Google’s Product Listing Ads (PLAs) are playing a major role in the company’s “pay-to-play” ad format. Over the past year, PLAs have soared in popularity due to their expansion to smartphones and new customer-facing featPures. Because consumers are using PLAs more frequently, retail advertisers have increased spending on the PLA channel by approximately 300%, according to research from Marin Software.
In addition to growth in overall PLA spending, the share of spend on PLAs increased from 12% to 15% throughout the year. By December 2013, retailers were allocating 23% of their paid search budget toward PLAs, a 92% increase over January 2013.
The report, titled: The State Of Google Shopping: Mobile Shoppers & Record PLA Spend Drive Success For Retailers, analyzed enterprise retailers from the Marin Global Online Advertising Index that spent more than $100,000 per month on Google text ads and PLAs in 2013.
Because PLAs are more visual than traditional text ads, they are becoming more attractive to consumers. Approximately 20% of all paid shopping clicks were on PLAs. This type of advertisement saw the only increase (6%) in click-through-rates throughout the year, while text ads decreased by 13%.
Because businesses were willing to commit additional funds to PLAs, bidding for the ads became highly competitive. This more competitive climate resulted in a 35% increase in PLA cost-per-click for the first half of 2013, while text ads increased by 14%. By the end of 2013, PLAs saw cost-per-click boost by 141%, while text ads only saw a 21% increase.
The holiday season was a significant contributor to this trend. Specifically, the cost-per-click and click-through rate of PLAs saw a notable increase during the holiday season. Increased competition boosted cost-per-click by 44% between Q4 2012 and Q4 2013, a major difference compared to the 4% increase in cost-per-click for text ads over the same time period. From October to December 2013, PLA click-through rate increased 21% year over year. Conversely, click-through rates for text ads increased by less than 5% year over year.
Click here to access a complete version of the Marin Software report.