Google have announced that they will be inviting users to test their latest advertising format “product ads”, which will work alongside their existing search results and will include product and pricing information as opposed to the standard 3 lines of marketing text currently used on the Google network.
Apart from the new format being visually different, advertising space will be charged on a commission (cost per sale) basis rather than the traditional pay per click model, which could dramatically change the way in which online advertising campaigns are managed.
This is something which many advertisers have wanted for some time as it is relatively risk-free due to the nature of the model, and should help reduce PPC fraud and irrelevant / unwanted traffic.
Providing the volume and quality of visitor can be maintained and improved upon, this should be an extremely positive move for the market but success will of course largely depend on advertiser profit margins and how much they are prepared to give away to their new Google sales team!
Advertisers that know exactly what their margins are, what products are more profitable, and what the true lifetime value of a visitor is worth may therefore thrive on this new format as they will have a clear understanding of acceptable CPA’s and margin levels. This means we can all spend our days happily obsessing about driving more sales, increasing margins and worrying less about ad position and keyword match types!
I am not at all surprised with this recent announcement and suppose it was always on the cards when the threshold for using Conversion Optimiser was decreased to only 30 conversions per month. Personally, I can’t wait to see the results and hope to analyse the results of a product ad test very soon.