Searchmetrics study on Google Shopping shows "fake" competition for ad space

In June 2017, the European Commission imposed a fine of €2.4 billion on Google for abuse of its dominant position in the area of Shopping ads. Since then, a lot has happened at Google: Google Shopping has been offering its own unit with external Comparison Shopping Services (CSS) for shopping ad spaces in its own search engine since September 2017. But this has not brought peace: on November 22, 2018, 14 operators of traditional product and price comparison sites sent an open letter to EU Competition Commissioner Margrethe Vestager complaining: Google Shopping's ad allocation is no fairer than before.

Competition for shopping ads questionable

The current analysis by Searchmetrics shows at first glance that there is now demonstrably much more competition in Google Shopping than before. In Germany, the UK and France, around one third of the ads now come from competing CSSs and only around two thirds from Google Shopping itself. But at second glance, this competition proves to be questionable:

The evaluation by Searchmetrics as part of the current study on Google Shopping 2018 shows that only nine percent of the market share goes to classic product and price comparison sites. In contrast, marketing agencies hold the majority of the market share for external CSS with 23 percent. For the most part, these agencies were only founded in 2018 and only have the products of those online retailers in the comparison portfolio for which they have taken over the auction for the Shopping ads.

At the beginning of 2018, there was still little competition on Google Shopping

To investigate the situation, Searchmetrics analyzed desktop search results in fall 2018 in Germany, the UK and France in its current Google Shopping study. In doing so, Searchmetrics also drew comparatively on its results from the previous Google Shopping study. In January 2018, four months after Google Shopping was opened to external CSS, Searchmetrics examined the new competitive situation for the first time. The result at that time was devastating: Only two percent of the ads came from external CSS.

Searchmetrics statement on the study results

Daniel Furch, Director Marketing EMEA at Searchmetrics, sees, among other things, the SpendMatch incentive program launched by Google as a cause for the improvement of the competitive situation: "With the program, Google succeeded in making an intelligent move. As soon as merchants book their shopping ad via external CSS, they get a kickback credited to their ad account. So it's a win-win situation: With a two-thirds share, Google still leads its own Google Shopping market, while at the same time the number of Shopping ads played out by competitor CSS has increased enormously. A remarkable result - and in all three countries we studied."

Furch continues: "The opening for external CSSs has been used primarily by online marketing agencies, which are now a new player in the marketplace for shopping ads and benefit from the incentive program. Whether the classic product and price comparisons are right in their assessment that "fake" competition currently prevails will presumably only be clarified after a further examination of the Shopping product by the EU, which, with its demand for more competition in Google Shopping, had primarily the welfare of consumers in mind. Searchmetrics will investigate the development in subsequent studies."

The results of the Searchmetrics study not only show what the European Commission's demands have achieved, but also which comparison sites are most frequently found in shopping ads in the three markets.

The key findings on Google Shopping in the three countries studied:

• The most successful external CSS on Google Shopping are: in Germany, the Otto Group's product search engine Shopping24 with 27 percent of ads; in France, the CSS agency productcaster.com with 29 percent of ads; in the UK, the online marketing agency periscopix.co.uk with 20 percent of ads.
• In Germany, billiger.de and twenga.de are the only classic price comparisons, and in France, kelkoo.fr and shopping.com can hold their own in the top 10 of the competitor CSS. In the UK, on the other hand, none of the classic price comparisons is in the top10.
• Numerous competitor CSS are not classic product and price comparisons, but were listed in the search results by Google for the first time in 2018. In France and the UK, this affects six out of ten competitor CSS; in Germany, it is four out of the ten most significant competitor CSS.

The complete current study is available here available for download free of charge. The detailed results from the predecessor study in January 2018 can be here can be read.