Money Matters - Simplified

Google Shopping to boost Search Engine’s Revenue

Google Shopping, the new paid version of Google Product-Search kicks off in October, just before the crucial holiday shopping season.

In a move that will substantially boost the search engine behemoth’s revenue, Google Inc. has decided to revamp its online product-search service.

Under the new scheme of things likely to be in force this fall, the Google Product-Search service will comprise of items that have been paid for by merchants for the purpose of inclusion.

Controversial Move
Hitherto, the Product-Search service from Google has been free for retailers. The program provided merchants with ready access to potential shoppers. Google made money through paid product search advertisements only.

Under its new version, the decade old Google Product-Search would be rechristened as Google Shopping.

The decision to impose a fee makes commercial sense for Google; however the move is likely to draw flak as it has some controversial connotations.

“Pay-for-placement to some degree is an alternative to purely organic relevancy results. The fact that shopping results will be more closely tied to bid-for-placement will not sit well with all advertisers,” claimed Mercent's Best.

Boost to Google’s Revenue
Hitherto product search output or listings have been on ‘relevance.’ Under the new set up, the listings would be based on how much money advertisers or retailers have paid for their product.

“We are starting to transition Google Product Search in the U.S. to a purely commercial model. This will give merchants greater control over where their products appear on Google Shopping,” Sameer Samat, vice president of product management at Google Shopping said of the new business model.

“Having a commercial relationship with merchants will encourage them to keep their product information fresh and up to date,” Samat opined.

According to estimates, retail advertisers account for close to 40 percent of Google's advertising base. These retailers may have to cough up as much as $130 million per annum to ensure that they do not lose out on sales that they derive from Google Product Search.

“That's the free sales that are going to disappear unless they decide to pay. The winner in this is Google. That extra spending is pure margin and will drop to earnings per share,” averred Scot Wingo, CEO of Channel Advisor.