As AuctionBytes reported last month, Google has been testing its new Product Listing Ads ad format in live searches, and yesterday, it confirmed it was expanding the testing - just in time for the holiday shopping season. Not only do these advertisements include product photos and prices, but retailers pay only when a shopper clicks on an ad and makes a purchase on the retailer's website. This CPA (Cost Per Action) model offers merchants a way to reach a larger audience on Google.com with none of the listing fees associated with ecommerce marketplaces.

Google Product Listing Ads works with an advertiser's Google Merchant Center account (Google Base) to serve highly targeted ads. However, the ads are in beta testing and are only available to a limited number of retail advertisers.

Colin Sebastian of Lazard Capital Markets wrote about the new ad format in a report today, "With the lines now blurring between search and comparison shopping, we note the potential to create additional competition for traditional online marketplaces (e.g., AMZN and EBAY)."

But the new ad format goes beyond comparison shopping.

AuctionBytes wrote a year ago about such a hypothetical offering which we dubbed Google ProductAds (link to article). We noted that such a program would offer merchants a way to have their product listings appear on third-party, non-marketplace sites, such as blogs, newsletters, niche collectibles content sites and hobby/fan sites, and how such an offering could offer these sites the ability to offer a classifieds.

"Instead of attempting to drive ecommerce to a single core site, Google instead will be taking ecommerce and integrating it into already-vital online communities and content sites."

Comment on the AuctionBytes Blog - "Is Google Poised to Rule the Ecommerce Universe?" (November 1, 2008)