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Google Shopping Fine: Should Brands Be Worried?

Phil Norris

Posted in Return

03/07/17

The European Commission has fined Google €2.4bn over its Shopping ads

The European Commission’s decision last week to slap a €2.4 billion (£2.1 billion) fine on Google for favouring its own shopping results over those of its competitors and price comparison sites is about much more than the money.

Sure, €2.4 billion is a lot of cash. It’s the largest fine ever handed out by the regulator, and it’s higher than the GDP of 15% of the world’s nations. But it’s little more than a drop in the ocean for a company like Google, which has more than €150 billion in assets.

The real headline here isn’t purely financial. It’s partly a matter of reputational damage, and mostly about the changes Google could be forced to make to its Shopping ad platform.

 

How will Google react to the fine?

Since news of the record fine broke, we’ve received plenty of calls and messages from clients concerned about how their own paid search campaigns will be affected. You can see the huge impact that the ruling had on search activity for the term “Google Shopping”, as marketers and brands alike scrabbled to find out more (the big spike coincides with the fine being announced):

Google Shopping European Commission fine analysis
UK interest in “Google Shopping” over June

It’s hardly surprising that interest in the fine – which is the latest development in a European Commission probe launched back in 2010 – has been so high.

According to Search Engine Land, the share of paid SERP clicks held by Shopping ads climbed from 51 per cent to 71 per cent between Q4 2015 and Q4 2016. Because Shopping ads reach searchers lower in the buying funnel than Text ads, they convert significantly better too. Four in five shopping ads convert in the first five days, compared to 13 days for Text ads. In short, Google Shopping is a huge part of the paid search landscape, and even minor tweaks to the platform could have seismic ramifications for advertisers.

Following the ruling, the European Commission stressed that it would not impose mandatory changes on Google Shopping. Instead, it has left Google to decide what alterations should be made.

For its part, Google says it’s considering an appeal. A spokesman explained: “When you shop online, you want to find the products you’re looking for quickly and easily. And advertisers want to promote those same products. That’s why Google shows Shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both. We respectfully disagree with the [European Commission’s] conclusions.”

However, the judgement could lead Google to open up its Shopping auctions to price comparison sites, and even – eventually – to the likes of Amazon and Bing.

 

How will the Google Shopping ruling affect brands and consumers?

Over the long term, this could lead to some major changes to Google Shopping. If price comparison sites are allowed into the platform, it would theoretically mean more choice for customers – but also potentially a longer path to purchase.

Google Shopping results for tennis rackets

Currently, if you search for a product on Google, you can click on the one you want in the Shopping feed and be taken straight to the retailer’s website. Adding comparison sites into the equation would mean an extra step in this process. As we know, consumers don’t like complexity; every extra click diminishes the chances of a purchase being made.

However, in the short term – before any of those potential changes are implemented – we’re not anticipating a major shift in the way consumers view and interact with Shopping ads.

Rachel Smith, Paid Search Manager at Return, says: “From an agency perspective, we’re very much of the view that this will not have an effect on Joe Public’s buying habits in terms of reputational damage. Consumer desire to ‘buy the product now’ will override any moral indecision to buy from a Google Ad, especially on mobile devices.

“As demonstrated by last year’s EU referendum (spoiler if you missed it:  we voted to leave), a significant proportion of the UK population is already pretty distrustful toward Brussels. As such, there’s no reason to assume this ruling will change we way people view Google and interact with its ads. There may be some changes in the future, but for the short term we’re not expecting anything to be substantially different.”

Want to see more bang for your PPC buck? Contact us for a FREE audit on your Paid Search activity to ensure you’re investing your money in the right areas.

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