Google Inc (NASDAQ:GOOG)’s Product Listing Ads are going into their second holiday shopping season in an expanded capacity, and new data suggests that they may provide a very important positive impact on the search giant’s revenue growth. Citi analysts say this data is encouraging, especially because it is the earliest data to suggest the extent to which these ads will impact Google’s growth.
Marin Software data shows positive impacts for Google
Analyst Mark May cites data from Marin Software Inc (NYSE:MRIN), one of Google’s partners. The data focuses on the company’s Product Listing Ads and provides a few main positive impacts of these ads and two positive forecasts for the ads.
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In July Google Inc (NASDAQ:GOOG) saw its cost per click for its Product Listing Ads climb 53 percent year over year. Meanwhile the cost per click of standard text ads rose just 10 percent. He notes that average cost per clicks for Google’s PLAs is still that of standard text ads, but as the data shows, they could catch up and perhaps even surpass them for cost per click.
In addition, click-through rates for PLAs rose 19 percent year over year and 3 percent month over month. They were also 21 percent higher than click-through rates for Google Inc (NASDAQ:GOOG)’s standard text ads.
Positive expectations for Google
According to Marin Software, the company should see more of its advertisers increase their paid search budgets toward its PLAs because of the strong cost per click and click-through rates. The company reported that some retailers put up to 50 percent of their budget for paid search ads toward PLAs in July.
Marin also believes that PLAs’ impression and spending shares will “dramatically” increase in the fourth quarter of this year compared to the current run-rate. This is because Google Inc (NASDAQ:GOOG) has expanded its PLAs to mobile devices through its Enhanced Campaigns platform.
According to May, Google’s timing on this expansion is particularly important as we head into the holiday season because more and more shoppers are researching and shopping for products while on the go, using their mobile devices. He sees the company getting the biggest benefit from PLAs during the fourth quarter shopping season.
May maintains his Buy rating and $1,005 per share price target for Google Inc (NASDAQ:GOOG).