Product Listing Ads Remain Strong – Paid Search Trends For February 2013
Cost-Per-Clicks (CPC) fell across the board month-over-month, as is typical for February, resulting in a 5% lower CPC for Google and 3% lower for Yahoo!-Bing, compared to January. Year-over-year (YoY), retail CPCs are stronger on Google, partially due to rising CPCs on Product Listing Ads (PLAs), ending at a 5% YoY gain for Google and […]
Cost-Per-Clicks (CPC) fell across the board month-over-month, as is typical for February, resulting in a 5% lower CPC for Google and 3% lower for Yahoo!-Bing, compared to January. Year-over-year (YoY), retail CPCs are stronger on Google, partially due to rising CPCs on Product Listing Ads (PLAs), ending at a 5% YoY gain for Google and a slight 1% loss for Bing.
February 2013 CPC Update,
The most important theme in paid search during the past retail holiday shopping season was undoubtedly Product Listing Ads (PLAs), an ad format by Google combining product image with other pieces of information such as price and merchant name.
Marketers that had previously been hesitant to invest in building out their PLA campaigns were motivated to do so in time for the holidays, causing rapid volume inflation peaking at 17% of Google search spend.
The volatile nature of the season means whatever trends seen during this time are not always reflective of the long-term market direction — this is particularly true for PLAs, given the rapid increase in adoption within the past six months. However, now that the dust has settled, we can take a step back and gauge where the PLA market is headed in 2013.
Market Share For PLAs Stabilize (For Now)
Looking at spend share trends for retail advertisers already running PLA campaigns prior to Q4, there was very little movement since late December. In fact, the spend share for PLAs dropped slightly in January, stabilizing at 15% in February.
This means advertisers that had made sufficient investments during or prior to the holiday season are not currently inclined to further push spend from text ads into PLAs.
The trend toward market stabilization we see here agrees with other studies showing that PLAs had already been priced rationally with respect to the market as of December. The optimal spend allocation will vary for each advertiser, but 15% to 16% appears to be the current average balance point in terms of cost efficiency and scalability of PLAs vs. regular text ads.
PLA CPCs Bounce Back In February
Comparing PLAs vs. regular text ads, we saw CPCs on both ad types fall from December to January: an expected trend, as marketers cut back on budget after the holidays. However, while text ad CPCs continued to fall into February, PLA CPCs bounced back up to 7% above October averages.
This shows the market is not yet saturated with competitors. There are new players still coming on board to get a slice of the PLA pie, while existing advertisers are maintaining their spend. Since paid search is a rational marketplace, this is a good indication that PLAs are still viewed as a relatively efficient channel, where the CPC increase is justified by higher ROI.
Google is still experimenting on ad formats and presentation to improve relevancy and click-thru rates on PLAs. Along with advances in product feed optimization, further improvement on baseline performance and scalability will, in turn, justify additional investment.
PLA Tips For Marketers In 2013
Retail marketers should be aware of current trends so they can prioritize campaign management efforts. The holiday season will be back before you know it — now is the best time to work on your PLA campaigns and test out new optimization strategies.
- Be mindful of the relative efficiency of PLAs vs. regular non-brand text ads for your account. If one is more efficient than the other, do not hesitate to shift budget between them, as they are separate auctions. Optimal allocation will be a moving target.
- The baseline efficiency of PLA campaigns is determined by the quality of your product feed. Optimize your feeds to include the entire product lineup in full detail, and make sure that price and inventory are being updated in a timely manner.
- Your PLA campaigns should have the structure and granularity to represent your product lineup in sufficient detail. Check on search phrases regularly and add negatives to insure queries are being matched to the correct product.
- Use the all products target as a catch-all, but make sure it is bid low enough so as to not cannibalize more granular, higher performing targets.