Google is changing Google Product Search to Google Shopping, and building it on product listing ads.

“When searching for great local restaurants, people want places to eat right there on the results page, not another click or two away. It’s the same with hotels, flight options, directions and shopping,” says Sameer Samat, Vice President of Product Management, Google Shopping. “Organizing these types of data can be very different from indexing the Web, because the information is often not publicly available. It requires deep partnerships with different industries—from financial services and travel to merchants who sell physical goods.”

This sounds very much like those paid inclusion results Danny Sullivan reported on this week, which we talked about here. Sullivan talked about Google “sponsored” results, which are being found in searches for hotels, flights and financial services – all of which are mentioned in Google’s announcement today. He quoted Google’s Amit Singhal as saying:

“Fundamentally, time and time again, we started noticing that a class of queries could not be answered based upon just crawled data…We realized that we will have to either license data or go out and establish relationships with data providers…To be super safe, where we have a deal between Google and another party, we didn’t want to call those fully organic results, because they are based on a deal…After much debate, we said “OK, let’s be extra cautious. Let’s call it ‘sponsored’ so that we tell our users that there’s a special relationship that Google has established with someone.”

In today’s announcement, Samat says, “We believe that having a commercial relationship with merchants will encourage them to keep their product information fresh and up to date. Higher quality data—whether it’s accurate prices, the latest offers or product availability—should mean better shopping results for users, which in turn should create higher quality traffic for merchants.”

Google talks about how to create a new product listing ad here:

The transition from Google Product Search to Google Shopping will be complete in the fall, Google says. Google is giving Merchants who create product listing ads by August 15, a 10% monthly credit of their total Product Listing Ad spend through the end of the year. Current Product Search merchants can get $100 AdWords credit toward the ads if they fill out a form before that date.

Google says ranking in Google Shopping will be based on “a combination of relevance and bid price,” the same as Product Listing Ads today, and those who want to stand out can participate in Google’s Trusted Stores program. The program saw a limited launch last fall:

Merchants will also be able to standout, using special offers, Google says.

In Google.com results, the Shopping results will appear as “sponsored,” as discussed by Singhal. Google shows the following example for “telescopes”:

It sure seems like there are a lot of ads “above the fold”. I thought Google didn’t care for that much.

“These new formats are clearly labeled ‘sponsored,’ and take space currently occupied by AdWords,” says Samat.

But it looks like there will be plenty fo AdWords ads on the page too.

Google is, however, also putting the “sponsored” results in the area where other queries will return Knowledge Graph results:

These types of search results have been described by Google recently as a “third kind of thing” between organic results and ads. Sullivan has made a point to referr to them as “paid inclusion” results, and to point out that this kind of thing was considered “evil” by Google back in the IPO days.

Things change (and Google doesn’t call it paid inclusion).