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Google To Test New Product Ads
Brett_Tabke




msg:3937207
 3:58 am on Jun 20, 2009 (gmt 0)

[blogs.wsj.com...]

With the new ads, Google is mixing up its pricing model as well. Unlike Google’s standard search ads, where advertisers generally pay every time users click on their ads, Google will charge advertisers for product ads only when a user makes a purchase. Advertisers set the commission they are willing to pay, and Google decides which products ads to display based on the commission, how well the ad matches a query, and how often people click on the ads, among other things.

 

maximillianos




msg:3937370
 2:31 pm on Jun 20, 2009 (gmt 0)

Seems like they will have a similar problem as the affiliate program they started. Putting the trust in the advertiser to not only name their price, but essentially also be the validator on whether the sale took place.

I know G requires code on checkout pages, but I have always felt that actual implementations vary to favor the advertiser. ;-)

iThink




msg:3937384
 3:26 pm on Jun 20, 2009 (gmt 0)

If I am reading it correctly, then merchants don't need publishers anymore, at least for generating sales from PPC. They can simply sign up with Google and that is it. No more headache of dealing with large number of publishers and no more dealing with networks like CJ and such. Google is trying to kill two birds (affiliate networks like CJ and publishers) with one stone.

Hey Goog, I will pay you $10 for selling a copy of my ebook. Can you please sell it for me? :)

[edited by: iThink at 3:29 pm (utc) on June 20, 2009]

signor_john




msg:3937387
 3:49 pm on Jun 20, 2009 (gmt 0)

If I am reading it correctly, then merchants don't need publishers anymore, at least for generating sales from PPC. They can simply sign up with Google and that is it. No more headache of dealing with large number of publishers and no more dealing with networks like CJ and such.

I'd guess that only a small percentage of affiliate sales come from ad blocks that are served by a third party and aren't under a publisher's control. In my experience, at least, affiliate marketing works best when it's integrated into a site's topic or content (not just targeted to a keyword) under the control of the publisher.

Also, product ads, listings, or links are just one aspect of affiliate marketing. My own highest affiliate commissions, in both percentage and dollar terms, come from intangible services.

coachm




msg:3937388
 3:53 pm on Jun 20, 2009 (gmt 0)

if this works for us this is HUGE for us, since there's hardly a downside for us to "pay out". And, it may be a good deal for publishers who achieve sales of our stuff. I have no problem paying out 15 bucks on certain items to a publisher and google.

Nothing ever seems to work out as well as it sounds, but we'll be into this big time as advertisers provided it works, and doesn't require huge time. It may revitalize content ads, too.

inasisi




msg:3937392
 4:23 pm on Jun 20, 2009 (gmt 0)

Seems like they will have a similar problem as the affiliate program they started. Putting the trust in the advertiser to not only name their price, but essentially also be the validator on whether the sale took place.

If the advertiser doesn't credit the sale properly, then Google will get less money out of it and would hence show their ads less often or might not show their ads at all. So it is the advertiser who loses out.

weeks




msg:3937440
 7:06 pm on Jun 20, 2009 (gmt 0)

Hmmm. What is not said in the announcement is why. Why is Google doing this?

I don't know, but as a former print publisher, I can tell you we looked at these kinds of deals when we were not selling ads otherwise. Is this a sign of a really,really weak ad market? Hmmm.

Publishers hate pay per inquiry (or, if you insist, pay per click) ads and when Google started with these kinds of ads it made them look, in the eyes of many traditional publishers, as second-tier publishers not to be taken seriously.

Indeed, at the time Yahoo sold ads on pay per impression AND they made you beg. Ha. Woo. The New York Times paid Yahoo millions to have them run their news articles. Really! [Tip: When talking with NYT executives, don't bring that up.] Ah, those were the days..when someone paid you to run an ad, no matter how it performed for them. The memories...!

Where was I? Oh...

So, now, we have this. This is a BIG step away from pay per click. Honestly, it's not April 1 is it? If this takes hold, it will stink big time for webmasters. This is Google lining up more with the advertisers and less with the publishers. Which, since Google is more or less a publisher, doesn't strike me as such a good idea for Google, not to mention their "partners."

Digmen1




msg:3937446
 7:18 pm on Jun 20, 2009 (gmt 0)

As an online manufacturer and retailer (hopefully) I would certainly go for that.

I am finding that keyword click rates are just too high for our product. The possibility of paying only when you make a sale is great !

We would not mind paying a good commission rate as it would be on sales not click when you needs lots of click s to get a sale !

iThink




msg:3937452
 7:30 pm on Jun 20, 2009 (gmt 0)

Seems like they will have a similar problem as the affiliate program they started. Putting the trust in the advertiser to not only name their price, but essentially also be the validator on whether the sale took place.

Google has been collecting a lot of data, including conversion data, through analytics since last several years. Combine that with the adwords CPC for sites in various industry segments and they have a fair bit of idea about how much any advertiser is earning.

With this latest move google will directly decide how much money any given business can retain after paying google for PPC. Basically profit margin of advertisers who depend on PPC will now be decided by google god just like they decide how much any adsense publisher can earn.

Sounds like a misuse of data that they collect and misuse of market share to me.

I am finding that keyword click rates are just too high for our product. The possibility of paying only when you make a sale is great !

The rates must be high because there must be a large number of advertisers bidding for keywords or some advertisers with deep pockets willing to pay too much just to keep competitors out of the business. These advertisers will still be around even with the new system. Most likely they will still pay higher commissions to google to retain their market share.

Make no mistake about it, lowering the cost of making a sale for any advertiser is not the aim of google. They just want the biggest possible cut out of what an advertiser spends for making a sale and nothing less.

[edited by: iThink at 7:44 pm (utc) on June 20, 2009]

weeks




msg:3937479
 8:47 pm on Jun 20, 2009 (gmt 0)

said Digmen1
As an online manufacturer and retailer (hopefully) I would certainly go for that.

I am finding that keyword click rates are just too high for our product. The possibility of paying only when you make a sale is great !

We would not mind paying a good commission rate as it would be on sales not click when you needs lots of click s to get a sale!

Yes, you can easily factor in the sales commission into the price of what you charge.

Just keep in mind that it has to be worth it to the publisher as well. You have to pay them (Google and the webmaster) enough where they will pick YOUR product to offer over everything else everyone wants to sell. Yes, I know PPC works in a similar manner, but it's different, too. Clicks are more knowable than sales.

In a nutshell, Google and the publishers are going to have to "buy" your product and your company. They are your new customer. Think you can match the margins cellphones have?

coachm




msg:3937488
 9:16 pm on Jun 20, 2009 (gmt 0)

The potential is good on both sides, but it has to be done right. At minimum, if I pick and choose offers (as a publisher) I want to know a few metrics before allowing the ads, including ctr, conversion %, etc, just like for reputable affiliate systems.

However, the more info, the more complex. At the other end could be a simple, opt in opt out for the entire program.

We don't have enough information, really, on the publisher side. As advertisers, it's a no brainer.

signor_john




msg:3937491
 9:18 pm on Jun 20, 2009 (gmt 0)

The rates must be high because there must be a large number of advertisers bidding for keywords or some advertisers with deep pockets willing to pay too much just to keep competitors out of the business.

Or to obtain leads that can be followed up or passed along to dealers, or to obtain new customers who can be added to a mailing list.

StoutFiles




msg:3937508
 10:08 pm on Jun 20, 2009 (gmt 0)

How does this work for sites that aren't selling anything? Some sites just want the traffic.

koan




msg:3937553
 1:55 am on Jun 21, 2009 (gmt 0)

Some sites just want the traffic.

Then they'll use regular PPC Adwords. This product placement stuff by Google doesn't involve publishers as far as I understand, they will be using that on their search results for product sellers.

With universal search, this will be more search results estate that will be taken away from regular sites... maybe I'm exaggerating, but I fear pretty soon all the top 10 results for a search will be Google properties.

signor_john




msg:3937571
 2:24 am on Jun 21, 2009 (gmt 0)

maybe I'm exaggerating, but I fear pretty soon all the top 10 results for a search will be Google properties.

That seems pretty unlikely, since Web search is Google's core product, and I doubt if the folks at Google are foolish enough to throw the baby out while promoting the bathwater.

xalex




msg:3937606
 5:21 am on Jun 21, 2009 (gmt 0)

This would be great, will cut down ppc fraud and unwanted traffic. It was about to happen while back. But why now?

idolw




msg:3937633
 8:16 am on Jun 21, 2009 (gmt 0)

I am finding that keyword click rates are just too high for our product. The possibility of paying only when you make a sale is great!

No worries. The commission you will have to pay to Google per sale will effectively eat all your margin.
There will always be a suicide burning money no matter what because they are starting or because this is their last chance. These guys will force you to compete against them unless you wish to be on page 1500 of these ads.

My personal opinion is that this is HIGH TIME to work on your brand. This is the only way to go if you want to have any online traffic from Google.

Actually, Bing started doing what Google announced here already - they have the Bing Travel and Bing Travel is what Google Products Ads will be. Go figure and apply the model to your niche.

iThink




msg:3937682
 12:37 pm on Jun 21, 2009 (gmt 0)

My personal opinion is that this is HIGH TIME to work on your brand.

My personal opinion is that those who depend on adwords for making sizable portion of their sales should immediately start looking for other sources of decent quality traffic for their sites. Brand building is one such avenue. I'm seriously thinking about restating offline part my business again.

Right now google can kill any adsense publisher without warning. This move will enable google to kill advertisers, many of whom are genuine businesses, at will. Depending on google adwords for most of the sales and profits has always been a risky proposition but this risk has never been greater.

[edited by: iThink at 12:45 pm (utc) on June 21, 2009]

conor




msg:3937699
 1:30 pm on Jun 21, 2009 (gmt 0)

Isn't this just Google providing a quicker route to conversion maximiser sales to advertisers;

Dont wait till you have 300 conversions a month , don't worry about us not hitting the conversion price, just tell us the price you will pay and we will get the conversion for you?

idolw




msg:3937770
 5:12 pm on Jun 21, 2009 (gmt 0)

My personal opinion is that those who depend on adwords for making sizable portion of their sales should immediately start looking for other sources of decent quality traffic for their sites. Brand building is one such avenue. I'm seriously thinking about restating offline part my business again.

Exactly. Both Adwords and SEO will be bringing less and less traffic and conversions. You need to work out new ways of getting traffic that converts to your websites.

Isn't this just Google providing a quicker route to conversion maximiser sales to advertisers;
Dont wait till you have 300 conversions a month , don't worry about us not hitting the conversion price, just tell us the price you will pay and we will get the conversion for you?

Of course that is. Problem is if you are a small guy in a big industry, your big competitor will always beat you on price so you will have to give up your margin to get any traffic and sales.
Here you can see an example: [google.com...]
Why am I (in Poland) only seeing 7 links here? :)

weeks




msg:3937823
 6:42 pm on Jun 21, 2009 (gmt 0)

My personal opinion is that those who depend on adwords for making sizable portion of their sales should immediately start looking for other sources of decent quality traffic for their sites. Brand building is one such avenue. I'm seriously thinking about restating offline part my business again.

iThink makes a good point here. I might add "thus it has always been and will always be."

Yesterday I posted the question on this thread, "Why was Google doing this?" Then I suggested it might reflect the weak ad market.

I've reconsidered. Instead, it could be that Google is taking the Walmart approach with its business model. Let me explain...

While not understood by most consumers, today Walmart does not own the vast majority of the goods on its shelves around the world.

It works, instead, this way: A supplier such a Rubbermade agrees to provide x amount of buckets at Y price. Walmart, usually working with Rubbermade, sets a retail price for the bucket. But, Rubbermade doesn't get paid for the buckets until someone buys them. Until they are sold, they are Rubbermade's buckets. Thus, Walmart has very low inventory costs. This arrangement is not unusual for most large national or regional retail chains today, but Walmart more or less invented it about 15 years ago.

What does this have to do with Google?

Walmart was able to make this arrangement work for them because they controlled a huge segment of the retail channel. In the past, if you wanted Rubbermade buckets to sell at your store, great! Rubbermade would say, buy as many as you want. Buy 100,000 before the end of the quarter, and we'd make a deal, etc. But, typically they were YOUR buckets and YOU had to sell them.

Not now. They are still Rubbermade's buckets when they are inside of a Walmart. Thankfully, for Rubbermade, they have a brand the consumers recognize. So, the strong get stronger. And, there might be other buckets from brand you never hear of, but they are not Walmart's buckets. You want to put up a large sign in Walmarts that says "Buy Rubbermade Buckets!" OK, but it's going to cost.

So, why does this plan work for Google? Because, I fear, Google dominates advertising on the web.

Here is how I see it: You want to sell your buckets on the Internet? Fine. Let's cut a deal. You provide this many buckets at this (hugely discounted, can barely make a profit) price and then pay us (Google/Walmart) x for each one sold. And we'll promote them on "bucket" across the Internet. But, they are your buckets. They don't sell, they're your problem, not Google's.

Bad news? Good news? If you make consumer goods and are the number one brand in your category, can cut your costs even more and you have the best margins in your category, Google is ready to help you increase your sales. But, if you are a second tier company that can't provide the margins on buckets or bird diapers or whatever, well, we have some space for you, somewhere, maybe...

Or, put another way: If you're a consumer goods firm in Walmart with your products now and are happy, then you might be getting happier. If not,... (As you might guess, some vendors to Walmart see the retailer as an unhappy reality they must deal with.)

Oh, and if you are an Internet retailer? Well, I guess you have a new competitor of sorts.

As a publisher with Google ads on their pages...? It's a reality. If you can really sell buckets, this might be great for you. But, I'm looking around for other partners, myself.

cwnet




msg:3937899
 9:59 pm on Jun 21, 2009 (gmt 0)

Right, cut down on your sales force...let Google sell your stuff...sell without sales staff...until...Google decides that you make to much profit...and, because by then you cannot sell without Google...Guess What?

incrediBILL




msg:3937915
 11:10 pm on Jun 21, 2009 (gmt 0)

The irony of Google getting back into affiliate-style sales when affiliate programs are about to be taxed in both CA and NC, hope their lobbyists are hard at work!

idolw




msg:3938036
 7:31 am on Jun 22, 2009 (gmt 0)

The irony of Google getting back into affiliate-style sales when affiliate programs are about to be taxed in both CA and NC, hope their lobbyists are hard at work!

no worries, merchants will pay that ;)

conor




msg:3938065
 8:39 am on Jun 22, 2009 (gmt 0)

Any one know when this is going to be opened up to a selected group of Beta test merchants and/or go live for mainstream advertisers?

Gomvents




msg:3938225
 1:55 pm on Jun 22, 2009 (gmt 0)

also keep in mind products ads are not the same as CPA, where CPA can be pay per lead, sale, clickthrough to a particular page, etc.

skibum




msg:3938339
 5:44 pm on Jun 22, 2009 (gmt 0)

I am finding that keyword click rates are just too high for our product. The possibility of paying only when you make a sale is great !

Google isn't doing this to make less money.:)

This kinda sounds like they are simply trying to get revenue out of Froogle/Google Base now doesn't it?

In any case, it is a way for them to get more information about your business and how much traffic is worth to you.

filbiz




msg:3939300
 8:13 am on Jun 24, 2009 (gmt 0)

Well my opinion about it is it's very similar to Google Affiliate Network. The program was removed from Adsense and created it's own program (Google Affiliate Network). Payment is by CPA (cost per action). CPA still looks like an experimental stage and I don't know if it will replace or affect the CPC of Adsense publishers because obviously it is still Google's main bread and butter.

netmeg




msg:3939511
 2:20 pm on Jun 24, 2009 (gmt 0)

I'd be willing to give it a go, but honestly, I'd rather they open up those expanded ads that link to Google Products lists first. I think that'll be more of a money maker for all concerned.

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