Google is Making Tonnes of Money from New Type of Online Shopping That's Killing Amazon
Jan 24, 2014 02:50
In 2012, Google quietly introduced a new type of search ad. "Product Listing Ads" (PLAs) are those photo boxes that appear at the top of Google's results pages when you search for stuff that is shopping related, like "Ugg boots" or "iPhone charger."
The format turned out to be a huge success for Google, according to data from Marin Software, which buys PLA campaigns for its clients.
This means bad news for Amazon, because PLAs push Amazon's organic, non-paid search results farther down the page every time they appear; and in search advertising, everyone knows that bring at the top of the page is important.
Amazon is known to be highly sensitive about Google's use of PLAs, and the company has declined to buy any PLAs from Google to boost its search rankings. The PLAs must work, however, because several of Amazon's subsidiary units — Zappos, Diapers.com, Wag.com Soap.com, and BeautyBar.com — have upped their PLA budgets during the course of the year, according to Jefferies Research.
The increased budgets from all of Google's online retailers have increased Google's coffers in 2013, Marin says.
Analyst Ben Schachter and his team at Macquarie Capital agrees. In a pre-earnings note to GOOG investors yesterday, he wrote, "We expect a strong quarter from Google, and believe that PLAs in particular will drive upside, as PLAs pricing/competition has been better than expected." Google will deliver its Q4 2013 earnings on Jan. 30.
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