Over four and a half years ago, Google launched Product Listing Ads, commonly known as PLAs. Since the launch of PLAs, Amazon has avoided advertising in this ad space, thus becoming a safe haven for retail brands, free from the eCommerce giant. It makes sense that Amazon would refrain from participating in PLAs given that they want to be the first place a consumer goes when they begin their product discovery.
So why has Amazon finally entered the PLA marketplace? It seems that Amazon has finally realized that PLAs cannot be ignored and their Google paid search strategy of running text ads alone is no longer sufficient. “In Q4 2016, PLAs will produce just under half of all retailers’ Google search ad clicks”1. Additionally, with the limited ad space on mobile, PLAs become even a larger player and consequently have a higher click share than on Desktop. Of the clicks on PLAs, anywhere from two-thirds to three-fourths are coming from non-brand queries. Further supporting the fact that people are still using Google search as their starting point for product discovery.
Therefore, Amazon saw the writing on the wall and around December 20th, people started noticing Amazon PLAs popping up for home good products. It looked as though Amazon was conducting a small test and search impression share, while significant, did remain under 25%2.
But now the question is, will Amazon expand beyond home goods and begin competing in additional product sectors? Is this a strategy they will save for bigger shopping moments like the holidays or will it become an always-on strategy? And of course, the question on everyone’s mind is how will this affect other brands, small and large alike? While a single competitor here or there entering the PLA space may have minimal impact on a company’s CPCs and search impression share, a giant like Amazon with seemingly unlimited advertising funds would pose a real and serious threat.
However, there is one bright spot for brick-and-mortar stores and that is Local Inventory Ads. Local Inventory Ads are a component of PLAs and inform a consumer if the product they are searching for is also available in a store near them. With Google’s increased focus on local and Amazon’s lack of ability to run Local Listing Ads, LIA’s will be a small leg up for retailers with brick-and-mortar stores who have opted into this feature. Although Amazon recently unveiled their checkout-free convenience stores so perhaps it is only a matter of time before they enter into the brick-and-mortar space as well.
The future of a PLA world that includes Amazon is still unknown so keep your eyes out for an Amazon PLA ad in your sector. And take heart that Amazon most likely does not want to be cutting Google an even bigger check on a monthly basis.
1,2 https://www.merkleinc.com/blog/reversing-course-amazon-testing-google-product-listing-ads-may-be-ramping-efforts
