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Google Shopping Bests Amazon at its Own Game

image0011 637x424 Google Shopping Bests Amazon at its Own Game

Let it never be said that Google will not give every ounce of effort to beat out the competition when it comes to the field of technology. Wary of Apple’s iPhone and iOS, Google not only developed their own Nexus smartphones but also developed the wildly popular Android OS. Google’s search engine remains the most popular site of its kind in the U.S. and around the globe, despite numerous challengers. Not wanting to be left behind in any field, Google made alterations to its online shopping engine after Q2 of 2012 and the results show the move paid off big time.

When comparison shopping data was collected by CPC Strategy, a comparison shopping agency, for 2012 it was discovered that Google had pulled off an impressive coup by overcoming Amazon Product Ads in a short amount of time. The results showed that Google Shopping sent 120% more customers to advertisers and was 32.7% more cost effective than Amazon Product Ads.

 

What Changed?

At the start of Q3 2012, Google made a shift to a more commercial, pay-for-use model for Google Shopping to help the system better compete with Amazon Product Ads. Additional changes were made that allowed advertisers the option for more customization in their ad services with features such as ad campaign management tools and the lack of a minimum Cost-Per-Click (CPC) bid.

 

The Results

The data from the second half of 2012 (Q3 and Q4) showed that Google not only improved upon its own performance, but bested Amazon Product Ads in the process. Google Shopping sent more traffic to advertisers’ sites in the second half of 2012 and saw lower CPC rates compared to Amazon as well.

Google Shopping traffic in 2012 was nearly double that of its 2011 performance, but the more impressive numbers came in the almost immediate reversal in traffic in favor of Google Shopping over Amazon Product Ads.

In Q3 2012, immediately after the switch to the new paid model of Google Shopping, Google sent 140% more traffic to advertisers than Amazon Product Ads. During Q4 Google again bested Amazon Product Ads by sending 96% more traffic, for an average of 120% more traffic during Q3 and Q4 than Amazon.

In addition to driving more traffic during the second half of 2012, Google also posted a lower CPC rate for advertisers compared to Amazon Product Ads. Over the 10+ year history of Google Shopping, the program has never tracked CPC rates because it never operated as a paid model. When the first CPC rate was recorded in Q3, Google Shopping advertisers were getting a rate of $.30 per click.

During Q4, Google Shopping’s CPC remained relatively unchanged at $.31 per click while Amazon Product Ads had a CPC rate of $.41. For that critical phase of the year, the holiday shopping season, Google Shopping advertisers were getting a CPC rate that was 32.5% cheaper than Amazon Product Ad users.

On top of greater traffic volume and lower CPC rates, Google Shopping also managed to provide advertisers with a more cost effective experience than Amazon Product Ads. The data showed that an advertiser had a 32.7% lower cost-per-sale number on Google Shopping than on Amazon Product Ads. While the cost-per-sale decreased on both services in Q4 compared to Q3, Google Shopping was lower than Amazon Product Ads and increased its advantage from Q3 to Q4.

During Q3, Google Shopping’s cost-per-sales was 12.5% compared to 16% at Amazon Product Ads. That 3.5% difference was widened to 4.3% in Q4 when Google Shopping’s cost-per-sale was 11.3% compared to 15.6% at Amazon Product Ads.

 

Why Google was Successful

CPC Strategy pointed out that a great deal of Google’s success can be attributed to changes made to its campaign tools and algorithm changes within Google Shopping. The ability to specifically target certain advertising campaigns and the lower CPC rates are helping to not only drive more traffic through Google Shopping, but the tactics are also providing greater profits for advertisers.

 

Not All Good News

While Google’s changes to the Google Shopping program did result in greater traffic, better CPC rates, and more profit for users compared to Amazon Product Ads, the news wasn’t all good. Google Shopping’s conversion rates continued to decline despite the changes made after Q2, posting four straight quarters of decline in the process. On the other hand, Amazon Product Ads experienced increased conversion rates each quarter during 2012 and surpassed Google Shopping during Q4.

Google Shopping’s conversion rate in Q4 2011 was 3.1%, but dropped to 2.4% by Q4 2012. That represents a 22.35% decrease over a year. By contrast, Amazon Product Ads experienced a 57.5% increase from Q4 2011 to Q4 2012 with conversion rates jumping from 1.8% to 2.8%.

CPC Strategy collected the data after looking at more than six million clicks, $2.4 million in advertiser spending, and $14.6 million in revenue from over 200 participating advertisers. In the end it is far too early to draw conclusions about the long term effect of the new tools now in place for Google Shopping. All this data would seem to suggest that Google is on its way to conquering Amazon Product Ads at the top of the heap, but the data represents just two quarters worth of activity.

 

Image Credit: © Collina – Fotolia.com

 Google Shopping Bests Amazon at its Own Game
Founder and CEO at FullTraffic. Passionate about Search Engine Marketing and Optimization, regular writer for the FullTraffic Blog. Since 2005, FullTraffic has evolved to become one of the most important Traffic providers worldwide for small to medium sized businesses.
 Google Shopping Bests Amazon at its Own Game

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4 thoughts on “Google Shopping Bests Amazon at its Own Game

  1. Thanks for posting our study Federico. I just want to clarify that Amazon Product Ads is a very small piece of Amazon itself. The title of the post is a little misleading.

    Amazon Product Ads has been out for around 4 years now compared to Google Shopping’s 10+ year history. It’s also not Amazon’s main business model, and presents just a fraction of their yearly revenues (though still drives more than $1billion yearly).

    Here’s a link to the full report – http://www.cpcstrategy.com/blog/2013/02/google-shopping-vs-amazon-product-ads/

    Thanks again.

    Andrew

  2. “but the tactics are also providing greater profits for advertisers.”

    You have to remember that these product listings on Google used to be free. You didn’t have to pay for placement. So to say that its providing advertisers with greater profits is not accurate and in fact the exact opposite. Google choked out all other comparison shopping sites by offering a comparison shopping service where merchants didn’t have to pay to submit their products. Then Google stopped showing other comparison shopping sites in their search results claiming they were “low quality” but they continued to show their own shopping results. Now that the other comparison shopping sites have been chocked out and have no traffic, Google flips the switch and starts telling merchants that if they want their products to be on Google product shopping they have to pay. Well they have no choice but to pay since other comparison shopping sites are either out of business or have no traffic.

    So while this was a great business move by Google, it’s skimming off the top of merchants who are already struggling to survive in a low margin web economy. And I definitely wouldn’t say that the tactics are also providing greater profits for advertisers because after all it’s just another added expense to a marketing budget, which comes straight out of the already low profit margins.

  3. What i feel is, when it comes to Search marketing, its very difficult to beat Google for other companies like Amazon, Yahoo, Bing, Facebook etc. Continuous improving Search algorithms by Google not gives you improved search results but also gives advertisers better targeted audiences.

    However competing with Google in product ads is a win for Amazon especially when its only a 4 yr old product.
    There is still time for Amzaon to reach at levels where Google is right now,

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