Google: Retail ad sales reveal "brick-and-mortar isn't dead"

As shoppers return to stores, more advertisers are including in-store sales alongside e-commerce goals, driving omnichannel growth, Google said.

Google's parent company Alphabet published stellar third-quarter results on Tuesday, largely driven by ad sales in the retail sector. But strong digital ad sales doesn't mean shopping has moved completely online, Google's Chief Business Officer Philipp Schindler said on an earnings call Tuesday.

"We've seen explosive growth in digital over the last 20-some months, but as the world begins to reopen, shoppers are returning to stores," he said. "Brick-and-mortar isn't dead. Instead, omnichannel is in full force." 

The evidence of that is found in Google Search queries. Searches for "open now near me" are up 4x globally versus last year. Strong growth in local shopping queries means people are researching their visits to stores more often before they go, Schindler said.

"As a result, we've seen more advertisers include in-store sales alongside e-commerce goals to drive omnichannel growth," he continued. "Adoption has nearly doubled over the past year."

Schindler cited Kohl's as an example. The retailer launched curbside pickup just two weeks after its 1,100 stores shut down at the start of the pandemic. After testing local inventory ads in Q4, Kohl's went "all in" on omnichannel bidding across its paid search portfolio, the CBO said, and is leaning heavily into a full-funnel approach on YouTube. Kohl's net sales were up 31% year-over-year in Q2, led by higher foot traffic and continued strength in digital. 

Schindler outlined ways Google is making it easier for businesses to show the local services they offer across Google Search and Maps: Local inventory ads highlight which products are in stock and when to pick them up. Retailers can add "free shipping" and "easy return" annotations across Search and Shopping. Google Lens creates "instantly shoppable" images. Plus, Google rolled out a new visual browsing experience on Search. 

There's more to come, including tapping into commerce on YouTube, Schindler said. "We're still in the early innings of what's possible."