On February 6th, Google announced that it had agreed to acquire Channel Intelligence for $125 million. Channel Intelligence (CI) manages and optimizes product-listing feeds on comparison shopping engines (CSEs) and product search engines, including Google Shopping (also known as Google Product Listing Ads (PLAs)). Google plans to use CI to bolster Google Shopping, which Google transitioned to a paid model in October 2012. Google stated, “We think Channel Intelligence will help create a better shopping experience for users and help merchants increase sales across the Web.” IMPLICATIONS for ADVERTISERS How Does this Impact Google Shopping (PLAs)? Google has been squarely focused on building vertical search engines, or “apps,” directly within the search results page (Shopping, Hotels, Flights). At Performics, we’re calling this trend “Engine App-ification.” Engine App-ification is Google’s response to the fact that participants are increasingly moving to vertical sites for specialized results (like RetailMeNot for coupons, Amazon for shopping or CitySearch for local). In fact—according to Forrester—30% of shoppers now start their searches on Amazon; only 13% start their searches on Google. Google Shopping (PLAs) is at the center of the Engine App-ification trend. Google has been affording Shopping Ads prominent placement on the search page, and the Ads often push down the traditional organic results. The below example illustrates that Shopping Ads drown top-ranked Amazon organic listings: Google’s focus on Shopping makes Shopping feed optimization critical for retailers. And Channel Intelligence will likely give retailers more ability to create highly engaging and relevant Shopping feeds. Ultimately, Google’s purchase of CI is the next step in Google’s commerce plan. Google introduced the new Shopping experience in October 2012, and now Google is giving marketers more tools to activate better Shopping experiences for searchers, at the lowest allowable cost. This aligns with Google’s broader strategic plan to provide marketers with more opportunities to measure and optimize advertising (i.e. Google Analytics, DoubleClick suite). While this may require advertisers to entrust Google with more of their data, this data will be leveraged to accelerate advertiser performance in Shopping. CI will bolster Google Shopping, which will only become more important to advertisers as Google seeks to build a Shopping catalog that can compete with Amazon. In turn, CI could change the game for the merchant on Google. The Future of Shopping Feeds and Search At Performics, we’re excited that shopping feeds are becoming more tightly entwined with search marketing. For years, we’ve managed both channels—traditional search and comparison shopping. We’re now integrating shopping and search strategies across screens in response to changes in participant behavior and the evolution of Google Shopping. For us, inventory management is now part of performance media. Our data feeds practice will not change markedly until we learn how Google integrates CI into its shopping experience; our clients’ programs and day-to-day work will continue as usual. However, we expect Google to have CI integration enabled in time for Back to School 2013. In this new landscape, where shopping and search are one, retailers must have an integrated shopping-search experience in time for Back to School 2013. Additionally, Google’s new Enhanced Campaigns (which will roll out by July and may cause mobile CPCs to rise) do not include Shopping; this may enable advertisers to execute highly efficient PLA campaigns at a time when CPCs in traditional paid search are rising. We’ll be paying close attention to Google’s CI integration and will provide updates as they become available.