‘Google Shopping enables fake competition for ads’

In Europe, Google was forced to open up its shopping service to outside competitors. But now it seems that digital marketing agencies are profiting from the changed auction model instead of the traditional comparison shopping sites: 23 percent of all ads seem to be from marketing agencies.

In June 2017, Google got a €2.4 billion fine by the European Commission, because it abused its dominance and promoted its own comparison service Google Shopping over those of its competitors. Google split off Google Shopping and Europe saw a steady increase in the number of rival products showing up in Google Shopping’s search ads.

9% of ads are from comparison shopping sites

But new research from Searchmetrics suggests that a third of ads within Google Shopping boxes are coming from providers other than Google. But most of these ads, and 23 percent of all ads, are from digital marketing agencies. These firms profit from the revamped auction model. As a result, only about 9 percent of all ads are from the traditional comparison shopping sites, the ones the EU originally intended to support with the antitrust ruling.

‘Ad agencies pose as comparison shopping sites’

It’s no surprise 14 shopping comparison services in Europe wrote an open letter to the EU’s competition commissioner to complain how the changes Google has made, made things even worse for them now. According to them, Google is trying to fill Google Shopping with ‘fake’ comparison shopping site, by reaching out to Google Shopping Ad Agencies to encourage and incentivize them to pose as comparison shopping sites, Searchmetrics writes.

Their analysis of Google Shopping in the United Kingdom, Germany and France shows that many non-Google ads are from digital marketing and advertising agencies. Their role is to manage the ad auction process for merchants. They do however run comparison shopping websites, but they only show products that are sold by the merchants whose bids they manage. So, for a customer looking for the best price, these sites aren’t very relevant.

“The agencies are likely to have been encouraged to enter the market by the Google Comparison Partners program which creates certified comparison shopping sites who can act on behalf of merchants that want to bid for Google Shopping ad slots”, Searchmetrics say. “Google has been giving cashback if merchants spend their ad budget via these competitors.”