Google, battling Amazon, tries ecommerce overhaul to win back advertisers


Google, an unlikely outsider, struggles to keep pace with Amazon.

AMZN 0.31%

com Inc. in the battle for billions of dollars in e-commerce ads.

In its latest change of strategy, the Alphabet Inc.

GOOG -0.68%

The unit said on Wednesday it was updating the look and format of product search pages to feature images of clothing, accessories and other items to look better like a digital store rather than to a long list of links and text.

The change is part of a larger overhaul that Google undertook during the pandemic to liven up its fledgling ecommerce operation. Over the past year, Google has stopped requiring merchants to advertise their products to be listed in shopping searches. He also stopped collecting commissions on purchases and joined Shopify. Inc.

to simplify search listings for 1.7 million merchants.

Google Seeks To Protect Its Core Search And Advertising Business From Continuing Amazon Encroachment And Walmart Ambitions Inc.,

Target Corp.

and others who have started selling advertisements as part of e-commerce operations.

Google is updating the look and format of product search pages to look more like a digital store, rather than a list of links and text.



While Google largely dominates digital search and advertising, Amazon’s dominant lead in e-commerce has made it the starting point for about 53% of U.S. consumer goods searches. Continuing those clicks, advertisers shifted spending, bringing Amazon’s share of search ad sales to one-fifth of the market and reducing Google’s share to 57% from 61% in 2019, according to the company. eMarketer market research.

In the first half of this year, Amazon reported $ 14.82 billion in ad sales, an 82% increase from the same period a year ago. Google’s total ad revenue is over six times greater, but has grown just under 50% over the same period.

Amazon’s acceleration in advertising activity has sounded alarm bells within Google, prompting CEO Sundar Pichai to assure Alphabet’s board that rejuvenating its declining e-commerce efforts is a priority, according to former Google executives. He needs to fix a mess of Google’s own making. The company has restarted its digital purchasing strategy at least four times in two decades and has had five executives of its e-commerce operations in 10 years, the former executives said.

“Google is almost like a living dead” in e-commerce, said Guru Hariharan, managing director of CommerceIQ, an online retail service provider. “Nobody goes there to shop.”

Google’s current strategy reflects its approach to the smartphone market, according to executives and industry watchers. Just as the company built Android’s open source operating system as an alternative to Apple’s “walled garden” Inc.

Developed around its iPhone ecosystem, Google executives want to become the search solution for direct-to-consumer businesses looking for a life outside of Amazon’s buying and ordering system.

“It’s a pretty uninteresting world if you wake up in a few years and there’s only one place to buy things,” said Bill Ready, chairman of Google commerce.

Mr. Pichai recruited Mr. Ready from PayPal Holdings Inc.

in 2019 to lead Google’s Come-from-behind initiative. Despite being an outsider, he was well acquainted with the twisty history of the tech firm’s e-commerce.

In 2002, she launched her first online shopping site, Froogle, to categorize products. This evolved a decade later into the Google Shopping tab. To avoid listing out-of-stock inventory, merchants purchased product listing ads to make their products appear in purchase searches. This boosted Google’s revenue, but hampered its ability to attract small business ads, former industry executives and watchers said. Fewer ads made it less attractive to consumers, contributing to less searches.

“It’s a pretty uninteresting world if you wake up in a few years and there’s only one place to buy things.”

– Bill Ready, Google Chief Commercial Officer

Meanwhile, Amazon has persuaded more clothing and consumer goods companies to shift their advertising budgets from Google, said Mudit Jaju, global ecommerce manager at Wavemaker, a media agency. “Google was no longer the gateway to the consumer,” he said.

Mr. Ready sought to reverse these trends by dividing the Shopping team into two groups: one focused on consumers and one focused on merchants. It also shortened the development cycle for new features from nine months to six weeks, former executives said.

Last year, it eliminated the paid advertising requirement and made product listings free. He also negotiated the partnership with Shopify, which became a counterweight to Amazon by helping businesses start and run online stores. Google introduced a turnkey system on Shopify that allows its customers to list products in purchase searches and develop Google ad campaigns for those listings.

Direct-to-consumer watchmaker Talley & Twine Watch Co. struggled for years to list products on Google Shopping through Shopify because it had to manually enter the 200 watches it sold, said Randy Williams, founder of the company. Virginia Beach, Virginia. The Shopify-Google partnership introduced technology that automatically imports product information from Shopify and made it possible to quickly create Google ads.

“It used to be really awkward,” said Williams. He said the improvements led Talley & Twine to shift their advertising budget from Facebook Inc.

to Google. This year, he spent $ 100,000 on Google ads and made over $ 400,000 in sales from those promotions.

In the three months ended in June, Google reported that ad revenue increased 69% to $ 50.44 billion, with retail being the biggest contributor.

The sales growth coincided with the pandemic store closures and retailers going online. It also happened as Apple’s new privacy restrictions on iPhones led advertisers to push budgets away from Facebook.

“Google was lucky,” said Mr. Jaju of Wavemaker, who recently saw customers transfer ads to the company.

Google’s next changes are consumer-centric. Mr Ready said the new visual search experience would direct users typing in “cropped jackets” to a landing page that looks more like an Amazon shopping search (showing rows of images of jackets) than it does. to Google’s current text link offering. Google said its tests of the format found that users liked being able to see brands and styles faster.

In the future, he wants to integrate e-commerce with all of Google’s range of offerings, from search to maps to YouTube. Mr. Ready imagines that people are watching a YouTube video of someone unpacking new clothes and viewers can click nearby to purchase the items, or receive an ad on Google search if they later search for the clothes.

Google’s work so far has done little to ease Amazon’s dominance. In the past year, the e-commerce giant has increased its share of product searches by 1 percentage point to 54%, according to ChannelAdvisor Corp.

, an e-commerce consulting company.

“It is clearly a very competitive space,” said Mr. Ready.

Write to Tripp Mickle at [email protected]

Copyright © 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8


Comments are closed.