Reef, a beachwear manufacturer best known for its sandals, said it increased spending with Google by 76 percent last year — mainly
because it nearly quadrupled the money it put into product ads.
On a desktop computer, a Google search for “Reef flip-flops” brought back three text ads above the
search results — one from Reef, one from Zappos and one from Amazon — selling Reef sandals.
“The winner in all this is Google.”
Andreas Reiffen, chief executive of the search engine marketing firm Crealytics, said Google’s revenue from P. L.A.s on smartphones was more than double its revenue from text ads, because it can place three product ads in the same space as a single text ad,
and consumers are more likely to click on image-based ads than text-based ones.
In recent years, Google has served more product ads
and expanded their availability to more general search terms — for example, showing photo ads on a search for “running shoes,” not just “Nike Air Max.” It has also tinkered with the size, location and number of ads on results pages for both computers and smartphones.
That’s important for product ads, because P. L.A.s take up a larger proportion of phone displays,
and Google increased the size of those mobile ads in 2015 to make them stand out even more.
They accounted for 52 percent of all Google search ad spending by retailers in the first quarter
of 2017, versus 8 percent in 2011, according to the digital marketing agency Merkle.
At the same time, the average price of Google ads fell 13 percent in 2016, in part because mobile ads
and P. L.A.s are less expensive than traditional desktop text ads.