Product listing ads are also known as PLA ads or Google Shopping ads. In short, they're online advertisements that companies pay for on a cost per click (CPC) basis. Therefore, if your online store were to take out a product listing ad on Google, you would only pay for the times when a user clicked on that ad. No payments are made when users see the ad but don't decide to click.
In general, merchants purchase these product listing ads through Google AdWords. It's the most popular ad network in the world, but there are some smaller ones you can also look into.
You don't have to pay anything to signup for AdWords, so the only costs that come in are when users make those clicks. As for the location of the ads, they're placed on the side of Google search results and on the top.
Here's an example:
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