Since their debut in the spring of 2012, Google’s product listing ads, a.k.a. Google Shopping Campaigns, have become a vital component of paid search advertising for the retail industry. To provide insight into the role of PLAs in the paid search advertising landscape during the holiday season, we compared U.S. Google desktop PLA and Text Ad activity on the top 2500 retail keywords (based on paid search ad spend) in Q4 2015.
Unlike traditional text ads, there are a number of advanced technical specifications required to advertise with Google Shopping Campaigns, which can present a barrier to entry for many smaller retailers while favoring larger, more sophisticated advertisers with a deep inventory of products. The result of this phenomenon is far fewer advertisers competing on PLAs than text ads.
In Q4 2015 AdGooroo observed 96% fewer advertisers sponsoring the top 2500 retail keywords via product listing ads than text ads (8,400 PLA advertisers vs. 209,000 text ad advertisers).
That percentage has decreased some since February 2016, when Google dropped right rail ads from its results pages, however there is still a sizable difference in competition between the two paid search ad formats. For instance, from March through August 2016, we found 77% fewer advertisers sponsoring the top 2500 retail keywords via product listing ads than text ads (9,651 PLA advertisers vs. 42,827 text ad advertisers).
To account for seasonality (i.e., a natural increase in advertisers in Q4), we also looked at the same period last year and found 85% fewer PLA advertisers than text ad advertisers on the keyword group from March through August 2015 (9,962 PLA advertisers vs. 67,223 text ad advertisers).
In keeping with AdGooroo’s past findings, clickthrough rates (CTR) were higher for product listing ads than for plain text ads in Q4 2015. PLAs generated an average clickthrough rate of 3.40% on the top 2500 retail keywords in Q4 compared to text ads’ average CTR of 3.07%.
However, advertisers should be mindful that differences in CTR can vary greatly between the two search advertising mediums at the individual keyword level. For instance, the term ‘ugg boots’ experienced a 4% CTR for PLAs vs. a 2.5% CTR for text ads in Q4 2015, while ‘serta perfect sleeper’ generated a 6.5% CTR for PLAs compared to a 3.7% CTR for text ads.
Cost Per Click
Interestingly, in past studies AdGooroo found that PLAs had a higher average cost per click than text ads. For instance, in a Q2 2014 study of 60,000 keywords we found PLAs generated a $1.63 average CPC vs. a $1.07 average CPC for text ads. In Q4 2015, however, that trend was reversed on the top 2500 retail keywords, for which PLAs averaged a $1.46 CPC compared to a $1.57 average CPC for text ads.
Clicks & Spend
PLA ads served on the top 2500 retail keywords generated 55 million clicks in Q4 2015, 80% fewer clicks than the 272 million clicks on texts ads for the keyword group during the period. This phenomenon is a natural extension of there being fewer PLA advertisers, since the significantly higher number of text ad advertisers translates into more ads and more opportunities for consumers to click.
Total PLA spend on the top 2500 retail keywords was $80 million in Q4 2015, 78% less than the $365 million advertisers spent to sponsor the same keywords via desktop text ads during the period.
Results Vary By Advertiser
The product listing ad vs. text ad comparison detailed above looks at averages across all advertisers’ campaigns on the top 2500 keywords during Q4 2015. However, individual results can vary considerably.
For additional insight, we compared PLA and text ad activity for the top 10 advertisers by combined PLA and text ad spend on the top 2500 retail keywords. (Note: Advertisers that only sponsored text ads or PLAs were not included. Hence, Amazon is not included because they only sponsor text ads and not product listing ads.)
In keeping with the findings of our general PLA vs. text ad comparison, the vast majority of the top 10 advertisers generated a higher clickthrough rate and a higher average cost per click for PLAs than text ads on the top 2500 retail keywords. The sole exception in clickthrough rate was Apple, which had 4.3% CTR for text ads vs. a 3.9% CTR for PLAs. For cost per click, three advertisers had a lower average CPC for PLAs than text ads: Kohl’s ($1.11 vs. $1.21), Zappos ($1.13 vs. $1.20) and Apple ($1.45 vs. $1.58).
On average 23% of the top 10 advertisers’ total spend on the top 2500 retail keywords was devoted to product listing ads. However, there were notable exceptions. For instance, 49% of Best Buy’s total spend on the top 2500 keywords was devoted to PLAs, while just 6% of JCPenney’s spend went to PLAs for the keyword group studied.
Perhaps contributing to less total spend on PLAs than text ads during the quarter was the fact that the majority of the top 10 advertisers sponsored fewer keywords via product listing ads than text ads for the 2500 keywords studied. Again, Best Buy was a noticeable exception, sponsoring 60% more PLA keywords than text ad keywords during the quarter.