Beating Google By Doing Better Than Competing On Price

The results pages delivered by Google for searches with commercial intent are undergoing two types of modifications that are harmful for online merchants who have become accustomed to profiting from website visitors referred through clicks on organic results. The prime space on Google's shopping result pages is increasingly being allocated to: 1) price focused product listing ads; and 2) Adwords sponsored ads. The organic results are being pushed down to positions "below the fold". Thus, Google is changing the user behavior of viewers. There is an increased likelihood of:

1) products and online stores being evaluated solely on price point,
2) an increase in clicks on sponsored ads and product listing ads; and
3) a decrease in clicks on organic results.

Product Prices

Google's decision to make product prices so prominent will hurt many online retailers. It is likely to lead to a race to the bottom on prices in order to attract visitor traffic, and this will cut into profit margins. It will make it harder to gain customers based on product selection and good merchandising with Google making price such a dominant product attribute.

User Interface

The increase in screen "self space" being allotted to paid placements will reduce clicks upon organic results. This increase in the percentage of clicks on paid placements is obviously good for Google, but not optimum for online stores.

Over the last few years, Google has made a number of modifications to their search result user interface to increase the click rate on sponsored ads.

1. The shading of the sponsored ad box has been lightened up to a very pale shade of purple.
2. The font on the headlines on the ads on the right hand side of the result pages has been increased in size to match the size of the organic results.
3. The sponsored ads on the right hand side of the result pages have been moved closer to the organic results
4. Adwords ad extensions and ratings have increased the "shelf space" allotted to paid ads

These changes have increased the ratio of clicks on paid links on Google. According to Wordstream "clicks on paid search listings beat out organic clicks by nearly a 2:1 margin for keywords with high commercial intent in the US".

Google Shopping

The above listed changes may pale in comparison to the impact that Goggle Shopping and Google Visual Search Ads will have upon user behavior. These price focused paid ads will reduce the number of clicks on organic listings. A search on the term "convex mirrors" provides an example of the reduced exposure for the organic listings for online stores. The first organic listing for an online store is below the fold on many monitors (and Amazon is one of the top organic lisings). As shown in the image below in the red circled area, the organic listings are crunched into the bottom left hand corner of the prime screen space.

Results Page for Search on Convex Mirrors

The introduction of Google Shopping, Visual Search Ads, and the increased prominence of sponsored ads, create significant challenges for online merchants that are dependent upon organic traffic from Google. Online merchants for whom: 1) buying Adwords sponsored ads is too expensive; and 2) competing based on lowball pricing is unattractive, had best prepare themselves for a future with reduced free organic visitor traffic from Google.

Adapting to Price Prominence of Google

There are three keys to success in a future with less free organic traffic from Google:

1. Increase visitor traffic from other sources, such as referrals. social media, online display advertising, offline marketing, and email marketing.
2. Increase the dollar yield of visitors to your site either by increasing conversion rates or by increasing average shopping cart size.
3. Increase the lifetime value per customer by developing relationships that generate repeat purchases. Improving the effectiveness of email marketing, social media, referral programs, and repeat purchase continuity programs are tactics that can be effective in increasing customer lifetime value.

Conclusion

The upheaval created by the launch of Google Shopping will create a challenging situation for many online merchants. For those stores that can not profitably take advantage of Google Shopping, success will come to the ones that discover methods to compel increased conversion rate per visitor, expand cart size, and boost purchase frequency.

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