Relevance is key. Search engines that deliver poor results leave users confused and – if via an on-site engine – can result in search abandonment. When search engines properly navigate, they deliver positive consumer experiences. Consumers in turn, come to trust the engine and its results, recommendations, etc. With this trust, comes the potential for profit.
Google Carved the Path
With sponsored search, Retail media platforms have taken their cues from Google. The end-all, be-all of search engines – Google has done an other-worldly job of monetization. It’s been a decade-long journey of testing, manipulating, and adjusting. Often, even the smallest changes to Google’s search engine results pages (SERPs) would lead to mild panic within the industry. Often though, the changes made were almost imperceivable to the naked eye.
This slow burn approach has given birth to a well-oiled machine. One that balances the essential question any search engine struggles with:
Ensuring paid ads do not undermine the legitimacy of the SERP
Retail media platforms – like Amazon, Walmart Connect and Roundel – are extremely lucky in this way. They’ve had Google laying out the blueprint since the late ‘00s. All that’s required of them is to follow that gameplan.
Amazon Has Followed Suit
Amazon and other retailers’ search tools need only index the products sold on their sites. They don’t have to answer complex questions, scouring the entirety of the internet in the process (like Google). They live by more basic principles, focused on relevancy and sales velocity. Their algorithms take the user’s propensity to purchase and meld it with the most relevant outputs based on the query. Reading into what the eventual purchase will be, while still providing results that satisfy the original input. Essentially cutting to the chase by shortening the path to purchase.
Amazon also cut to the chase when it came to sponsored ads as well. They accomplished this by flooding their layout with ad placements. There was no tip-toeing, or slow process of inundation. Their Sponsored Brand, Sponsored Product and Sponsored Display ads have occupied real estate across almost every inch of their SERP for some time now.
Amazon has made their layout into a battlefield for sellers. It’s ad-heavy and conquest friendly. But as they say, it’s the cost of doing business. Sellers that need to be on Amazon are willing to put up with it because they need to be on Amazon.
WMC and Roundel’s Approach
Walmart Connect (WMC) and Roundel originally took a different approach to sponsored search. Whereas Amazon didn’t pull any punches, WMC and Roundel let organic listings shine – offering sponsored search as a supplemental effort, as opposed to a pre-requisite.
Both retail media networks initially slotted specific – less intrusive – locations where sponsored search could exist. They also held true to the mantra of paid is incremental. Within both networks, competitive conquesting is not allowed. This is a consistent theme across sponsored search platforms not named Amazon. Its what makes platforms like Walmart Ad Center, Criteo, Citrus and PromoteIQ havens compared to Amazon Advertising.
Sadly, approaches like the above don’t keep the lights on. That’s why both Roundel and Walmart Connect have recently announced large scale changes to their search layouts. Walmart’s adjustments are less earth shattering, seeing as they’d made a similar, prior adjustment that softened the blow. But for Roundel, the changes represent a more impactful shift.
Roundel’s New Layout
Roundel has officially update their search experience on both Target.com and their app. The changes are in response to a three-month test designed to evaluate their current SERP, in hopes of finding a better balance between organic and sponsored search listings.
They’ve historically only allowed ads within specific positions – namely the 3rd, 6th, 9th and 12th spots. This type of layout ensured organic listings occupied no worse than the first and second slots for any search result on Target.com, lending a great deal of credibility to their SERP. It also ensured sponsored ads could be eased into the overall scheme, instead of being thrust into the top position right from the get-go.
While Target-focused sales teams appreciated this approach (and its focus on organic), it left something to be desired regarding the effectiveness of marketing efforts (sponsored ads). If sponsored ads only ever existed in – at best – the third slot, how were advertisers expected to truly steal category share?
This newest iteration as Target describes it, was based on guest behavior, sentiment, and experience. These three factors drove the reshuffling, which now allows advertisers to appear in the 1st, 2nd, 7th, 8th and 9th positions. Even though it’s a small shift, it represents a substantial change.
It now puts an even heavier burden on sponsored ads. For example, a seller could own the top spot organically. But with this new layout, they’re going to need to invest aggressively in sponsored search to truly own the top spot. It also limits the effectiveness of organic listings. If the first and second slots can now be bought, organic listings are going to drive fewer eyes.
Long story short – it means more volume for sponsored ads and less visibility for organic. It also opens category searches up to the highest bidder, representing a hybrid approach between what Target used to be, and what Amazon has become.
Walmart Connect’s New Layout
Walmart Connect is a slightly different story. They already had sponsored ad placements in the first two positions of their SERP. Then in late April, they added two more in-grid sponsored ad slots – set to occupy positions three and four – based on testing.
This new layout means the entire first row of search results on Walmart.com can now be occupied by sponsored placements, in addition to the area above the first row, which is designated for their Sponsored Brand Amplifier ad type. Below are examples of the older and newer iterations of the SERP.
The entire first row being occupied by sponsored ads is very reminiscent of Amazon’s layout:
What to Expect Post Shift
With both Target and Walmart’s layouts revamping within a few weeks of each other, advertisers need to prepare for new outcomes.
Both retailers mentioned advertisers should expect increased volume, improved CTRs and higher ROAS. The volume and CTR upticks make sense. Sponsored ads will now be in more prominent – thus, more clickable – locations within their respective SERPs. This will undoubtedly lead to increased impressions and higher CTRs, which will in turn lead to more clicks and spend.
The mention of increased ROAS might be harder to come by. Making an ad more visible does not necessarily mean it will convert more often. Factors beyond the prominence of a placement determine whether or not a user converts. More accurately, thanks to these changes, advertisers on both Target.com and Walmart.com can expect more overall revenue – not more revenue per dollar spent.
In the end, each of these platforms is slowly following the path Google has set over the course of the last ten plus years. Testing, adjusting, reformulating. Figuring out what works, what doesn’t. Then laying out the best way to monetize the pieces that stick.
With their recent layout changes, both Target and Walmart Connect aren’t being greedy, they’re simply doing what they should be doing. The path has already been carved by Google and Amazon, they simply have to follow it.
