Google Shopping is having a tough time at the moment. I detail the battle between Google and comparison shopping services and how it will impact them, as well as consumers and marketers.
Today, I’m going to be talking about the latest developments in the rather lengthy battle that’s been going on between the comparison shopping services and Google. And to do some scene-setting, and to bring everyone up to speed, we’ll start back at the beginning.
Back in November 2010, when the British price comparison site, Foundem, the French legal search engine, eJustice, and the Microsoft owned, Ciao!, complained that Google’s practises put competitors at a disadvantage in the way that it was structuring its search results and the way that its algorithms worked.
This prompted the EU Commission to investigate Google strangers to their algorithm and the way that they were laying out their search result pages. Five years later, after lots of probing and research, the EU Commission sends a Statement of Objections to Google, accusing them of an antitrust violation.
The ruling that came out of that was, firstly, that Google was systematically giving prominent placements to its own comparison shopping service and, secondly, that Google has demoted rival comparison shopping services in its search results.
Now, that’s quite an interesting one because, I think, the main reason that that’s happened is the duplicate content issues that comparison sites are basically aggregators, so by their nature and the way that they’re mostly automated don’t have much unique content on, and if you know anything about technical SEO, you know that duplicate content is a bad thing. It’s going to push you down the rankings, but that’s not to say that they’re not giving a service to users. It’s still useful to be able to compare prices and products, even if there isn’t necessarily any unique content on there, so that’s maybe a contentious one.
But obviously after a couple of years of unsuccessful negotiation between Google and the EU Commission, on the 27th of June, Google were hit with a record €2.42 billion fine.
To give you some context on the size of that fine, Alphabet’s four-year revenue for 2016 was almost $90 billion, which is absolutely huge, and the Commission said that essentially that fine was calculated on the revenue that Google would have generated through the shopping services in the affected countries over that time. And on top of that, they said you’ve got 90 days to resolve the infringement or they could face penalties of up to 5% of Alphabet’s daily turnover.
In true Google style, exactly 90 days later, on the 27th of September, Google made some changes to their search results designs. Previously, if you were to carry out a search, you would’ve seen probably something like this. If you were to carry out the same search today, you’ll see a very slight change that they’ve added a label underneath the products that say: “via Google.” Now, this is because they are allowing the comparison services to bid on the same slots as Google in the auction.
Now, on top of this, Google are going to be splitting up Google Shopping into its own business unit and essentially they’ve stated that Google will have to bid on their own slots and that the cost for those bids, or the money for those bids, is going to be coming from their own operating costs and their own revenue and it won’t be subsidised by Google itself. So quite small changes visually, but might have very big impacts on Google Shopping.
So, what does it mean for the comparison sites? Foundem, and the people that were leading the complaints at the beginning of the process, put a presentation together to give their response to this, essentially. I hope you like graphs because there’s a lot of charts in this.
Essentially, they said that back in the day when Google Shopping started, back when it was called Froogle, in the early days the comparison services were very successful in making huge amounts of profit. Google Shopping was not. Fast forward to today and the landscape looks like this where Google Shopping’s generating huge amounts of revenue and the comparison services are struggling to stay alive, essentially.
Now, they have said that the landscape should look something like this. Now, I don’t necessarily agree with that. Google Shopping is Google’s platform. They should be able to monetize it and generate revenue for it and, ultimately, they’re likely to generate more revenue than the comparison sites, but that’s by the by. But Foundem have pointed out that essentially with the auction and everyone bidding on those slots, that most of those profits are going to go to bid costs anyway, and ultimately those bid costs go back to Google. So, there’s not really any change in the landscape so you can see where they’re coming from.
They’ve put forward some suggestions for what they think could be solutions to it. Either removing the shopping design from the top of the list completely, so just having your normal organic search results. Keeping the design but it not being an auction, so it’s still organic search results and still gives the same user interface and experience, but listings are in there in their merit, or maybe some sort of hybrid in-between.
So, what do these changes mean for consumers? As a consumer, if you were to carry out a search today, you’re probably not going to notice much difference. There’s only a small change. There’s a small link below the products that if you click on you go through to the comparison sites where you can see a list of results. But you could argue that the Google Shopping’s not particularly great for consumers anyway. It’s essentially a pay to win platform. As a marketer, we love it; it’s a great way of selling products. But, ultimately, although there are ranking factors involved that will try to push down poor performance and spammy sites, ultimately if you’re willing to pay enough, you can win.
I think what would be better for consumers is listings that are possibly more like organic search results, where things are listed on their merit. I think, as marketers, that’s what we should be aiming for anyway. We should be trying to create engaging experiences rather than paying to win, essentially.
And keeping it on the theme of marketers, what does it mean for us? I think the biggest threat to us is in maybe performance, so due to increased competition leading to high CPCs and lower ROI. If you’ve got comparison sites bidding on the same slots, then ultimately it could push costs up, so we need to keep a close eye on performance and make sure that we’re not seeing that affect us internally on our accounts.
But it could also lead to the comparison sites maybe creating their own biddable platforms that feed straight into the search results. Now, we’d have to see how that plays out because it’s got to be profitable for them, and they’re probably working on very tight margins there so it’ll be maybe a while before we see any activity there, but if that was to happen, it does give us an opportunity to essentially capture more real estate. We could be showing ads on multiple platforms that are all showing up in the same results.
Now, is that the last we’ll hear of it? Probably not. It’s probably a legal battle that will go on for years. I don’t expect too much change in the short-term, but we definitely need to keep an eye on performance.
That’s it from me. Thank you.