Google today rolled out new advertising products and services in its latest attempt to adapt to the changing ways consumers use their smartphones to search for items, then often buy in nearby stores rather than online.
Google says it is reacting to consumers’ behaviors; the search giant says it handles trillions of searches a year, with more than half coming from mobile devices. About one-third of its searches on mobile are location-specific.
The new products include more detailed text in its display ads, new ads retailers and other businesses can place within Google Maps and new ways to buy ads. They were announced Tuesday by the Alphabet Inc. subsidiary at the Google Performance Summit in San Francisco.
“It’s very clear to all the advertisers we speak with, that mobile is here, it’s really the mainstream,” said Sridhar Ramaswamy, senior vice president, Google ads and commerce.
Some advertisers are paying more for Google’s mobile ads than for ads that appear on personal computers, as the emphasis of the company’s $40 billion-a-year business shifts to mobile devices, he said. Google wants to be able to better show how ads on its search engine translate into in-store sales.
“This year, around 90% of all global sales will happen in stores as opposed to online,” said Jerry Dischler, vice president of product management for Google’s ad business.
New ad products include enhanced listings on Google Maps, ads that re-shape themselves according to the website they’re seen on, and expanded business descriptions in sponsored links. Along with that, Google said it can measure, with more than 99% confidence, whether an online advertisement yielded an in-store purchase. The U.K. subsidiary of Nissan Motor Co. saw that 6% of clicks on mobile ads resulted in someone visiting a dealership, yielding a 25 to 1 return on investment, Google said.
The ads could prove extremely effective for bricks-and-mortar retailers that sell items that a consumer needs right away, says Omar Akhtar, an analyst at the consultancy Altimeter.
“These could prove powerful to retailers and other businesses that sell impulse, in-the-moment items like a hardware store or a coffee shop where someone wants something right away,” he says. Retailers that sell luxury items, or anything that requires some consideration, likely won’t find the ads useful, he adds.
But while the Google Maps ads may work well for a retailer like Walgreen Co., No. 37 in the Internet Retailer 2016 Top 500 Guide, Google has to walk a fine line between fostering demand for its ads and helping users, Akhtar says.
“Google Maps isn’t focused around discovery, like search is; it’s about figuring out how to get somewhere,” he says. “If I’m looking for how to get to Walgreens, it makes sense to give me a coupon to Walgreens. But things get tricky once local businesses start competing to show up when I’m specifically looking for a Walgreens. If a CVS coupon shows up, and CVS isn’t near me, the utility of the service can quickly wane.”
Google will also let advertisers change how much they pay depending on whether they use mobile, computers or tablets, letting them tweak campaigns according to the device.
“It’s useful because every device has different intents, different conversion rates,” says Frederick Vallaeys, the chief executive officer of Optmyzr, which provides tools for advertisers and marketers, and a former Google employee. “In the past tablets could have been a money pit. You had to buy it as part of the desktop traffic. Or it could have been doing really well and it was a missed opportunity.”
Google is also is expanding the amount of text a retailer can present in its expanded text ads; the maximum length of headlines and descriptions are expanding to 30 and 80 characters from 25 and 70, respectively. The change should produce more appealing ads, says Holly Pauzer, client insights and research manager at search marketing firm Adlucent.
“More advertising space, should naturally lead to increases in click-through rates, and in the course of our testing so far, we have definitely seen click-through rate increases,” she says.
But even if the ads drive better results, Altimeter’s Akhar doesn’t believe that Google’s moves will produce long-term benefits.
“Display ads are annoying and deliver a bad experience,” he says. “Any improvement to display ads is really just a rearranging of the deck chairs on the Titanic.”
Many retailers are shifting dollars away from display ads to other more interactive ads with greater appeal for mobile consumers, he says. For instance, Facebook Inc. earlier this year introduced its Canvas ads that give retailers broad leeway to tell stories and showcase products. When a consumer clicks on a Canvas ad in her news feed, it quickly opens up a full-screen mobile ad.
Bloomberg News contributed to this report.Favorite