Marketing spend on Google Shopping ads surpasses text ads

Dive Brief:

Google Shopping ads captured more than half of retail marketers' AdWords budgets in 2016, marking the first year in which Google Shopping ad spending surpassed Google text ad spending, according to new research from marketing company Sidecar.
The study also found that mobile devices drove 29% of total Google Shopping revenues in 2016, up from 17% in 2015, which probably has something to do with the fact that Google Shopping ads now enjoy top billing on the mobile search engine results page (SERP).
Overall, Google Shopping ads accounted for 16.1% of e-commerce sales in 2016, up from just 9% in 2015. The 78% year-over-year increase in 2016 cements Google Shopping ads' status as a mission-critical revenue driver for e-commerce marketers, Sidecar said

Dive Insight:

The data comes from the 2017 Google Shopping Benchmarks Report, for which Sidecar analyzed 19.1 billion user sessions from retailers' e-commerce sites to produce what Sidecar described as the industry's first definitive account of the state of Google Shopping ads.

The spending increase says something about how retail marketers' online ad needs are changing as e-commerce continues to grow. Bare-bones text ads just aren't enough anymore, and they are looking for something richer that will give them more bang for their ad buck. To that end, the spending increase also says something about the rise of Google Shopping in general, and the faith that marketers have in it as a platform for product ads.

"Google Shopping has earned its place in retail," Andre Golsorkhi, founder and CEO of Sidecar, said in a statement. "That's because the channel bridges the mega trends that define e-commerce today — visual content, mobile optimization, relevancy. This perfect storm is unseating the mighty text ad, which begs the question: What ad format will Google Shopping upend next? As more retailers expand their Google Shopping efforts, the typical e-commerce marketing mix could look dramatically different in the next 12 months."

That's an interesting notion as many retailers are coming to a point where they must go all-in on e-commerce whether they feel ready to or not. Brick-and-mortar stores continue to shutter — rue21 was this week's victim — and it seems like were hear at least once a week of a retailer being forced to close doors and place more hopes on creating solid online and mobile customer experiences.

As they venture even further into the arena of competition with Amazon, Google Shopping no doubt can provide an assist to retailers. The platform has been around for years, but it did seem to turn a corner last year at this time with a big sales jump and rise in mobile shopping activity. That growth came some months after a Shopping redesign oriented around mobile-first shopping. While the positioning of Shopping ads on the mobile SERP gets some of the credit for the revenue rise, the design of Google Shopping itself makes it well-positioned for ongoing mobile revenue increases.