New Ways Top Retailers Are Using Paid Search To Drive Revenue

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We sat down with Garrick Baxter, Ecommerce Marketing Manager for Oriental Trading Company, to discuss the top new ways retailers are utilizing paid search to drive more sales. This report captures the conversation and summarizes the key learnings on how retailers can utilize paid search data in nontraditional ways to increase customer acquisition and lifetime value, identify new product opportunities, and better understand consumer behavior.

KEY INSIGHTS INCLUDE:
What makes retail paid search unique from any other industry
and why it should be treated differently
Ways to plan for, and predict, seasonality
How to use paid search to launch a product
Which performance metrics are the best indicators of success
How paid search data can be used by the merchandising and catalog teams

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New Ways Top Retailers Are Using Paid Search To Drive Revenue

  1. 1. MAKINGRETAILPAID SEARCHPREDICTIVENew Ways Retailers AreUsing Paid Search ToDrive Profitable RevenueSEARCH REVENUE REPORT
  2. 2. S ince its arrival twelve years ago, paidsearch has evolved from a channel to a strategicasset that can be used to help influence and drivebusiness functions outside of ecommerce.Over time, we’ve seen three waves of paid search.The first wave started in the early 2000’s whenPPC was just a tactic. Competition in this spacewas low and retailers used paid search to testmarketing strategies, drive efficiencies, andcollect customer data.As competition emerged and technology wasneeded to scale search programs, the second FEATURING: Garrick Baxter Ecommerce Marketing Manager, Oriental Trading Company Garrick Baxter has twelve years of online marketing management experience. As the Ecommerce Marketing Manager for Oriental Trading Company, Garrick manages paid search advertising, promotions, creative, and email marketing strategies to drive online customer acquisition for three separate business units.wave emerged. Retailers began to treat PPC as Ashwani Dharan independent marketing channel that needed Chief Client Officer, Adlucentattention and optimization. The value of paid Ashwani Dhar brings over 20 years of sales,search moved beyond the marketing organization marketing, and business development experienceas insights derived from PPC data were used for to his role as Chief Client Officer at Adlucent.inventory planning, product investments, and more. Ashwani oversees a team of Retail marketing and search experts who work to drive profitableWe’ve now entered the third wave of PPC which revenue growth for the industry’s top brands.centers around predictive paid search. Smartretailers are capitalizing on demand data, using it Meaghan Danielsonto influence pricing, inventory, and merchandising Client Manager, Adlucentdecisions. Retailers are also using shopping Meaghan Danielson has spent the last four yearsanalytics to become more predictive about search helping top retailers build superior paid search andrevenue and spend. Keywords have become online marketing programs. She now manages alinked with product and customer performance to team of search marketing professionals who rununcover patterns and signals to help influence key advertising programs for leading brands.business strategies.Paid search will continue to evolve and its future is “Paid search has the opportunity to deliverbright. When retailers become predictive with their exactly what the customer is looking for.search strategies and dig into shopping analytics Natural search can do it to some degree,data to influence key business decisions, they will but it is limited. Email can certainly do it,be able to achieve amazing results. but it is mainly to your existing customers. It doesn’t have a new customer audience likeThis paper is a summary of a presentation paid search does. Affiliates and comparisonoriginally given by Garrick Baxter, Ecommerce shopping engines have completely differentMarketing Manager at Oriental Trading Company, value propositions, so paid search isAshwani Dhar, Chief Client Officer at Adlucent and absolutely the channel where you can deliverMeaghan Danielson, Client Manager at Adlucent. your true message to existing customersGarrick and Meaghan share key ways retailers can and to prospects.” –Garrick Baxterutilize paid search to drive performance.
  3. 3. WHY RETAIL PPC IS UNPARALLELED synergy between online and offline channels.Retail is unique from all other industries and Many of their customers who receive a catalog insearch strategies should be designed specifically the mail take the time to earmark pages and circlefor these distinctions. Such differentiators include their desired items before going online to makelow barrier to entry, quick sales, and high volatility. a purchase. The internal catalog team has eachRetailers must focus on customer acquisition edition planned 12-15 months in advance. In orderand the frequency of conversion. Sales cycles to integrate marketing messaging and promotions,are often shorter as consumers are more likely the paid search team must follow the sameto make impulse decisions due to a low barrier to planning timeline; however, they must also remainentry. Finally, seasonal shifts are largely driven by responsive to real-time changes.changes in consumer behavior.Paid search accounted for 47% ofonline advertising spend in 2011–IAB Internet AdvertisingJust as the retail industry is unique, so is each 9/27 10/11 10/25 11/8 11/22 12/6 12/20 1/3 1/17retailer. Oriental Trading Company, number 73 onthe IR 500, is a party supplies retailer that drives It’s important for retailers to remain flexible andrevenue through catalog and online sales. For OTC, build campaigns around value propositionsdeveloping a deep relationship with each customer that are important to customers. OTC monitorsso that they become a customer for life is at the multiple data sources to identify customer needscore of their success. Because so much of their and predict seasonality. Some of these sourcesproduct line is tailored to the many life experiences include historical paid search data, real-timea customer has throughout the years–birthdays, search queries, customer ratings and reviews,holidays, weddings–they strive for repeat and call centers. In addition to historical databusiness through customer satisfaction. OTC from PPC, retailers should review product data,does this by establishing a close relationship with promotional changes, and macro-level marketeach customer and providing the most valuable trends in preparation of a seasonal spike.products and services based on customer needs.Responding to consumer behavior through Last Halloween season, Oriental Trading Companypaid search in real-time has become a key decided to extend their target demographicdifferentiator for the party supplies giant. beyond their typical party planner market. OTC and Adlucent used a variety of data sources to determine if the product offering was successful.90% of retailers surveyed said that They started by investing heavily in the top ofsearch engine marketing is one of the search funnel, an area where clicks can cost upwards of $4-$5 each, simply to drive volumetheir top three most effective and acquire enough data to determine if theircustomer acquisition tools strategy was effective. What they found is that adult costumes were not resonating. Although they-State of Online Retailing Report 2011 were in the middle of the seasonal spike, OTC was able to quickly react and change their strategy to focus promotional dollars on children’s costumes. They didn’t stop there. After the Halloween seasonTHRIVING IN SEASONAL FLUCTUATIONS was over, the OTC team began collecting insightsOriental Trading Company has sold through from the promotion to use in planning for the 2012catalogs for over 80 years. Although part of their season.business has gone online, there is still a tight
  4. 4. INVENTORY AND CUSTOMIZED BIDDING EVOLVING PERFORMANCE MEASUREMENTWhile paid search is used to sell products, some Five years ago, paid search success was measuredsearch strategies work too well, resulting in by metrics like impressions and volume. Over time,inventory depletion, fill rates, and backorders. revenue, profit, and order count became theAdlucent’s Deep Search™ software integrates a standard. Today we’re seeing metrics like newretailers inventory data into customized algorithms customer acquisition, attribution, and lifetimein order to optimize ad spend. value becoming critical measures of success for executives.The holiday season can represent Garrick Baxter suggests retailers focus onanywhere between 25–40% of brand exposure and customer acquisition. PPCannual sales for retailers Managers should track where seasonal keywords lead to a conversion in brand terms; as well-National Retailing Foundation as customer acquisition insights like net new customers, total acquisition cost, and lifetimeAccording to Meaghan Danielson, “we try to be value. Adlucent recently released a new piece ofcautious and not overbid on low inventory items technology that gives retailers the ability to trackso that retailers won’t overpay for an inevitable their new customer acquisition efforts throughsale–one that you would get whether you were paid search. As Meaghan explained, “we areadvertising in position one or position five.” doing this by tracking the unique customer IDAdlucent makes recommendations for items that information and also the order ID informationcould benefit from more inventory investment. in order to measure the trends for new, existing, and reactivated customers across keywords,Garrick shared a story about a product that OTC categories, products, cart size, any othercarries called the Peppermint Pig™, an item that’s segmentation strategy that a retailer might need.”part of a holiday tradition for many families livingin the Northeast. Two years ago, Oriental Trading It’s important to note that each retailer is uniqueCompany partnered with Adlucent to promote the and performance metrics vary. Metrics areproduct online. An aggressive paid search strategy constantly evolving based on retailer goals,was put in place and by Cyber Monday, the product strategies, and consumer behavior. PPC Managershad sold out, leaving many potential customers must act as educators, translating the metrics thatdisappointed. After analyzing the results, OTC are being delivered by the ecommerce team anddetermined that the Peppermint Pig would be a distributing them throughout the organization.great order starter so when the next holidayseason rolled round, they partnered with Adlucent PROMOTIONAL STRATEGY AND TESTINGto promote the product over a longer period of Paid search is a great way to test promotions.time. With the new strategy in place, OTC spent Garrick Baxter explains, “I think paid search hasless in advertising costs and increased customer the unique opportunity to be a testing ground forsatisfaction. the entire organization. It will definitely help you zero in on the value of the new customers that you do acquire. It helps you determine loss leaders and certainly what is contribution neutral.” Only 32% of retailers haveRetailers should always look beyond keyword level consolidated the cross-channeldata to avoid pushing a product into the highest shopping experienceposition and driving inventory to zero. By factoring -National Retailing Foundationin product and inventory data in conjunction withkeyword level data, retailers will have a much moreefficient search program.
  5. 5. To determine the effectiveness of a promotion, IMPROVING CROSS-CHANNEL PLANNING retailers should measure the lifetime value of each Insights derived through paid search should be converting customer. They should also monitor used throughout a retail organization. other channels such as the call center, social media, and customer reviews to gauge customer eCommerce satisfaction.   Catalog Merchandising Oriental Trading Company measures the lifetime value of a Integrate paid search data throughout the organization customer that comes in through each promotional channel. to help influence critical business decisions. DRIVING SUCCESSFUL PRODUCT LAUNCHES Adlucent partners with Oriental Trading Company’s Paid search is an important testing ground for merchandising team to deliver a dashboard of product research, development, and launches. Two real-time paid search results with information years ago, Oriental Trading Company discovered on ROI, clicks, impressions, and more. With this a new product opportunity. OTC noticed a high information, OTC’s merchandising team can volume of searches for Silly Bandz–silicone work with the IR marketing team to determine bracelets popular among children. The decision which products and subsets of those products was made to invest in this fashion trend, but they should be shown and promoted on the site, find had to move quickly to get the most out more relevant landing pages for new queries, of their investment. and optimize landing page copy based on search terms. A retail search partner can also help predict After launching promotions for Silly Bandz, which merchandise will have the highest sales Oriental Trading Company used paid search data before a product launch, giving the marketing and to monitor customer engagement, conversion, merchandising teams time to develop a promotion and consumer behavior. Adlucent delivered daily to maximize sales. reports showcasing rising trends, additional value propositions, and keywords that OTC should be Adlucent also partners with OTC’s catalog team using. The result was a successful product launch to prepare for spikes in web traffic. Information across multiple channels. such as catalog drop dates and recipient lists are collected in order to build targeted value propositions and bidding strategies. OTC’s USING PAID SEARCH AS A RESEARCH TOOL catalog team can also use search data to analyze the behavior of consumers who don’t convert Mine queries for potential new products immediately. Through this data, they can measure01 Review search queries regularly to identify sales per page to determine if the correct products new product and category opportunities are being promoted, measure the success of promotions on various customer segments, and Look for conversion changes in older products compare the sales of products that come from02 Customers will tell retailers when their products paid search against other marketing channels. are stale or irrelevant. Use this data as an indicator that it’s time to replace or create new products Paid search is a great way for the marketing, merchandising, and catalog teams to test Monitor bounce rates promotions and new products thanks to the ease03 A high bounce rate can mean messaging is of implementation and its affordability. not matching customer expectation. Look for opportunities to change marketing copy, landing page design, or location
  6. 6. PARTNERING WITH AN AGENCY KEY TAKEAWAYS When evaluating potential paid search partners, Look for a paid search partner that: Garrick suggests four key factors to look for: » Looks at all data sources when anticipating Aligned Goals seasonal spikes01 There are a lot of talented search providers, but they are often too focused on their formula » Doesn’t stop at keyword-level data, but for managing paid search. According to Garrick, monitors product and inventory data as well “Adlucent is absolutely flexible to measuring success to your organization. This was absolutely » Plans, executes, and measures cross- hands-down something that I wanted from channel promotions within your brand values a partner, and we have gotten a great deal of success from that.” » Uses paid search to test promotions before they are launched in other marketing channels Performance Model02 Determine whether an agency or performance » Uses paid search data to identify new model is more aligned to your organization. products and reacts to insights derived from “Adlucent manages their performance and your data in real-time compensation models according to what makes sense and what makes success translate to » Engages in larger business discussions and your organization,” Garrick shared. translates that data into an actionable paid search strategy Retail Expertise03 Garrick explains, “Adlucent has awesome industry experience. Every algorithm for every Adlucent is a marketing technology and analytics Adlucent client is unique to that client. All of us agency based in Austin, Texas, focusing solely on are looking for a game-changing partner. It’s your retail and eCommerce companies. Leveraging company, and this algorithm is going to perform its Deep Search® search marketing and retail exactly to your business performance, and more analytics platform, Adlucent’s experts help the importantly to your customers.” smartest retailers acquire new customers and grow revenue profitably through digital marketing. Makes Recommendations Beyond Paid Search Expanding from a decade-long relationship with04 Ensure that your paid search partner is talking Amazon.com, Adlucent’s current client base with other departments within your organization. includes eTail and multi-channel brands such Collaboration and engagement are critical. as Anthropologie, Buy.com, Free People, Jewelry Television, and Oriental Trading Company. Contact Us 2130 S. Congress Ave Austin, TX 78704 800-788-9152 solutions@adlucent.com © Adlucent

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