Google Takes on eBay, Amazon With Shopping and Search Update

Source: Getty Images

Source: Getty Images

Google (NASDAQ:GOOG) (NASDAQ:GOOGL) Shopping, the tech giant’s comparison shopping engine, has come a long way since its early days as Froogle. But businesses who sell products online know that it’s still been difficult to use, and hasn’t integrated particularly well with Google’s other offerings, like AdWords, in helping advertisers to figure out which advertising campaigns are effective. VentureBeat reports that all of that is poised to change, thanks to an update to integrate Google Shopping into AdWords and to a recent update to Google’s search algorithm.

The AdWords update, announced in an April blog post, sees Google retiring the traditional Product Listing Ads that businesses create in AdWords, and instead upgrading all users’ advertising campaigns to the new Shopping campaigns. The new campaigns, which were announced in February, provide businesses with a graphical interface to track their inventory, pricing, and promotions directly in AdWords. The interface includes new metrics, performance reporting, a bid simulator, and the ability to create new campaigns or ones based on previous Product Listing Ad campaigns. The traditional campaigns will be retired completely by August, and Google will upgrade existing campaigns to Shopping campaigns at that time.

The changes cut out redundant and time-intensive tasks previously involved in creating an advertising campaign, and as VentureBeat points out, finally puts more data into the hands of businesses looking to Google Shopping ad campaigns to drive traffic and sales. For instance, the bid simulator feature makes a variety of metrics — clickthrough rate, cost per click, impression shares, and rankings — viewable on a per-product basis, enabling businesses to track and fine tune how they’re spending their advertising budget.

As The Wire reported in May, Google made a major update, called Panda 4.0, to its search algorithm, with notably disastrous results for eBay (NASDAQ:EBAY), which lost roughly 80 percent of its “best” search results. Taken at face value, Google’s motivation for the move seemed unclear; eBay is the second largest buyer of Google’s Product Listing Ads, spending huge amounts of money to drive traffic to its auction and shopping site from Google.

But Business Insider spoke with an expert who characterized eBay’s use of Google’s ad campaigns an “asleep-at-the-switch AdWords management style,” as eBay’s ads used an automated process that indiscriminately added whatever word a person searched for into its ad, resulting in irrelevant, sometimes ridiculous, and usually expensive ads. Google’s search algorithm also favors pages that offer a depth of useful content related to the search term, which eBay’s site generally doesn’t offer.

Since Google’s biggest revenue source is advertising, it’s in the company’s best interest to be a useful and popular shopping platform for consumers. Having tons of irrelevant ads pop up just undermines Google’s viability as a shopping platform, and risks sending them elsewhere, like eBay or Amazon (NASDAQ:AMZN). Google undoubtedly rolled out its Google Shopping Express same-day delivery service to compete with Amazon. But there’s a key difference between the two: Google doesn’t have Amazon’s distribution infrastructure of fulfillment centers, and instead relies on the inventory of third-party retailers that consumers access through the Google platform. Google picks up products from local chain stores, such as Target or Best Buy, to deliver to consumers.

The idea is to make purchasing from those retailers easy, organized, and centralized into one convenient platform. That philosophy could easily be extended to Google’s goals for its entire Shopping platform, and its updates to the search algorithm and Shopping advertising campaigns play a part in that. As Google looks to compete with Amazon as an online shopping destination, it may depend on partnerships with retailers to differentiate itself from Amazon for consumers. Google’s biggest challenge is Amazon’s function as what Wired terms a “search engine for commerce,” a nod to its status as a primary destination for users looking to buy something.

As Google looks to pull businesses’ advertising dollars away from both Amazon and eBay, offering a data-fueled interface and campaigns for advertisers, it may need to take a page out of Amazon’s book and build a smarter shopping platform. While Amazon and eBay may each work (and pay) to make their products and pages more visible in Google search results, Google may focus on making its platform more attractive to businesses and consumers by tracking more customer data on searches and purchases. That way, it can figure out what consumers want and help advertises give them more opportunities to buy it, building a smarter shopping platform for everyone involved.

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