As Google’s advertising growth is slowing, it’s getting more aggressive in courting retailers. And it’s bulking up its capabilities as a commerce platform to do so.
Most recently, the company announced last week that it is rebranding its Google Express marketplace as Google Shopping, as well as expanding visual shoppable ad formats to new platforms like YouTube and Google Images. It’s also been adding more merchants to its marketplace over the past year. According to e-commerce research firm Marketplace Pulse 1,450 retailers are now on Google Express, up from 27 two years ago.
The company has also steadily been adding new merchants to a program it first announced at Shoptalk in 2018 called Shopping Actions. The program allows retailers to promote their products across multiple Google platforms, including Google Images and Google Assistant. Customers of participating merchants can also shop via a universal cart that worked across multiple properties, including mobile and desktop. Since launching, the number of participating merchants has increased “sevenfold,” according to Google.
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With these new initiatives, Google is pitching to retailers its ability to reach customers on multiple platforms like video, image, text and voice, as well as to provide a more seamless payment and checkout experience. It’s also taking on some of the logistics work that’s become a headache in the e-commerce age, by pledging to communicate with customers about shipping issues and returns on behalf of retailers. And, with the relaunch of Google Shopping, Google is using its treasure trove of data to create a personalized homepage that it’s hoping will make Google the first destination for more shoppers, though the company hasn’t shared what data it shares with retailers.
Google’s push into commerce comes as shopping online has become increasingly splintered. Platforms like Instagram fuel brand discovery, while Amazon serves increasingly as a catch-all for product searches: according to marketing analytics firm Jumpshot, the majority (around 54%) of product searches start on Amazon. By improving its product discoverability functions, Google could serve as both a point of inspiration as well as a convenient shopping destination.
while Amazon serves increasingly as a catch-all for product searches
Growth of Google’s ad revenue also hinges upon its ability to become a shopping destination. With $116 billion in advertising revenue, Google is still the largest recipient of digital advertising dollars in the U.S. But its ad revenue has been slowing for the past four quarters — in Q1 2019, its ad revenue grew 15% compared to 24% year over year. Google risks losing out on advertising money from retailers to Facebook, which is also aggressively moving into commerce with the launch of Instagram checkout and Amazon. In April, Amazon reported $2.7 billion in advertising revenue during its first-quarter earnings calls, a year-over-year increase of 36%.
“Google is now racing to become a power player in commerce faster than Amazon can become a power player in advertising,” said Andrew Lipsman, e-commerce analyst at eMarketer.
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