Fighting a battle with Amazon to be the preferred entry point for Internet shopping, Google last year retooled its lucrative search page. Its strategy is showing signs of progress.
The change allowed retailers to post pictures, descriptions and prices of products at the top of search results, both on desktop computers and, later, mobile devices. For example, a Google search for “microwave oven” shows a grid of photos for specific models, sold online by retailers like Macy’s Inc. and Target Corp, with prices clearly marked. The ads more closely resemble what Amazon shows shoppers than Google’s typical text-based ads. The same search on an iPhone shows a carousel of such ads that users can swipe through.
By directly helping searchers who know what they want, Google’s “product-listing ads,” as they are called, reduce the number of clicks before users get to the “buy” button. Searchers click on product ads 34 percent more frequently than regular text ads, according to Adobe Systems’ research arm.
At stake is supremacy in the U.S. e-commerce market, which comScore expects to rise 14 percent to around $210 billion this year. While many think of Amazon and Google as being in separate businesses, the two are locked in fierce competition to be the first search box shoppers turn to when they are browsing products online. As more Internet users begin searches on Amazon’s marketplace—which comprises an array of vendors besides itself—Google loses an opportunity to show them ads.
The extent of the threat Amazon poses to Google isn’t clear, since the search company doesn’t break out its revenue from shopping-related clicks. Larry Kim of search-marketing firm Wordstream found that, in 2011, retailer ads were the second most-lucrative category in terms of revenue for Google, behind only finance/insurance. By the third quarter of 2012, retail fell to third, behind travel. Kim says the figures haven’t changed substantially since then.