Retailers Strike Back: 4 Predictions for Paid Search in 2016

Posted by Kevin Kielty on Feb 3, 2016

This year is getting exciting for retailers. In 2016, we’ll see brick-and-mortar businesses get into the paid search and online retail game, and successful online retailers launch physical stores. Today, I'm going to share some thoughts about where paid search could be headed, and where you might want to focus your energy in the year to come.

1. It’s Going to Get a Lot More Competitive

Paid search isn't just for the biggest retailers anymore. Smaller businesses and brick-and-mortar stores are catching up as they enhance their online presence.

With offline retailers today now venturing online, it will lower the barrier to entry for online shoppers, partly due to the fact that customers will feel more confident when they can return things to an actual store – especially when it comes to big-ticket items, where a customer might spend hundreds of dollars (the physical store option means less hassle).

In fact, paid search is shaping up to offer things specifically geared for the small and medium business, making it easier for them to benefit from getting involved.

In March 2015, Google announced the “Let's Put Our Cities on the Map” initiative. While this isn't directly part of paid search, it increases online visibility for small businesses, and can support any existing ad campaigns.

In April, the Google Shopping blog announced Google for Retail and a new Shopping Campaigns page, both designed as resources to help SMBs make the most of the platform.

Then, in December, Google announced Smart Goals. Smart Goals helps those businesses that aren’t tracking website conversions to help them optimize AdWords for a website's highest quality visits.

Here are a few other things that will help SMBs in 2016, summarized from the Acquisio 2016 “Digital and Local Marketing Predictions”:

  • Improvements for smaller product feed submissions and management on Google Merchant Center
  • Tools for integrating Google My Business with AdWords
  • Easier offering of same-day delivery service with Google Shopping Express

2. Retailers Will Expand Their Inventory

Because more brick-and-mortar businesses are getting into the online game, retailers will be able to expand their online inventories to start competing with the likes of Amazon.

Already, companies like Target and Walmart are rethinking every aspect of their inventory and it's likely that smaller brick-and-mortar locations will follow suit. Interestingly, some small online companies have had such success that they're going the other direction, and expanding into physical storefronts.

The expansion of online inventories can help offline brands retain customers who might otherwise have turned to an Amazon for something they couldn’t find in stock that they wanted in the store.

Further, if those retailers pair up with delivery services, as I expect they will, expansion will be even more readily available.

3. Online and Offline are Going to Merge

For a while now, Google has been merging in-store visit data with traditional AdWords data, and it's driving retailer success through mapping technology and visit duration data. Companies across the board are only going to get better at creating seamless online/offline shopping experiences.

There is a great incentive for this merging. Macy's, for example, found that omni-channel shoppers are eight times more valuable than those who shop in one channel only. What’s more, reward programs and buyer discounts can be great for omni-channel marketing, so long as you use discount strategies wisely and avoid becoming a bargain-basement brand.

4. Sellers Will Reevaluate Amazon

If you ask Amazon, the platform is ideal for sellers because of its multiple opportunities, including its connection with a massive audience, brand recognition and shipping/returning services. This might be true, but don't forget that Amazon might take 15 percent or more of your sales.

Google Shopping, on the other hand, is a growing opportunity. Along with a rich history and numerous features, the product was recently redesigned for improved mobile shopping. Add to this the fact that Amazon is one of AdWords' biggest customers, and Google Shopping starts looking like a worthy opponent and alternative.

Other things could cause sellers to second-guess working with Amazon, too.

While using Fulfillment by Amazon for shipping might streamline delivery for sellers, it could cost fees they weren't paying before and take away a measure of control. Some small retailers feel like lab rats in the Marketplace, vulnerable to business loss when Amazon tests sales against them and undercuts their price points.

These sellers have seen the products they sell being offered for less by Amazon, and are forced to lower prices or withdraw items from the site. One seller watched sales drop significantly after having much success with a product then noticing Amazon was selling the same item for less.

Experiences around this have marred Amazon's reputation. The company has been called exploitative, predatory and crushing to local economies. VentureBeat shared a claim that Amazon deletes bad reviews on its own fulfillment service but allows them for sellers using other fulfillment services, tipping the scales in its own favor.

Striking Back at Internet Giants

This year, I see paid search becoming more competitive and encouraging brick-and-mortar stores to expand their online inventory. As online and offline marketing continue to merge, we might see some interesting things happen.

It's no secret that Google and Amazon are huge rivals. Whether or not there is anything that makes you nervous about linking up with Amazon, Google Shopping is worth considering as an alternative.

Unlike Amazon, Google Shopping doesn't have a reputation for undercutting its retailers and offers some amazing features. In my mind, it is the future for online shopping in 2016, and well beyond.