SocialGoogle’s Latest Move Toward Social Shopping

Google's Latest Move Toward Social Shopping

With Google's seller ratings, advertisers who practice good customer service will be rewarded and achieve better ROI on their digital marketing programs.

Google introduced seller ratings to its growing lot of ad extensions last month. In addition to titles, prices, and thumbnail images, a searcher now gets treated to a 1 to 5 scale indicating past customers’ satisfaction with a particular merchant.

Here’s how it looks:

Ad extensions incentivize advertisers to educate themselves and adhere to Google’s best practices in order to reap strong ROI, which ensures a smooth user experience in the process. They also allow Google’s engineers to better understand search behavior and adapt the search algorithm accordingly.

The difference between these seller ratings and the other recent innovations to AdWords, however, is that this most recent announcement looks more and more like a thinly-veiled countermeasure to whatever is going on over at Facebook Inc.

Not long ago, raised a ruckus over Facebook’s supposed intentions to make content available in Open-Graph enabled search results, only to be set straight by Facebook CTO Bret Taylor. While rumblings that Facebook is entering the search business may be overblown, the game-changing nature of this possibility isn’t lost on us.

With a user base nearing 500 million users, Facebook’s next big hit will likely be at the intersection of social media and e-commerce (note the 39 percent year-on-year growth in ad dollars pouring into advertising on Facebook, or the rise of self-contained social shopping environments like 1-800-Flowers’ Facebook page).

Advertising spend on Facebook occupies a small share of what is being garnered by the search engines (eMarketer estimates the total search marketing pie in the United States at about $3.94 billion in 2010, putting Facebook’s relative figure around 11 to 12 percent of that), but the folks over in Mountain View have their eye to the future. As online shopping behavior becomes more sophisticated, the notion of querying products and comparing vendors will become stale, and the leading edge of online consumers will begin to abandon that paradigm.

Instead, peer influence will become an increasingly important ingredient of a pleasant online shopping experience. After all, if faced with product reviews written by friends, versus those written by unknowns, which would you trust more? (This also explains why comparison shopping and trust are so conjoined in e-commerce environments.)

In the long run, the addition of the seller ratings ad extension benefits all parties.

Consumers are treated to a more transparent online shopping environment, which allows them to achieve higher satisfaction more quickly. Advertisers who practice good customer service are rewarded for doing so, and achieve better ROI on their digital marketing programs. And for Google, this is yet another way to weed out less competent advertisers who stand in the way of their more profitable counterparts.

The day might even come when a fourth beneficiary enters play — if Google extends seller ratings to ads served on partner sites through AdSense, then publishers will likely also reap rewards in the form of revenues from increased click volumes.

Can Facebook deliver such ubiquitous goodwill to every stakeholder in the media equation? That’s what remains to be seen.

Just one complaint for Google, though: why do the seller ratings only apply to merchants with an average rating of four stars or higher? This counteracts the basis of comparison shopping — the difference between four and five stars is hardly a broad performance spectrum, and it’s barely visible when measured in pixels on the screen.

Why not give advertisers with lower ratings (or an insufficient number of ratings) a chance to throw their hats in the ring? We can probably assume that their CTRs will be lower, but perhaps with more interesting inventory or more relevant promotions, they can still present the consumer with a compelling choice?

Join us for SES San Francisco August 16-20, 2010 during ClickZ’s Connected Marketing Week. The festival is packed with sessions covering PPC management, keyword research, search engine optimization (SEO), social media, ad networks and exchanges, e-mail marketing, the real time web, local search, mobile, duplicate content, multiple site issues, video optimization, site optimization and usability, while offering high-level strategy, keynotes, an expo floor with 100+ companies, networking events, parties and more!


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