SAN FRANCISCO — Before Sergey Brin and Larry Page founded Google, they wrote a research paper as doctoral students at Stanford University in which they questioned the appropriateness of ads on search engines.
“It could be argued from the consumer point of view that the better the search engine is, the fewer advertisements will be needed for the consumer to find what they want,” the pair wrote in the 1998 paper.
How times change. Two decades later, it’s not unusual for a smartphone user to see only ads on a Google search page before scrolling down to the regular results.
When Google’s parent company, Alphabet, reports earnings this week, the internet giant’s big profits are expected to demonstrate yet again that the billboard space accompanying Google queries is the web’s most valuable real estate for advertisements.
In the 17 years since Google introduced text-based advertising above search results, the company has allocated more space to ads and created new forms of them. The ad creep on Google has pushed “organic” (unpaid) search results farther down the screen, an effect even more pronounced on the smaller displays of smartphones.
The changes are profound for retailers and brands that rely on leads from Google searches to drive online sales. With limited space available near the top of search results, not advertising on search terms associated with your brand or displaying images of your products is tantamount to telling potential customers to spend their money elsewhere.
The biggest development with search ads is the proliferation of so-called product listing ads, or P.L.A.s. In a departure from its text-based ads, Google started allowing retailers to post pictures, descriptions and prices of products at the top of search results in 2009.
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.
Retailers are snapping up product ads. 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.
“P.L.A.s takes the search engine results page to a different level,” said Andy Taylor, Merkle’s associate director of research.
A Google spokeswoman said the company’s goal had always been to quickly give people the best search results.
“Our goal has always been to deliver results that people find immediately useful, which is even more important on mobile devices with smaller screens,” said the spokeswoman, Chi Hea Cho. “For most queries, we show no ads, and we recently…
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