3 Reasons Google’s New Shopping Listings Are Really About Amazon

Sure, Google wants to help retailers—but it also wants market share

google shopping screens
Free organic listings are coming to Google Shopping, but it's not just to help retailers during the pandemic. Google
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Key insights:

When Google announced it is adding organic listings to its Shopping site and other properties, the platform said it wanted to help retailers connect with consumers regardless of advertising spend.

Bill Ready, Google’s president of Commerce, painted it as a win-win-win: The new results give retailers exposure to hundreds of millions of daily shopping searches, consumers a wider range of purchase options, and advertisers the means to augment their paid campaigns.

“Solutions during this crisis will not be fast or easy, but we hope to provide a measure of relief for businesses and lay the groundwork for a healthier retail ecosystem in the future,” Ready wrote.

Search marketers, however, say the truth is more nuanced.

In fact, even Google itself stands to benefit, as it will likely gain users and market share along with advertising dollars.

“Those incremental advertising dollars will come from advertisers who sign up to do shopping via Google’s free shopping ads, who then see the amazing ROI and begin spending dollars on paid ads on Google,” said David Dweck, head of paid search at digital marketing agency Wpromote.

And while consumers and retailers do indeed stand to win, it’s a mixed bag for advertisers.

“It’s a loss for advertisers who have paid to play on Google and now will have increased competition from those who weren’t running paid shopping campaigns on Google,” Dweck said. “It’s a win because it gives those advertisers who were spending money additional free exposure, free sales and speed to market as current paid shopping advertisers on Google will be first movers due to being auto-opted into the program.”

So why rock the boat now?

Google wants to reclaim product searches

According to Rachel Bucey, vice president of earned media at Wpromote, the global pandemic has exposed a chink in Amazon’s armor.

“Consumers’ need to bring all shopping behaviors online has unveiled gaps in Amazon’s offering and infrastructure,” she said. “Shoppers that previously valued the simple convenience of quickly buying the basics are now craving variety as well. Google’s timely release of a no-barriers breadth of products may represent the competitive edge needed to challenge Amazon as a one-stop online shopping solution.”

The evolution of Google’s shopping ads can be traced back almost 20 years. When shopping results first came to Google in 2002, it was through an SEO technique called Froogle. But, over time, the platform realized how much it could increase advertising revenue if it switched to an auction-based model, said Gregg Manias, vice president of strategy at search marketing agency Acronym.

Google rebranded Froogle as Google Product Search in 2007—Marissa Mayer, who was then vice president of search and user experience, made the announcement. And, in 2012, it evolved into the commercial model known as Google Shopping.

“We believe that having a commercial relationship with merchants will encourage them to keep their product information fresh and up to date,” the search platform said in a blog post at the time. “Higher quality data—whether it’s accurate prices, the latest offers or product availability—should mean better shopping results for users, which in turn should create higher quality traffic for merchants.”

But part of the problem, Bucey said, is consumers prefer organic results—only 9% of clicks are generated from paid ads. This hampered Google Shopping over the years. And then the darnedest thing happened: Consumers started bypassing Google for product searches and heading straight to Amazon.

Now Google is trying to fix a problem of its own creation.

“Google made a huge mistake years ago by going from both free and paid shopping ads to only paid shopping ads. At the time, it was a greedy move designed to fully monetize the shopping real estate on Google search engine results,” Dweck said. “This move has 100% backfired on Google as it allowed Amazon to grab a foothold in ecommerce search, resulting in over 50% of product searches starting on Amazon versus Google.”

Now, Google is looking to “claw back market share from Amazon, who has stolen advertising dollars and consumers,” Dweck added.

If Google can increase the value of its Shopping product and attract more queries, it could pull traffic share directly away from Amazon, said Jared DeSisto, search director at performance marketing agency Merkle.

Which brings us to…

Google wants consumers to transact via Google Shopping

The new listings primarily impact users who are searching within Google Shopping—not conducting general web searches. And, DeSisto said, the amount of traffic Google generates from its Shopping tab is “fairly negligible today,” or around 3% to 5%.

However, the addition of organic product listings blurs the lines between organic and paid results, and will likely increase usage of what Bucey called the “previously plateauing purchase platform.”

“In recent years, Google has released a number of SERP [search engine results page] redesigns that together represent a strategic shift towards presenting paid as almost indistinguishable from earned positions,” Bucey said. “By establishing Shopping as a holistic marketplace experience, Google paves the way for a more native advertiser experience. … Ultimately, we can expect increased engagement from users previously hesitant to explore Google Shopping due to a dislike or mistrust in advertising, thereby increasing brand impressions across the board.”

In turn, Google can also learn behavioral preferences and potentially steal share from competitors like you-know-who, said Joe Shea, senior director of media and structured data at creative and media agency 360i.

“Ultimately, Google is trying to increase the amount of ways it can engage shoppers, so it becomes the first retail destination,” he said. “This is a small next step in that evolution.”

It could even apply positive insights to other properties—including its web results, Shea added.

Jon Maxson, senior director of organic media at digital marketing agency iCrossing, agreed.

“If the popularity of the Google Shopping site continues to increase and becomes an organic product center, in the way normal Google results have become a global knowledge center, the positive business impacts to both brands and Google will grow over time,” he said. “Beyond Google Shopping, this also has the potential to increase the relevance and accuracy of product answers within Google’s voice search ecosystem, which would bode well for continued consumer satisfaction and adoption in that area.”

But the key difference is Amazon is innately an engine for products. Google has not trained consumers to search for products via the Shopping tab, which means “it may be too little too late for Google,” said Dominic Gazzuolo, senior director of paid media at Wpromote.

Google wants to build out its own third-party marketplace

If it’s not too late, the listings may also help Google compete with Amazon’s third-party marketplace, which Amazon CEO Jeff Bezos himself said accounted for nearly 60% of its sales in 2018.

“Amazon’s marketplace dominates product-based search because of their abundance of sellers and product variations,” DeSisto said. “With Google’s addition of free product listings, Google has the ability to increase product and seller assortment.”

In fact, Gazzuolo said he could see Google following Amazon’s lead and eventually creating a marketplace where sellers pay a commission to Google on all sales.

But Google also wants to appease regulators

Last but not least, remember all those antitrust storylines coming out of Europe?

In 2017, for example, the European Commission slapped Google with a $2.7 billion fine for favoring Google Shopping over rival services in search results.

Google appealed the decision earlier this year.

And, DeSisto said, the addition of free organic listings to its Shopping site could help Google appease regulators as it increases choice for consumers.

@lisalacy lisa.lacy@adweek.com Lisa Lacy is a senior writer at Adweek, where she focuses on retail and the growing reach of Amazon.