Google Advertising Product Search on AdWords

September 8, 2009

We recently noticed that Google is “buying” AdWords ads that point to Google Product Search pages. This seems to be focused on very generic terms such as laptop, shoes, and digital cameras. Most of the ads we’ve seen have been in position five through nine, but in some cases, as high as two. In all cases, the landing page for the ad is just a search on the original query or a very similar term, meaning from the user’s perspective, it is just like clicking on the “shopping” link at the top of SERPs.

Back in 2006, Google commented on the use of AdWords to promote their own products. Though there is quite a bit of language here around tools, algorithms, and quality scores, the relationship between the budget assigned to campaigns and the value to Google is not discussed in much detail. Google has indicated that “aggregators” that do not contain “original content” are likely to generate low landing page quality scores, which would need to be offset with high bids or click through rates. It’s hard to know what the CTR is on these ads, but since Google is essentially paying themselves, it doesn’t really matter. Their budgets can’t literally be anything but they can certainly bid aggressively. The only thing they really lose is opportunity cost of other advertisers in those slots. Instead of selling that space, Google is driving this traffic to product search pages, which do contain ads, but not ads that are any different or better than the SERP the user is being taken away from. This implies that Google wants to drive users to product search links, which are currently not monetized, instead of ads that are monetized. It’s possible they just want to build awareness of Product Search, but if these ads vanish, many users will not be able to find their way back to Product Search next time.

This is certainly good news for merchants with strong placement on Google Product Search pages for very generic queries like those on which Google is currently bidding as it could result in spikes of free traffic. It’s not good news for other “aggregators” such as comparison shopping engines, who not only now have another competitor in AdWords, but are paying someone other than themselves for advertising and are therefore constrained by costs and performance metrics. This is also true for retailers, marketplaces, and any other AdWords advertisers bidding on these terms as a new competitor with effectively no budget constraints that are not bound by the same metrics has entered the playing field.

This has a wide range of implications for users, advertisers, and for Google. Just on the few queries that we identified, using Google’s own traffic estimator tool, we estimate this to be in the hundreds of thousands of dollars of monthly spend. That is lost money for Google, but also lost business for other AdWords advertisers. We’d love to hear from readers on what this means for your business.