A group of people with shopping bags at their feet

Okay Google, What Does the Future of Retail Advertising Look Like?

Since its inception, the text ad format has reigned supreme in the world of paid search, but an old contender is looking to upset the status quo. For the first time ever, Google Shopping ads surpassed text ads and accounted for more than half of AdWords spend in 2016.

This shift in online spend coincides with a shift in the retail industry as a whole. With storefronts closing and online shopping continuing to grow, text ads working in isolation can’t provide the dynamic experience needed to enhance or replace the brick-and-mortar experience. To maximize revenue-earning potential, retailers need to focus on creating their shopping ad strategies around the key themes likely that are shaping the future of the ad format.

Shopping on the Go

Around the globe, more people own a mobile phone than a toothbrush. Really. Given that kind of shocking popularity, it’s no wonder that experts are predicting that the future of Google Shopping ads will be mobile.

In the past, mobile search advertising was often viewed as an inefficient way to drive sales, but this perception is quickly changing. Mobile click share continues to increase YoY, with iProspect reporting 59% of clicks across all clients coming from mobile —a 24% increase from Q1 2016. Additionally, Google reported that 30% of holiday 2016 sales came from mobile devices, and by next year, they expect 50% of online sales to come from mobile.

An obvious way to capitalize on this traffic is to apply a mobile bid modifier. While this basic approach has merit, it should be used with very specific intent. Rather than blanketing mobile bid modifiers across existing campaigns, advertisers should consider creating separate shopping campaigns that target top mobile-converting product categories to ensure that only profitable areas are being bid up.

This same mentality can be applied to Local Inventory Ads (LIAs.) As seen in the example below, these ads populate whenever a storefront is nearby that contains the product for which a user is searching.

LIAs can be incredibly effective at bridging the offline and online shopping experience by leveraging a mobile platform to capture on-the-go buyers. If a shopper who is out and about searches for an item on their phone and an LIA shows that it is available at a store close to them, they are more inclined to visit a storefront since they are already in the vicinity. This ad format is especially beneficial for items that are expensive to ship or big-ticket items that require full transparency before buying, such as appliances. Though the process is slightly more tedious than creating a standard Shopping campaign, building out LIA campaigns that target these kinds of product categories — as well as those that retailers identify as having strong offline performance — can significantly increase the profitability of mobile advertising.

Conversational Commerce

Presently, voice search makes up 20% to 25% of search queries on both Google’s mobile app and Android devices. While this is already a fairly substantial amount, experts predict that by 2020, 50% of all search queries will be voice searches.

Not only is usage of voice search on the rise, but voice capabilities have also expanded well beyond asking Siri to look something up just so you don’t have to tediously type it out yourself. With virtual home assistants such as Google Assistant and Amazon Alexa, it is now possible to purchase products without ever looking at a screen. While this opens up a world of opportunity for retailers, it’s incredibly important not to overstate the buying power behind the sound of a consumer’s voice.

Shoppers might not be inconvenienced by the current shopping ad formats on search result pages. In fact, consumers may consider it a major plus to have full control over which products they click on. For instance, it would not make much sense to shop for higher-priced items using a virtual home assistant since these are purchases that typically require full transparency prior to buying. From an advertising perspective, using voice search could limit customer acquisition capabilities since the user will be less inclined to compare results due to the quick-turnaround nature of voice search. However, retailers offering low-risk or impulse-buy items, such as groceries, could stand to benefit from the voice search revolution in the near future. (It’s worth noting that while a lack of a SERP is a current limitation, technology and consumer behavior are always evolving, so this could cease to be an issue for certain sectors. Stay tuned to the iProspect blog for any potential updates.)

Budget Fluidity

Paid search provides the unique opportunity to use one budget across ad formats with ease, and retailers should adopt budget fluidity as best practice. This efficient budget structure has become a staple for top-tier agencies, and iProspect has seen positive results from implementing it. We recently moved a retail client to a combined budget for text and shopping ads. Since implementing, we saw a 23% increase in shopping ad spend and a 36% YoY increase in revenue from paid search advertising. Leaving the rigid advertising spend structures in the past opens up the opportunity to invest solely in the areas driving revenue—which, for retailers, will most likely be shopping ads.

In Short…

The state of retail advertising is changing at a rapid pace. However, a proactive strategy for mobile approach, voice shopping potential, and budget planning will ensure your brand doesn’t miss out on key revenue-earning opportunities.