At SMX West last month, I participated in a panel discussion on Google’s new ad formats. Today, I want to share some findings, tips and tricks for getting the most out of Product Listing Ads.

What Are Product Listing Ads?

Google learned that folding images, videos, maps etc into organic search results — a.k.a. Universal Search — increased user involvement with organic listings.

If users liked the mixture of result-types in the organic listings it made sense — both for improving the user experience and making Google more money — to roll something similar into the ad landscape.

Product Listing Ads (“PLAs”) — not to be confused with Product Extensions, the plus-box expansion ads shown below the PLAs — were rolled out publicly in November of 2009, and initially were available for use only through the Google Affiliate Network.

Competition was sparse, CPCs were low, and PLAs were extremely profitable for those in the game. I suspect they were a money loser for Google in test mode as the text ads pushed down the page likely would have generated more revenue, but you often have to spend money to make money and this was a test run.

In November 2010, PLAs opened up to all advertisers who have a merchant center account, and are managed through the AdWords UI. PLAs operate as a separate auction from AdWords allowing advertisers to have both a text ad and PLA on the same SERP.

Competition has ticked up significantly since the public launch increasing the costs and splitting the “pie” between more players. That said, they remain a valuable new source of traffic when managed properly.

Worth noting: PLAs generally show up on fairly specific product related searches (tail and torso) not more general category-level searches.

This makes sense. CTRs are undoubtedly lower the less responsive the images are to the search. People looking for categories of products don’t know what they want, and the odds that Google will pick the right couple of products to show diminish greatly. Google therefore gets much higher RPM by showing the more general text ads in those cases.

How To Set Up Product Listing Ads

  • PLAs run off of the Google Merchant Center feed.
  • The Google Merchant Center must be tied to the Advertiser’s AdWords Account. We’ve found that most third-party feed providers are happy to help make that happen if you are unable to access the GMC account directly.
  • Set up separate PLA campaign(s) in AdWords and make sure the campaign settings are looking for Product extensions in the right GMC account.

9 Tips For Managing Product Listing Ads

  1. Set up a separate Ad Group for each product category. This will provide more controls for bidding, offer copy and targeting.
  2. You can either use the product categories that Google uses for Google Shopping, or if those are ugly, or wonky, you can set up additional parameters to cluster products appropriately for PLAs. It’s a good idea to login to the GMC and click on a product to make sure that those parameters are live before turning on the ads. Again, most feed providers can and will help make this happen if you don’t manage the feeds yourself.
  3. Use promotional copy if you can. Even generic offers like free shipping lift CTR.
  4. Set initial bids somewhat higher than corresponding product-level AdWords bids for each category to gain traction. Unlike AdWords, you have to be in the top 2 or 3 to get any traffic, so bidding a bit more may be necessary for testing. And, you may find that the traffic value is higher (though in most cases it is not — see below).
  5. Use negatives like you would with broad match search ads. Initially, Google didn’t think negatives would have an impact. We found that they did and shared that with the Google Product Team. Now they recommend them!
  6. Have an “All Products” Catch-all in addition to the product category AdGroups. As new products and new product categories are added to the feed the catch-all will pick up any new categories that don’t have their own AdGroup yet or products that for whatever reason aren’t categorized.
  7. Be careful with the bids on the catch-all AdGroup. Faced with the choice, Google will serve the PLA from the AdGroup with the highest bid, so any AdGroups tied to product categories with lower bids will be ignored. Try setting the catch-all bid to match the lowest bid of the PLA AdGroups. That’s not a perfect solution, but it’s a start.
  8. Watch the results, and play with the bids. We’ve seen some fairly hard to explain behavior from this product, like dropping bids by 50% and seeing the impression and click volume triple, seemingly as a result. We’ve seen catch-all AdGroups generate traffic on products tied to product-category AdGroups with higher bids. Google preferred the lower bid? or, something was gummed up in the product category mechanics on their end?
  9. An interesting side benefit: Kurt Krake of Search-Werks pointed out that pulling a search queries report from the PLA campaign can be a gold-mine for finding new keywords (and negatives) for your core AdWords campaign. Kurt also points out that it’s important to keep up with changes to the GMC feed requirements. Great tips from an old friend of ours!

Measuring The Results Of Product Listing Ads

Matt Mierzejewski did some research on our end to try to answer three key questions:

Question 1: Do PLAs cannibalize sales from AdWords ads?

The answer appears to be “no”. Overall CTR and traffic levels for product-level AdWords ads seemed to remain constant after launch. Even in instances where the same user search fired both text ads and PLA ads, there seemed to be no negative impact on the text ad CTR. The traffic driven by PLAs seems to be almost entirely incremental.

Question 2: Do PLAs drive the same quality of traffic as text ads?

On balance, “yes.” It appears that the conversion rate of the traffic is actually slightly higher than corresponding text ads, but the average order size is slightly lower. We speculate that perhaps the person who is drawn to the picture may be less likely to pick up accessories, too, but more research is needed here.

Question 3: Do PLAs drive meaningful quantity if the tail in text ads is already thoroughly built out?

Yes. We’ve found that for sku-based commodity retailers, PLAs can profitably contribute an additional 5% or more to a well-managed AdWords program. The product is less effective for those selling unique merchandise (eg camera gear works better than apparel), but it’s still worth trying.

The Key Takeaway

As with other pieces of the search experience, expect PLAs to evolve over time as Google tests other layouts and formats. RKG Senior Analyst Mia Brennan captured a couple of these test layouts below.

Horizontal in place of the top 2 – 3 AdWords ads:

Vertical but with up to 5 PLAs:

We can count on the Google Product Team to keep us on our toes! PLAs are a win for advertisers and users alike.

Well done, team — what’s next?

Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.

Related Topics: Channel: SEM | Paid Search Column

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About The Author: is Co-Founder and Chief Marketing Scientist of RKG, a technology and service leader in paid search, SEO, performance display, social media, and the science of online marketing. He also writes for the RKG Blog. Follow him on Twitter at @georgemichie1.

Connect with the author via: Email | Twitter | Google+



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