As Google’s advertising growth is slowing, it’s getting more aggressive in courting retailers. And it’s bulking up its capabilities as a commerce platform to do so.

Most recently, the company announced last week that it is rebranding its Google Express marketplace as Google Shopping, as well as expanding visual shoppable ad formats to new platforms like YouTube and Google Images. It’s also been adding more merchants to its marketplace over the past year. According to e-commerce research firm Marketplace Pulse 1,450 retailers are now on Google Express, up from 27 two years ago.

The company has also steadily been adding new merchants to a program it first announced at Shoptalk in 2018 called Shopping Actions. The program allows retailers to promote their products across multiple Google platforms, including Google Images and Google Assistant. Customers of participating merchants can also shop via a universal cart that worked across multiple properties, including mobile and desktop. Since launching, the number of participating merchants has increased “sevenfold,” according to Google. 

With these new initiatives, Google is pitching to retailers its ability to reach customers on multiple platforms like video, image, text and voice, as well as to provide a more seamless payment and checkout experience. It’s also taking on some of the logistics work that’s become a headache in the e-commerce age, by pledging to communicate with customers about shipping issues and returns on behalf of retailers. And, with the relaunch of Google Shopping, Google is using its treasure trove of data to create a personalized homepage that it’s hoping will make Google the first destination for more shoppers, though the company hasn’t shared what data it shares with retailers.

Google’s push into commerce comes as shopping online has become increasingly splintered. Platforms like Instagram fuel brand discovery, while Amazon serves increasingly as a catch-all for product searches: according to marketing analytics firm Jumpshot, the majority (around 54%) of product searches start on Amazon. By improving its product discoverability functions, Google could serve as both a point of inspiration as well as a convenient shopping destination.

Growth of Google’s ad revenue also hinges upon its ability to become a shopping destination. With $116 billion in advertising revenue, Google is still the largest recipient of digital advertising dollars in the U.S. But its ad revenue has been slowing for the past four quarters — in Q1 2019, its ad revenue grew 15% compared to 24% year over year. Google risks losing out on advertising money from retailers to Facebook, which is also aggressively moving into commerce with the launch of Instagram checkout and Amazon. In April, Amazon reported $2.7 billion in advertising revenue during its first-quarter earnings calls, a year-over-year increase of 36%.

“Google is now racing to become a power player in commerce faster than Amazon can become a power player in advertising,” said Andrew Lipsman, e-commerce analyst at eMarketer.

Over the past year, Google has recruited more smaller and medium-sized retailers, according to Marketplace Pulse, with many of them already selling on Amazon, eBay and Walmart marketplaces. According to the Information, Google has tried to recruit smaller retailers by telling them “it has plans to become a retailer in its own right, with the clear subtext that it will be a better partner than Amazon.” It’s also courted other major retailers like Nike, Best Buy, Sephora and Ulta Beauty to first become part of its Shopping Actions program, which tried to entice retailers with the promise of giving its customers access to more seamless checkout options like a universal shopping cart and one-click reordering. Participating merchants are also able to sell their products through Google Express.

But even with the addition of new merchants, Google’s marketplace generated just $1 billion in sales last year, according to the Information, giving the company a long way to go until it can catch up with Amazon, which did $142 billion in product sales last year. Lipsman said that rebranding Google Express as Google Shopping was a much-needed step in raising brand awareness for the marketplace, as “the name says exactly what it is,” and that many consumers don’t even know that it existed.

The rebrand has proven too late for some retailers. Sephora, which started selling on Google Express in October, stopped selling on the platform in April, according to Marketplace Pulse. A Sephora representative confirmed in an email that the company stopped selling on Google Express, but the company declined to comment as to why. According to Marketplace Pulse, Walmart, PetSmart, Whole Foods, Kohl’s, Walgreens, Home Depot and Bed Bath & Beyond also all stopped selling on Google Express within the past six months. It leaves a gap in Google’s marketplace as these retailers work on building out their own marketplaces and e-commerce businesses, but make room for Google to focus on the small- and medium-sized businesses that have helped fuel other platforms like Shopify and Amazon.

One way for Google to convince merchants, especially smaller ones, that its marketplace is worth their time and energy is to make all of its properties more suitable for brand building and product discovery. So over the past year, it’s taken a page from competitors like Pinterest and Instagram, and pushed more catalog-style formats like its Shopping Showcase Ads, which emphasize images over text. During Google’s Marketing Live event last week, the company noted that about 80% of traffic from Showcase Shopping ads to retailer sites are from new visitors just discovering the brands.

Apu Gupta, CEO of visual commerce platform Curalate, said it’s a play to create more advertising options for the top of the purchasing funnel, versus at the bottom of the funnel, where Google’s keyword ad formats have played an important role. But analysts are divided on how much interest Google’s new visual-heavy ad formats have drawn. Jon Reily, vp of global commerce strategy at Publicis Sapient, said that he “hasn’t seen much interest in it at all other than Google’s core customers.” But Gupta said that, among the 1,100-plus retailers his company works with, there’s been “fairly wide adoption” of the format.

“The recurring theme behind everything Google has announced was that search is going to become a much more visual space, and it’s going to be a much more inspirational space,” Gupta said. “It’s really designed to open up advertising to a part of Google that was previously hard for an advertiser to access.”

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