Google drives majority of paid search ad clicks in Q1 (GOOG, GOOGL)

Google drives majority of paid research ad clicks in Q1

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One of the largest referral channels for e-commerce is paid search — ads that are available on major search engines including Google, Yahoo, and Bing. 

But the vast majority of user clicks on these paid search ads are coming directly from Google, highlighting the success of its Product Listing Ads (PLAs), according to a report from Merkle.

• Google drove 95% of all paid search ad clicks on mobile in Q1.
• By comparison, Bing accounted for just 3% of all paid search ad clicks on mobile, and Yahoo made up just 1%.
• Retailers also increased their overall ad spend on Google's PLAs by an average 19% in Q1.

As shoppers engage more with Google's paid search ads, they're also spending more. Retail revenue from Google Shopping grew 52% year-over-year (YoY) in Q1 2016. This revenue was driven largely by mobile engagement. Sales from mobile PLAs grew 164% YoY. 

This change was driven in large part by Google's introduction of an ad carousel at the top of search results. Brands and retailers can pay to have their products appear in that carousel when a consumer makes a relevant search query.

However, search engines still need to be wary of competition in the e-commerce market. Oftentimes consumers go directly to a retailer's website to find what they are looking for. This is due in large part to the massive offerings of global marketplaces like Amazon and eBay.

In fact, 44% of US shoppers go directly to Amazon when looking to buy or research a product online, according to BloomReach. So while paid search ads are still driving traffic, their visibility is being reduced every day.

Paid search is just one of the ways in which retailers are changing their approaches in order to more effectively reach consumers who are increasingly turning toward mobile and digital outlets to shop.

Cooper Smith, senior research analyst at BI Intelligence, Business Insider's premium research service, has compiled a detailed report on new e-commerce strategies that looks at some of the top trends affecting retailers at each stage of the purchase funnel and how they're responding to those shifts.

Google drives majority of paid research ad clicks in Q1

Here are some of the key takeaways:

• Within digital, consumers are spreading out their retail purchasing across channels, forcing retailers to spread out their online marketing budgets. Paid search, affiliate marketing, and email all increased their share of e-commerce referrals last year, according to Custora.
• Paid search especially stood out as a major source of spending by retailers. Search ad spending grew 18% YoY in Q4 2015, according to IgnitionOne.
• Mobile continues to drive the most sales growth for retailers, but sales still aren't keeping up with retail traffic. IBM found that smartphone traffic beat both tablet and desktop, making up 53% of all online traffic. But mobile still only accounted for 29% of all online sales.
• Retailers only have themselves to blame for underperformance on mobile, as many still aren't using best practices for mobile websites and apps. Only 60% of the top 100 global retailers currently have a dedicated mobile website, according to The Search Agency.
• The increase in online shopping has put stress on the shipping and logistics industry. The number of UPS ground packages delivered on time during the holidays fell from 97% in 2014 to 91% in 2015, according to ShipMatrix.
• Retailers are beginning to explore alternative shipping options. Earlier this year Gilt Groupe switched its primary ground shipper from UPS to Newgistics.
• Retailers that can't afford to invest in alternative shipping options are offering consumers more fulfillment options using what many of them do have — brick-and-mortar stores. Buying online and picking up in-store, also called click and collect, made up about 30% of e-commerce sales at Sam's Club in 2015.

In full, the report:

• Looks at how retailers are shifting their ad spending and marketing efforts to keep up with online retail behavior
• Identifies which channels are top performers for referral traffic and new opportunities for reaching consumers
• Analyzes how retailers are responding to the rise of mobile purchasing and where they're falling short
• Examines the evolving delivery landscape and the aggressive moves retailers are making to become their own shipping carriers

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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of new e-commerce strategies.