPC, at the expense of organic search listings and regular non-PLA ads.

Good thing i sell information products lol. I imagine that affiliates who are a part of Amazon's affiliate program (who only uses 100% seo for their marketing) are earning less now than before PLA's sudden rise and takeover in the google search results. Would you agree with this?

Larry Kim
Jun 06, 2013

yes!! isn't that amazing! google figured out a way to drain the valuable clicks out of the serp and direct them to the paid results. clicks to the organic results or non blinged-up ads are far less likely to convert!

Anonymous (not verified)
Jun 06, 2013

What about service organizations? I guess for them this will never apply! ;)

Larry Kim
Jun 14, 2013

check out image ad extensions: http://www.wordstream.com/blog/ws/2013/06/06/adwords-image-extensions

This is the PLA for services organizations (or any non-ecommerce company)

Great post. I've spotted the difference in PLA's in search results between generic search terms "Car", "Holiday", ""Coffee Maker" or whatever, and the brand name results.

The differences are striking with more vanilla Google adwords for the vanilla and more PLA's for the brand. This in itself is a reversal of the position Google were taking as little as 12 weeks ago where brand prompted a greater number of PLA's

This suggests to me that they are experimenting with various monetization strategies while trying to moderate the sheer weight of self promotion they are doing. Have you done a post showing how easy it is to get most products on these placements? Once you have a system, using these to your advantage is pretty simple and very effective (until everyone learns how to do it of course).

Larry

 

Anonymous Leandra (not verified)
Jun 15, 2013

Hi Larry, 

Thank you for your post. This is very helpful. Is there any way you know of that I can test non-brand organic ranking drops compared to PLA's taking most of the clicks

Pretty convincing !! PLAs have become dearer to advertisers and allocate a huge budget-share to the once non-paid

channel. But the CPC for PLAs is on a rise....So be careful !!

 

I agree that PLA'a are now on the top of the growing trend to market in the digital world. As the cutomer are on the moving digital world we i.e; Marketers are to be on th express hand to deliver their product with whatever possible technique.!!!!!!!!!!!!!!

Intresting discussion..i appreciate with the things that yes PLA's are overshadowing the actual content on the page now in the fast moving digital world i would like that the more you showcase your product the more customer base is developed. So as to compete with the digital world market it is neecessary to showcase in an enhanced manner.

Kate (not verified)
Jan 27, 2014

For me PLA's is the only way I make profit on my ads. I was doing text ads and getting some results but seeing what product listing ads do for me there is no comparison.

I am using Sales and Orders Ads to get my P&L on my ads and it's only been good from the start.

Thanks for the post, Larry. Big Help!

atishay jain (not verified)
May 28, 2014

Any idea if we can land our product URL to category pages instead of item's URL?

Larry - What I have expereinced is - if you are a brand and an ecommerce as well then you are letting your competetors to steal your sales if you are not doing PLA.

Rafael (not verified)
Aug 06, 2014

hi larry, I'm from Brazil and your text discusses a subject that is intriguing practitioners of the agency that I work, shopping ads are increasingly cannibalizing ad conversions of text only. I have two questions and would like you to give me your opinion:
 
1 Non-PLA ads work together with PLA? How do you think we could balance the two?
2 If I pause Non-PLA ads I'll be enjoying my ROI or reducing the volume of users that are impacted by my brand?

Thanks for the post!
 

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