Co-op advertising

Google has been trying to figure out co-op advertising in Google Shopping for a long time. Co-op advertising is a marketing strategy where manufacturers share the costs of advertising with retailers who sell their products. This mutually beneficial strategy helps manufacturers increase brand visibility and drive sales, while retailers gain greater promotional support for the products they carry. The challenge has often been in the execution – streamlining communications and managing the flow of those advertising dollars.

The rules of Google Shopping require the user to be able to checkout from the site. For a lot of CPG brands that don’t have their own stores that has meant no access. 

Some big brands would work around this by sending co-op dollars to their downstream retailers but the success of those programs were limited. CPG brands don’t like to spend without accountability. By running the ads through retailers the visibility into spend and performance is limited. 

For a long time it looked like Google’s Manufacturer Center, not to be confused with Merchant Center, was going to be the hub for CPG brands to be able to promote products via Google Shopping even if they didn’t have a store presence of their own. The promise was that Manufacturer center would fill the gaps for data. 

There was also a small pilot in Asia called Retail Partnerships that launched a few years ago but doesn’t seem to have gained traction. 

While many CPG brands have solved the problem by creating their own D2C stores, many have not. There is still a huge opportunity for Google to pull in more ad dollars.

The rise of AI marketplaces

Generative AI has enormous potential to change the search landscape in the near term. 

Ecommerce sites are experimenting with hybrid semantic AI search and normal keyword search. What this means in a practical sense, is any ecommerce site can be a search engine for the web. Say you just bought some lettuce seeds and you want to know when and how deep to plant them? Why not put that in the same query box you used to find the seeds on the retailer’s site? 

There is a very near future where every site is a potential search engine. Marketplace sites in particular have an incentive to keep users sticky to the site. The tenuous glue that can hold this all together: Product Listing Ads. 

Google may be making a bet that merchant center listings are what’s going to hold commerce together in the future. This explains the over investment in Google’s Free Shopping listings in the SERP. 

PMax for marketplaces

Google’s latest co-op ad service hits the mark. 

  • Direct Marketplace Promotion: Brands no longer need their own website to run Google Ads. PMax for Marketplaces lets them use product feeds to target potential customers directly on the marketplace where the purchase is most likely to take place.
  • Automation and Optimization: PMax leverages Google’s powerful AI to create and optimize ads across a multitude of Google channels (Search, Display, YouTube, etc.). This maximizes exposure while reducing the need for manual campaign management.
  • Data-Driven Insights: PMax’s reporting capabilities provide valuable data that manufacturers and retailers can use to measure the success of their co-op campaigns and refine their strategies over time.
  • Reduces Complexity: The automated nature of PMax greatly simplifies the process of creating and managing campaigns, making co-op advertising more accessible for both manufacturers and retailers.
  • Less Conflict: CPG and retailers aren’t competing with each other for the same attention. This can reduce costs overall.
  • Efficiency: It removes the need for a brand store, saving time and resources.
  • Increased ROI: The combination of ease of use and smart optimization features should increase the success of co-op campaigns, translating to higher returns for everyone involved.

Retailer opt in

Marketplaces will need to set this up, but marketplaces like Target, Home Depot, Walmart, Lowes, Best Buy, and many more already have their own retail media offerings to take advantage of co-op ad dollars. We expect this to be adopted quickly.