ADOTAS – With the busiest shopping season of the year now behind us, Q4 demonstrated the rising influence of online purchases over traditional brick-and-mortar retail.
The last quarter of 2013 was the biggest quarter ever for paid search, with 36 percent of all global retail paid search clicks coming from mobile devices and retailers spending revenue on Product Listing Ads (PLAs) by 138% year-over-year according to marketing firm Kenshoo. But a new report released today by Marin Software cites more aggressive growth, stating that PLA spend increased by nearly 300 percent in 2013.
“Search advertisers continue to find new ways to improve results from their most productive digital marketing channel, and Q4 2013 proved to be the biggest quarter ever for paid search,” said Aaron Goldman, chief marketing officer of digital marketing firm Kenshoo. “Not only did paid search advertisers spend more than any other quarter on record; they did so more efficiently than ever by driving more clicks with fewer impressions. Furthermore, with formats like Mobile and Product Listing Ads showing tremendous gains, it’s clear that there’s greater opportunity ahead for sophisticated search marketers.”
For those of you unfamiliar with PLAs, Google first introduced this new ad format in October 2012 to provide retailers the ability to show consumers products with prices that are contextually relevant to an online search query. Think of it as a mini online shopping experience injected into pages of search results. Google’s PLA strategy aims to empower smaller retailers to steal market share away from popular online retail properties like Amazon and eBay by displaying relevant product listings, circumventing the need for consumers to visit one-stop-shop retail sites to make a purchase.
“The main objective of our report was to paint the picture of the Google shopping landscape and in the future, expand that to the overall landscape,” said Kye Mou (pictured), senior product marketing manager at Marin Software. “The meteoric rise of PLAs has paved the way for Google to focus on vertical ad formats. As advertisers and retailers allocate more ads towards PLAs over text ads, this provides larger opportunities for advertisers and for Google.”
Mou believes text ads are great for identifying intent, but consumers are really looking for more online as they make a purchase, and PLAs provide rich content that is more specific to what online shoppers desire. Marin’s data shows an almost 300% uptick in retailers’ spend on Product Listing Ads in 2013 and 2014, as well as a surge in use of mobile PLAs to drive consumers into real-world retail stores.
The Rise of Mobile & Vertical Ads
“Mobile is the largest opportunity for PLAs and today, shoppers are on the go and using phones in stores more and more,” said Mou. “PLAs delivered on smartphones offer higher engagement rates. For example, in October of 2013, CTRs were 33% higher on smartphones than on PCs and tablets combined. Mobile PLAs are cheaper and actually perform better.”
Aiding and abetting the higher engagement rates on mobile, smaller screen sizes actually drive the increased effectiveness of the ads, since PLAs can take up 30-40 percent of the screen real estate, driving consumers’ attention and clicks.
The future of advertising will be even more promising for mobile as a platform. According to the study, Marin predicts that by December 2014, retailers will allocate one-third of their entire paid search budget towards PLAs, and that 40 percent of all PLA clicks will occur on smartphones.
“We expect a proliferation of industry and the rise in popularity of dynamic comparison shopping ads like hotel pricing ads, and more industry specific ads that are closer to a user’s query,” added Mou. “As we expand from there, in addition to these specific ad formats, we will need to see how are advertisers getting these ads in front of the right people. Just compare the demographic profile of people who would see a Tesla ad as opposed to one for Kia. The key will be optimizing the targeted ads accordingly and creating user engagement and a custom experience.”