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Google Tests New Ad Format Aimed At Product Sellers

In what could set the stage for yet another showdown with Microsoft (NSDQ: MSFT), Google (NSDQ: GOOG) is testing a new ad format aimed specifically at product sellers. Under the program, advertisers will only be charged when someone buys a product from their site (instead of when someone clicks on their ads). The new ads will also feature product-specific information like the price of the item as well as an image, a contrast to the typical text-only Google ads.

Google says in a note to advertisers (via Google Blogoscoped) that it’s “constantly experimenting with new features and visuals to improve ad effectiveness and advance the end-user experience.” But it’s likely not a coincidence that Microsoft has somewhat successfully managed to differentiate its own ad offerings by appealing specifically to product sellers. Via Microsoft’s Cashback program, which was introduced a year ago and got additional prominence in Microsoft’s recent relaunch of its search engine, users who buy some products they find through Microsoft’s search engine get a percentage of the purchase price back. The company has claimed that the program has boosted its share of commercial search queries significantly and has boosted advertiser return on investment.

2 Responses to “Google Tests New Ad Format Aimed At Product Sellers”

  1. This is a significant move and has wide spread ramifications for all constituents. Having been in the CPC space since 1997 (yes there were companies before Google), the only performance-based ad unit that I felt could over take the CPC ad unit was the CPP (cost per purchase).

    For the user it provides a better experience giving them more and visual information before the click event – which equals a better user experience.

    For publishers (assuming quality content and a relevant ad) it will produce more clicks at higher prices since the conversion should be higher – which equals higher revenue.

    For the advertiser it essentially eliminates click fraud since they only pay based on a purchase – which equals increased efficiency in outgoing marketing dollars.

    And last – for Google it could yet again change the landscape as more advertisers would rather pay on a CPP basis than a CPC basis which would both further their lead on the performance-based marketing side of the industry while likely simultaneously cannibalize their (and all other) CPC business. The interesting piece of that statement to watch will be the cannibalization piece.

    The key to success – make it simple for advertisers to buy and interact and transparent to users. That is what GoTo/Overture did back in the late 90s. While there were other companies like mine that had been pioneering the CPC model, it was not until GoTo/Overture created the somewhat 'easy-to-use automated bidding engine' that the model really took off (now accounts for more than 50% of online advertising).

    So even though CPP (CPA) has been around since the early/mid 90s, if Google can introduce an intuitive automated system for advertisers on top of their somewhat simple to integrate publisher solution, they could very well change the performance-based side of the industry.

    At the end of the day advertisers small/medium/large are moving their money more and more towards ad units that can clearly show ROI and this is a strong move by Google to help facilitate. Next step is introduction of new ad units on the branding side of the fence to bring more ROI awareness to the branded side of industry…