One of the e-commerce experts at ChannelAdvisor uncovered some interesting data that led us to an important discovery about the new Google Shopping / PLA. Before we jump into the details, let me explain how we discovered it, the CSI work that led to it and then what it means for retailers.
How did we discover this?
Here at ChannelAdvisor, we provide our software-as-a-service offerings for Search, CSE, Marketplaces and social in two formats:
- Self service – this is where the retailer directly uses the software to manage a variety of e-commerce channels on their own.
- Managed service – where the retailer outsources the management of the channel to one of our e-commerce channel experts.
One of the managed service folks noticed some very unusual data this week:
- First they saw the GPS traffic go to near zero as Google switched over the one box from GPS to Google Shopping.
- Google Shopping / PLA traffic went up some.
- PriceGrabber.com traffic went up a a ton.
Usually when we see any kind of data move more than 10% (with the exception of holidays of course), we try to understand what is happening from a user experience standpoint or with the CSEs, we also look at any changes in distribution.
Our software allows us to look back several levels of referrals and when our expert dug in they found this weird trail:
Retailer product page -> PriceGrabber.com – > Google Shopping
That’s a weird referral chain because historically Google did not allow ‘aggregators’ (A catch all term for CSEs and affiliates) to participate.
What exactly is going on?
After seeing this one chain, we knew what we were looking for and here is what we are seeing: (unfortunately I can’t show a screen shot as we don’t want to reveal any client-specific strategies):
- Google definitely is showing a couple top CSEs in the Google Shopping results.
- When they are displayed in the new user experience, they are branded as if they are from the retailer directly – in other words, it says retailer.com not PriceGrabber or shopzilla
- The CSE is paying google and the retailer is paying the CSE – so the CSEs appear to be participating in the PLA auction.
What we don’t know
There’s a lot we can tell from the data (above) and there’s some things that are still a mystery:
- This is probably a google experiment – perhaps they are using CSEs to augment their selection in Google Shopping?
- How are the CSEs paying – CPA, CPC or ?
- What if a retailer is in both – you would assume google takes the highest bid (retailer-direct or cse), but who knows. It seems that CSEs would be able to bid their rate card minus a bit for margin – a pure arbitrage game – because it is essentially a click-pass-through. To be clear, the consumer NEVER lands on the CSE, they are passed through via redirect to the retailer and never see the CSEs brand.
What does this mean for retailers?
The inclusion of CSEs in Google Shopping has some interesting implications (positive and negative) for retailers:
- For smaller retailers, the CSEs could provide a valuable service – grouping small retailers together and acting almost like a co-op – helping them bid more together than they could individually.
- If you don’t want to get involved in Google Shopping at all, you can effectively outsource it to a CSE and they will manage it like a portfolio of traffic sources.
- CSEs have had a tough couple of years. Changes in both Google paid and organic programs such as Panda and Penguin have caused significant pain for CSEs. Perhaps this is a light at the end of that tunnel?
- Channel conflict – Many times in internet marketing it makes a ton of sense to run two ads. The idea is that if one ad works, then two should work as well. We call that a shelf space strategy and most retailers employ it. The challenge here is that instead of getting two spots (the direct and CSE), the retailer is competing with the CSE for one spot. This will likely cause channel conflict and most large retailers may pull their listings from the CSEs (either all together or just for Google Shopping if allowed).
- Control – While convenient, having someone else running ads for you can make it hard to have your brand 100% represented. Remember the consumer sees retailer.com on the GS entry, not the CSE.com. What if you are running a promotion? What if the price is incorrect? What if you want more control over the product, image, etc.?
- Lack of data – Last, but not least, in our corner of the World, data is king. The CSEs will be collecting all of the data and Google Shopping ‘know how’ and all you will see is the pass through CPC. It may not be prudent to be removed from the data needed to get an edge on this program.
This is a very new development (literally about 48hrs of data), so it’s too early to make a recommendation on what retailers should do. That being said, we do recommend keeping a very close eye on this and starting to think about where you stand on the issue from a macro standpoint :
- Do you want to effectively compete with your CSEs for Google Shopping spots?
- Do you want to do both?
- Do you want to participate in Google Shopping primarily through non Google CSEs?
If you are leaning towards not wanting to effectively compete (full disclosure: we are leaning this way in our recommendation for large branded retailers and manufacturers.)
Then you should call your engines and ask if they will be able to exclude your listings from the Google Shopping source. E.g. talk to your CSE account rep and tell them you do not want your items distributed via the CSE to Google Shopping. We’re not sure they will allow this, but it’s worth asking.
We’ll be keeping a close eye on this going forward and keep you posted on any new developments.
SeekingAlpha Disclosure – I am long Google and Amazon. eBay is an investor in ChannelAdvisor where I am CEO.