Google Inc. (GOOG) has enjoyed strong demand for its product-listing ads since making them a paid service late last year, according to new data, helping fuel the search company’s rivalry with online retailer Amazon.com Inc. (AMZN)
In October Google shifted its free product search service for retailers to a model that requires them to pay for placement in the company’s search engine.
The result is that a Google search for, say, “running shoes” may now result in a prominent batch of paid product listing ads at the top of a Google search page.
According to data from digital-advertising firm Marin Software, the paid service has likely already provided a noticeable bump in revenue. Marin Software says the percentage of total clicks on Google resulting from product listing ads more than tripled during last year.
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Meanwhile, advertisers’ investment in Google product ads rose about sevenfold as a result of the switch to a paid model, according to the data.
A representative from Marin Software said the increase in clicks and investment now being directed to product listing ads doesn’t appear to be coming at the expense of other Google ad products.
In addition, Marin Software says there was a 60% increase in the share of total ad impressions on Google going to product listing ads in the fourth quarter of last year–meaning that Google is now showing product ads far more often.
One upshot: space in the popular search engine directing users to products on Amazon’s site is now becoming less prominent.
Mountain View, Calif.-based Google and Amazon have long had an uneasy relationship, with Amazon relying on Google for traffic and Google relying on Amazon for a significant chunk of ad revenue. Each would prefer to retain as many users as possible on their own sites.
Now Google’s paid product-listing ads, which the company dubs “Google Shopping,” adds a new wrinkle to the rivalry.
“It probably does increase the competitive feelings there,” said Gartner Inc. analyst Andrew Frank.
However, Mr. Frank said the move hasn’t likely moved the needle too significantly for Google in a financial sense, and doesn’t yet represent “a mortal threat” to Amazon.
During its fourth-quarter earnings presentation last week, Google didn’t provide specific details on the performance of product listing ads. The company is “in the very early stage of that,” Google Chief Executive Larry Page said during a call with analysts.
The CEO added, however: “We’ve seen tremendous uptake from merchants and from users.”
Overall, Google posted a 22% gain in revenue for the quarter excluding its Motorola business, to $12.91 billion. The prices paid for clicks on its ads also declined less during the period than analysts had generally feared.
A Google spokeswoman declined to comment, but noted that Google Shopping has now drawn “tens of thousands of merchants” listing more than 1 billion products.
Amazon appears to be one of those participating; a search for “Kindle Fire” on Google can result in a paid listing for the Amazon tablet device linking back to Amazon’s website.
An Amazon spokesman declined to comment.
In order to retain Internet shoppers and keep them clicking around on its own site, rather than relying too much on Google, Amazon has sought to bolster its own internal search and advertising services.
A9, the Amazon unit responsible for search and advertising on the site, says it now has “a few hundred” team members scattered across cities including Palo Alto, Calif., Bangalore, India and Beijing.
The health of Seattle-based Amazon’s ad business is difficult to assess.
In the company’s third-quarter report issued in October, it said net revenue from businesses including its cloud-computing unit and advertising services rose to $648 million, from $407 million in the same period a year earlier.
Amazon is expected to report fourth-quarter earnings after the market’s close Tuesday.