Google Inc. (GOOG) Ad Format Change is Paying Off

Google Inc. (NASDAQ:GOOG) has developed its burgeoning empire through effective search results and correlated advertising. In some ways, maybe there wasn’t much broke, so there wasn’t much need to fix it. But, Google is always looking to evolve and develop concepts that would put them in competition with pretty much every other major tech company – Apple Inc. (NASDAQ:AAPL), Facebook Inc. (NASDAQ:FB) and Amazon.com Inc. (NASDAQ:AMZN).

Google Inc. has been working to take on Apple with its Nexus 7 tablet, Android operating system and Google Play store to rival iTunes. It is trying (with some success) to compete with Facebook in social media with Google+. Is Amazon the next direct competitor? With some results in after Google made some changes to its ad policy last fall, the idea of Google becoming an e-commerce platform may seem more feasible.

Google Inc. made some changes last October, introducing what are called all-paid product listing display ads (see this search for “nexus 7” and see the section that says “Shop for Nexus 7 on Google”) in their search results, and apparently this is paying off not only for Google but also for the advertisers that participate. Based on results reported by Marin Software, advertisers that manage $4 billion  per year in online ad campaigns spent six times more on Google product listing ads than they did before the formatting change. While that seems like a ton more expense, apparently the return on investment has been worth it – click-throughs on these product listing ads have jumped more than 200 percent.

So even though Google Inc. is now making advertisers pay to play with their display ads, the advertisers seem to be doing so with little prodding. But what does this have to do with competing against Amazon.com Inc.?

Studying online user behaviors, it is noted that when users are searching for product information, they go to one of two places – either Google Inc. to locate information about the product, or Amazon.com Inc. to find the price. But with this new platform on Google, it’s possible that this new ad format may be directed toward users who may be looking to buy a product, not just research it. Why go to Amazon.com, when you could click-through directly from Google to buy the product?

As of 1 p.m. ET Tuesday, Google Inc. stock is up slightly on the day to about $752.75 per share.

This is something that may be interesting to watch going forward as this new Google Inc. format continues to develop. What do you think? Will this increase the number of online shoppers, or will this help Google gain share of the existing market from Amazon? We’d love your thoughts about this in the comments section below.

Please see these related GOOG articles:

Is Google Being Ironic with Its New Privacy Quest?

Do You Feel Discomfort With Online Advertising?

Google and Apple Fighting for Smartphone Supremacy