New study: Competition is increasing in Google Shopping, but will this satisfy EU regulators?

Searchmetrics‘ data suggests majority of external ads on Google Shopping in Europe are placed via marketing agencies rather than the classic comparison-shopping sites that compete with Google. The study follows EU Commissioner Verstager expressing dissatisfaction with the quality of Google Shopping competition.

San Mateo, November 26, 2019 ‒ Two years after the EU fined Google 2.4 billion euros ($2.65 billion) and ordered it to open up its Google Shopping service to greater outside competition, around half of the ads on the platform in the UK, Germany and France are now placed via external providers according to a new study by Searchmetrics. But doubts remain as to whether this will convince the EU‘s competition regulator.

Malte Landwehr

“The share of ads coming onto Google Shopping via external sources has grown substantially from approximately 30% in late 2018, to around half now. However, it’s not clear whether this is going to be enough to avoid further intervention from the EU’s competition regulator.”

Malte Landwehr, VP Product, Searchmetrics

Sources of Product Listing Ads displayed in Google Shopping (Sep/Oct 2019)

Markt Google Marketing-Agentur Shopping -Vergleich
UK 49.1% 34.0% 16.9%
Germany 50.4% 33.7% 15.9%
France 53.8% 37.6% 8.6%
Average 51.1% 35.1% 13.8%

 

(download an image showing the above table at https://s3-eu-west-1.amazonaws.com/smwebsite-live-bucket/wp-content/uploads/UK_Table_Fazit_02_Agencies.jpg)

The data shows that approaching the end of 2019, only around half of shopping ads come from Google itself. A year ago, Google’s market share stood at two thirds of shopping ads. Now, 48.9% of all the Product Listing Ads (PLAs) displayed on Google Shopping are placed via external providers. However, the majority of these externally sourced ads are from digital marketing agencies (see table above). 35.1% of all ads are currently from marketing agencies and only 13.8% come from genuine comparison-shopping services that can be considered real rivals to Google Shopping.

The issue that is central to the matter is that the agencies, who mostly specialize in performance marketing, are viewed as offering comparison shopping services in name only: while they may run comparison shopping websites, they only list the products sold by merchants whose bids they manage on the Google Shopping auction system – which means they are otherwise largely irrelevant for genuine comparison shopping.

This may be one of the reasons why European Competition Commissioner Margrethe Vestager was recently reported as saying of Google’s attempts to introduce more competition:

“We may see a show of rivals in the shopping box. We may see a pickup when it comes to clicks for merchants. But we still do not see much traffic for viable competitors when it comes to shopping comparison.”

Marketing Agencies dominate the Google Shopping landscape

Searchmetrics‘ data suggests that most of the top ten external providers of ads on Google shopping in each country analyzed are digital marketing agencies.

In the UK, the top external provider of Google Shopping ads is Productcaster, a marketing agency and a Google Comparison Shopping Service (CSS) premium partner (the program that Google has set up to encourage more competition on Google Shopping in the EU). Second is Shoptail, another agency and premium CSS partner. In third spot is Kelkoo, a traditional shopping comparison site.

In Germany, Adference and Smec, two marketing agencies, are in first and third place. Between them in second place is Shopping.com, a product and shopping comparison service owned by eBay.

In France, little has changed among the top sources of Google Shopping ads over the past year, as marketing agencies remain dominant. As in 2018, Productcaster is still the CSS partner with the largest share of the market, again followed by two other agencies, Feed Price and Keyade, who have swapped positions since 2018.

Malte Landwehr said:

Malte Landwehr

“While changes made by Google have meant its own share of ads on Google Shopping has fallen from around two thirds a year ago to around a half at the end of 2019 in all the three markets we analyzed, questions remain regarding the quality of the increased competition this has produced. Traditional shopping comparison sites were the intended beneficiary when the EU demanded Google open up its shopping service to competitors – but they’re still in a minority in the shopping boxes. It remains to be seen which additional changes the EU will demand and what Google does to comply without giving away more market share than it wants to.“

Download the full study here

About the study

This Searchmetrics study analyzed the competitive market for Google Shopping ads – also known as Product Listing Ads (PLAs) – looking in particular at how the markets have developed in the UK, Germany and France in 2019. The data for hundreds of thousands of shopping related keyword searches was collected at four points during September and October 2019.