The Dirty Little Secret about PLA’s

It’s no secret that PLA’s are rewriting the rules of paid search. For years we had it pretty easy: focus on the keywords, the ad text and the landing page. You had very clear ways to develop your program and kick the crap out of your competitors. PLA’s have changed that drastically.

PLA’s give Google a way to compete with Amazon’s growing dominance in product searches. Amazon claims over 50% of product searches. My guess is that they aren’t that high, but they are growing fast. So Google needed to do something and PLA’s were the answer.

From what I’m seeing, when PLA’s are added to a search term you can expect about 30% drop in your traditional paid search clicks. Typically this is because of a drop in CTR, but it’s also due to a loss of position in search. I haven’t seen the same drop in organic clicks, probably because organic isn’t quite measurable as a click-through rate (clicks keep growing, but so do searches). Consumers can now shop directly from the search results page and save the time spent clicking through and price shop. Speaking as a consumer, I love it.

And Google loves it. CPC’s are significantly higher on PLA’s vs a paid search term on the same ad. And if you talk to Google, you should boost your CPC even more for higher impression share. For obvious reasons Google reps act like the only way to improve PLA performance is to increase impressions, which mays paying a higher CPC to show up more often. And PLA’s are still a black box (paid search is getting there, too, with the changes to keyword information, but that’s another story). PLA’s are also much more effective on mobile than paid search ever was.

What’s not to love?

Well, here’s the dirty little secret about PLA’s that Google dare not mention: they are price-driven. Let me repeat: to get a high CTR on PLA’s you need to have a low price. Amazon built this model and Google’s PLA’s are making the most of Bezos’ idea. Google PLA’s are all about your price. This is even more true for Bing PLA’s, which don’t show the brand, just the price.

Long-term this is a tough play for ecommerce sites. Ad costs are definitely going up and anyone not selling unique product is having to cut their price (unique, proprietary products have their own issues). This margin-killing, just like Amazon was. For Google, it’s great. They found a way to make serious money on mobile and increase the number of paid clicks on the page. A Google search page for a product often doesn’t have one organic term above the fold anymore.

The future of PLA’s will get even more interesting. Google is now pulling in local store data (“available 0.7 miles away”) in mobile, which translates to more advertisers and higher CPC’s. I also believe we’ll see more and more PLA’s on the page. The most I’ve seen so far is eight and I think that will quickly become the standard. PLA’s on very specific product searches now show just a listing of stores and prices where it can be bought (this isn’t completely rolled out yet), which looks extremely Amazon-like. Finally, PLA’s will soon incorporate overlay’s where you can boost your bid 10% for attractive searchers, for example. This isn’t the death of traditional paid search, but definitely a step in that direction.

For most non-proprietary retailers, your PLA sales should be in the 25-35% range of your total non-brand search account. And I would guess by holiday 2014 that will be well over 50% and approaching 75%.

The next phase of traditional ecommerce retailing will be pricing strategy. The big guys are already there, but with new tools and products on the market, I’ll think we’ll all be changing price on a frequent basis within the next year. We’re moving to the airline system of pricing where nothing has a single price. And Google PLA’s are now the driving force behind it.

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