As you should know by now, Google recently announced that it was combining its free Google Product Search listings and Product Listing Ads (PLA) to Google Shopping, where all listings would be shown in an auction based process akin to PPC.
This is a significant change for retailers as it means that a significant percent of traffic that has until recently been free until recently, is now paid. Thus it is imperative for the retailer to focus on effectively managing and optimizing Google Shopping campaigns.
How Google Shopping Works: A Very Short Summary
Google Shopping works differently from regular search ads. In the case of search ads, campaign, ad group, keywords are managed in Google Adwords where the advertiser can change bids.
To run a Google Shopping campaign, the advertiser has to also set up a product feed with Google Merchant Center. The feed contains a variety of product parameters including product id, image URL, price, availability etc.
On the Adwords side, the advertiser has to set up PLA campaigns and ad groups that contain product targets (as opposed to keywords) and offer text. These targets are linked to the GMC account which reference specific parameters on the product feed. However, like regular search campaigns, the advertiser has to place a bid to participate in the PLA auction.
When a user types a query, Google will map the query to a specific product/target combination in the PLA campaign in Adwords and will return a product listing ad based on the parameters of the selected products in the GMC feed.