Brief:

• Google started testing a feature on its YouTube video platform that will show product prices and recommendations beneath videos and let viewers make a direct purchase. The company also is adding retailers to its Google Express marketplace, which will be re-branded as Google Shopping, unnamed sources told The Information.
• Nike has tested the YouTube product recommendations under videos that take viewers to its Google Express marketplace, whose slate of merchants has grown to 1,300 from 50 last year, according to Marketplace Pulse data cited by The Information. Google created similar product recommendations for cosmetics chain Ulta Beauty that link to Google Express to spark more purchases through beauty-related video content, The Information reported.
• Google hasn't yet confirmed the plans, but the company may introduce the services at its Google Marketing Live event on May 14. In the past, the company has made significant announcements at the event, such as last year's rebranding of Ad Words to Google Ads, and of DoubleClick to Google Marketing Platform and Google Ad Manager.

Insight:

Google's reported plans to support direct-to-consumer (DTC) commerce on YouTube and Google Express may help many participating brands and retailers to close the gap between delivering ads to viewers and driving online transactions. The transformation comes as the company faces a significant threat from Amazon, which has become the primary product-search platform for many digital shoppers. More than half (54%) of online shoppers looking for a product begin their search directly on Amazon, compared to 46% in 2015, per researcher Jumpshot.

Google has told smaller businesses that it doesn't plan to become a retailer, according to The Information, highlighting the tech giant's key competitive difference from Amazon. The e-commerce giant not only provides a sales platform for small- and medium-sized merchants, but it also competes with them as a retailer. Amazon CEO Jeff Bezos, faced with growing criticism about the company's dominance in online retail, last month worked to defuse such scrutiny by highlighting how the share of gross merchandise sales on Amazon by independent third parties grew to 58% last year from 3% in 1999.

The new ad format comes after Google in March introduced shoppable ads on Google Images, letting marketers show multiple products available for sale within a sponsored ad among Google Images results. The shoppable ads allow Google to better compete with Pinterest and Instagram, which have released similar visually based ad formats to drive sales and keep users engaged on the sites longer.

Google for years has worked to diversify its revenue away from advertising, which is still a mature industry despite its digital transformation since the mid-1990s. Google parent company Alphabet last week reported that ad revenue growth had decreased for the fourth consecutive quarter. The company's 15% growth rate was disappointing compared with those of rivals in the digital ad marketplace, such as Snap (up 39%), Amazon (34%), Facebook (26%) and Twitter (18%). Google now needs to demonstrate that it can create additional sources of revenue aside from advertising, such as from e-commerce.