Ten Ways Retailers Can Drive More Revenue Through Paid Search


Published on

The growth of e-commerce shows no signs of slowing.
$14.8 billion was spent on paid search in 2011, but many retail search programs experience average performance and wasted ad spend. The way your customers are shopping is changing. Thanks to explosive growth in mobile, online and brick-and-mortar stores are converging. Shoppers are spending more time researching products and reading reviews from others like them in order to make more informed product decisions. Capturing them as they are comparison shopping and when they're ready to buy are critical moments that translate into millions of dollars in revenue every year. Learn ten ways retailers can adjust their paid search program to increase web and in-store conversion.

Why retail paid search should be managed differently than other industries
Tips for improving your keyword campaigns
How to use user generated content to predict sales
Ways to integrate paid search with your product inventory to optimize ad spend
How to target higher value customers

Published in: Business, Technology
1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Ten Ways Retailers Can Drive More Revenue Through Paid Search

  1. 1. RETAILPAIDSEARCHGUIDETen Advanced Tipsfor Driving More RevenueThrough Paid SearchRETAIL INSIGHTS E-BOOK #searchguide
  2. 2. RETAIL PAID SEARCH GUIDE 01THE RISE OFPAID SEARCHInternet Advertising revenue climbed to $32 billionin 20111, an increase of 22% over the previousyear—and the growth of online advertising isshowing no signs of slowing. The bulk of thisspend comes from search advertising, whichjumped 27% 2. Paid Search continues to be acritical factor in driving revenue for retailers.PAID SEARCH FOR RETAIL IS UNIQUERetail paid search is complex and requires a deepunderstanding of retail as an industry, the needsof specific retailers, and consumer behavior.Managing the different aspects of paid search,such as product categories, sub-categories,individual products, and promotions in real-time isdifficult for many organizations.We’ll explore ten ways retailers can drive morerevenue in 2012 and beyond through paid search. #searchguide
  3. 3. RETAIL PAID SEARCH GUIDE 02 USE A CUSTOM01 ALGORITHM At the heart of every paid search management AN EFFECTIVE RETAIL ALGORITHM MUST: platform is an algorithm—a set of mathematical equations that uses a variety of inputs to achieve 1. Be Retail-Centric your retail goals. Most search platform vendors It must take into account all of the retail-specific take a one-size-fits-all approach in developing factors that affect paid search campaigns. This their algorithms. This would work fine if all types includes pausing keywords that advertise out-of- of online sellers, all products, and all customers stock products, establishing the appropriate look- were similar, but retailers have unique business back period, adjusting campaigns for seasonality, structures and goals. An algorithm must be able and factoring in customer acquisition cost and to report on metrics such as; margin, marketing lifetime value. contribution, the cost to acquire a new customer, 2. Be Unique the total cost per order, and more. In nearly any It must be specific to the unique needs of the complex retail scenario, a custom retail algorithm retailer, reflecting their product categories and is essential. sub-categories, their specific customers’ buying The kinds of products e-tailers sell are very behavior, and their strategic business objectives. different than what travel agents, financial firms, and auto manufacturers sell online. Differences 3. Be Adaptable in product offerings lead to major variations in The algorithm must be continuously refined to terms of how buyers of certain products types reflect newly-learned information. shop, which in turn dictates how their algorithms 4. Be Inclusive of Marketing Promotions should be developed. The algorithm must be actively managed to coordinate with your changing offline and online marketing efforts. Conversion rates (CVR) change when retailers run promotions or offer discounts. Most search platforms are not “told” about these short-term events. As a result, their algorithms observe sudden spikes in CVR and falsely assume they will continue forever. And when the promotions end and CVRs fall, these platforms will over- penalize the involved keywords for dropping in effectiveness.CASE STUDY: Jewelery Television Overcomes Paid Search PlateausAfter implementing a custom algorithm, Adlucent employed two principal strategies to help JTV drive revenueand improve efficiency.1. Restructuring JTV’s online advertising accounts:Adlucent added 51,000 keywords, along with more than 9X as many campaigns and 10,000 more ad groupsto better represent the quality scores.2. More active bid management:Using its retail-optimized Deep Search™ software platform, Adlucent was able to make more frequent bidchanges in response to real-time campaign performance data.In less than a year, revenue from paid search soared 78% while margins improved 25% for JTV   #searchguide
  4. 4. RETAIL PAID SEARCH GUIDE 03 MANAGE YOUR 02 BRAND & NON-BRAND KEYWORDS SEPERATELY GOALS FOR BRAND & NON-BRAND TERMS The key is to manage brand terms separately Most retailers do not manage their brand-related from non-brand terms, with different cost of sales (trademarked) and non-brand (product-specific) (COS, or A/S) goals. Your expectations for CVR keywords independently. This is a mistake and and ROAS should be different as well—they’ll be a missed opportunity. Non-brand terms are best lower for new customers, but it is typically worth for new customer acquisition. While brand terms it in the long-run. assist in closing a sale, the customers most likely to encounter these terms are usually already THE PITFALLS OF BLENDED GOALS acquainted with the retailer. Both brand and non- The goal of paid search is to increase your reach brand terms are important, but they need to be and acquire new customers. By aiming for a managed separately. blended COS, you are deterred from growing non- brand traffic. In fact, you cannot increase non- Brand campaigns typically have brand traffic without simultaneously increasing“57% of online impressive performance stats brand searches or you will disrupt your blended average. Since brand searches are influenced including high click-through rates shoppers begin (CTR), high quality scores (QS), by awareness generated through a multitude of marketing channels, it does not make sense high conversion rates (CVR), low their shopping cost per click (CPC), and high for you to use a blended average. The result of blending brand and non-brand targets is an return on ad spend (ROAS). These process from a campaigns perform well because overemphasis on navigational brand traffic and a de-emphasis of building long-term growth the customers clicking on these search engine” ads already know you — from a through non-brand terms. prior purchase, previously-seen – E-tailing Group ad, search result, or your general THE HIDDEN VALUE OF BRAND TERMS: reputation. 1. Organic Search Brand terms serve to drive repeat customers, The success of brand terms is indicative of the but they are still valuable. Having a branded ad overall success of your brand marketing initiatives. accompany organic results still drives incremental Advertising your brand on search engines closes value. On average, for advertisers who appear the loop on other marketing initiatives, but does in the top rank organic slot, 50% of ad clicks are little to acquire a new customer; which is the real incremental. This means that half of all ad clicks value of search engine marketing. are not replaced by organic clicks when search ads are paused.4 We know 57% of online shoppers begin their shopping process from a search engine rather 2. Messaging than going directly to retailers’ websites.3 Even Take a look at the products that are being sold if customers already have an affinity to buy from through your brand terms. Is there adequate you, they are still likely to use a search engine and   keyword coverage on them? Are you using them to click on your branded ad to come to your website. test promotional ad copy and messaging? There are a lot of insights hidden here. This means that with brand terms, you are paying for a click that was used as a navigation shortcut. 3. Competition It can still result in a sale but you should pay less By purchasing your brand terms you are for that click than one from a new customer. protecting yourself from affiliates and competitors who may be bidding on them. #searchguide
  5. 5. RETAIL PAID SEARCH GUIDE 04 USE RATING & REVIEWS 03 TO PREDICT PRODUCT CONVERSION RATES READ THE REVIEWS The highest-rated, most reviewed products can If you’re paying attention to how Amazon.com then be promoted over the lowest-rated, least- merchandises products, you might suspect that a reviewed products. Once actual performance data product’s customer reviews can serve as a viable has begun to accumulate, reliance on predictive proxy for conversion rate (CVR). proxies can be reduced. The higher the ratings, the higher the CVR. This PREDICTING THE FUTURE makes sense as positive product reviews are given When building campaigns for new products to good products, and customers seek out products that have no historic CVR data or replacing an that are reviewed favorably by other customers. existing product with a newer model, you can use the review quantity and average rating as two Ratings & reviews on a website can boost conver- elements of a scoring mechanism to predict CVR. sion by as much as 10% to 40%.5 The particular values will vary by retailer, category, product type, and several other factors as every NO NEWS IS BETTER THAN BAD NEWS retailer is different. You might be surprised by the impact of ratings and reviews on CVR. Adlucent studied a major online You can promote the highest-rated, most reviewed retailer with 67,000 conversions on 9,800 products products over the lowest-rated, least-reviewed with at least three reviews. The products were culled products. Once you begin accumulating actual to try to isolate the effect of ratings and reviews performance data, you can reduce your reliance on from other factors, such as price competitiveness. predictive proxies. In the study, products A LENS ON THE BUSINESS“Ratings & reviews with an average rating of Ratings and reviews can help you improve overall 4.0 or higher showed a business performance, beyond just driving can boost conversion dramatic 65% higher CVR profitable revenue growth through SEM. versus those with a rating by 10% to 40%” of 1.9 or less. Adlucent First, you can match customer demand data found that products derived from search engines with ratings and – Bazaarvoice with no reviews actually review data to find areas of opportunity. Research had higher CVRs than the ratings and reviews of brands, categories of products with several bad reviews. In other products, and specific products that you do not words, it is better to have no reviews at all than a currently carry. Products with favorable reviews preponderance of negative reviews. Keep in mind tend to sell better, so consider adding these highly that it is still important to have some negative rated products to your catalogs. reviews as they add legitimacy to the rest of them. Second, products with unfavorable reviews tend to THE MAGIC NUMBER have higher than normal return rates. By merging In his article, “The Magic Behind Amazon’s 2.7 paid search performance data with ratings and Billion Dollar Question,” Jared M. Spool suggests reviews data, you can identify and resolve issues that the ratio of unit sales to reviews on Amazon. before they lead to margin erosion or customer com is 1,300 to 1. If accurate, you could deduce losses. In many cases, you can rectify issues by how well a product is selling simply by counting improving the product descriptions, resolving the number of reviews it has received (e.g., two delivery issues or fixing incorrect specifications. reviews = 2,600 unit sales). #searchguide
  6. 6. RETAIL PAID SEARCH GUIDE 05 In other cases, you can approach your manufacturer your merchandising division should be researching to share with them customer feedback and search the ratings and reviews of brands, categories of performance data so they can make the quality products and specific products that you do not control changes necessary to improve customer currently carry. satisfaction. Ratings and reviews are just one way for Improving performance means understanding and merchandisers to uncover new opportunities and delivering the products that customers want most. find the right product mix, but they are accessible To that end, in addition to the number of reviews, and should already be included in marketing plans. TARGET REPEAT04 CUSTOMERS The two most important metrics retailers should Figures like these explain why Zappos’ year-over- focus on are customer acquisition and lifetime year revenue growth resembles a hockey stick– value (LTV). Understanding the measurements hockey sticks are pretty linear after the blade. Once behind these two figures will help you drive a Zappos acquires a customer, they use numerous sustainable business. tactics to increase customer loyalty such as their one-year return policy, free shipping both ways, WHAT ARE YOUR CUSTOMERS REALLY and 24×7 phone-based customer service. WORTH? LTV is predicting the future value of a customer LTV AND PAID SEARCH and making the appropriate investments now to What does this have to do with paid search? secure that value. Managing LTV well makes the Well, knowing what a customer will be worth in difference between linear growth and exponential the long-run influences what a retailer should growth. Currently, only a handful of retailers be willing to pay to secure the position in search understand this and use it to guide their marketing results necessary to acquire that customer. and pricing decisions. Imagine if you knew that a customer was worth 3.6 Zappos does a phenomenal job of managing LTV. times the value you believe they have today. In that In 2008, CEO Tony Hseih released some striking case, you would be willing to bid much higher to data on Zappos’ success: secure a more competitive position because ads in the top positions capture significantly more traffic. » More than 75% of purchases are made by If you are not optimizing campaigns based on repeat customers lifetime value, you’re allowing another retailer to take future customer revenue that could be yours. » Over 50% of their customers purchase again » Repeat customers have a 27% higher average Retailers like Zappos and Amazon do not optimize order value (AOV) & will order 2.6 times more their campaigns to obtain one incremental sale. in the next 12 months (3.6 times per year) Instead, they optimize their campaigns around obtaining one incremental customer. Most » The 12-month LTV of a Zappos customer is retailers do not know the LTV of their customers. over $300, 175% higher than their first pur- chase indicates #searchguide
  7. 7. RETAIL PAID SEARCH GUIDE 06 It’s not always easy to measure, but it is important THREE KEYS TO LONG-TERM CUSTOMER to get started. One way you can start is to integrate ACQUISITION: your financial databases (that contain pricing and cost of goods sold data) with your marketing and 1. Manage your campaigns for non-brand (product) analytics partners. By bringing all this information terms and brand (trademark) terms separately. together into one place, you should be able to Spend more paid search budget on non-brand receive reporting and manage on LTV metrics at terms because they attract new customers. the keyword, brand, category, and retailer levels. 2. New customers tend to have a lower AOV than This knowledge will help you to make more repeat customers. To balance, set free shipping informed decisions about appropriate ad spend thresholds or other incentives a bit above your new for new customer acquisition. customer AOV. Managing Lifetime Value well means making 3. Do not use third party payment processors investments today that will yield multiplier-effect that will not share customers’ email addresses with benefits tomorrow. It is the difference between you. Email marketing is the most cost-effective slow-growth and hockey stick growth. marketing and retention tactic available. INTEGRATE05 INVENTORY Integrating paid search campaigns with product Start by creating custom landing pages for these inventory can lead to dramatic improvements products and direct traffic to them. This strategy in marketing campaign efficiency and revenue will often turn a non-converter into a customer. growth. In particular, doing just one straightforward thing—pausing keywords for products that have AVERAGE CONVERSION RATES CAN BE gone out of stock, and then re-starting them when MISLEADING the product is back in stock—can boost marketing In paid search terms, when a product goes out campaign efficiency by as much as 30%. of stock, CVR drops dramatically but most bid management systems don’t adjust right away. ONLY ADVERTISE WHAT’S IN STOCK Instead, their paid search decisions look at a rolling Conversion rates (CVR) approach zero when a average CVR which lags behind the real-time CVR, customer discovers that the product they are and averages decay slowly, even though the real looking for is out of stock. CVR may plummet. While waiting for the rolling average to catch up to the truth on the ground, ad After all, finding the same product from another site spend goes to waste and revenue drops. A more is often just a couple clicks away. Any campaign advanced strategy would re-allocate paid search that drives prospective buyers to a product that resources to a better performing campaign. you can not sell is a waste of your ad dollars. Ad budget that could have been driving immediate When an item comes back in stock, the problem sales of in-stock products goes to waste. Worse, is the same in reverse. Most systems, in response running ads for out-of-stock items provides a to rising CVRs, gradually “bid up” CPC ad spend, poor customer experience, eroding brand value, again based on rolling window averages thus preventing return visits, and reducing a customer’s under-advertising a hot item. lifetime value. Eventually, CPC rates should reach a correct level, ELIMINATE EXCESS INVENTORY but when the product falls out of stock, the cycle Retailers are constantly adding new products repeats. Furthermore, the effects of these cyclic and models, and discounting older items. dips in inventory cloud the pool of historic data Developing a strategy to reduce excess inventory from which future CPCs are calculated, causing and eliminate discontinued products is key. dramatic instability in a bid management system. #searchguide
  8. 8. RETAIL PAID SEARCH GUIDE 07 INTEGRATING INVENTORY INTO PAID SEARCH expense. This modeling can be used to quantify A smarter approach integrates retail inventory with the financial impact of not keeping the highest- paid search technology. margin products in stock. When a product goes out of stock, paid search THE EFFECTS OF LONG SHIPPING TIMES bids are paused and the portion of ad spend is Like out of stock products, long shipping times re-allocated to other well performing campaigns. also have a significant impact on conversion rate Efficiency is maintained, and waste reduced. (CVR). From a customer’s perspective, if a product Revenue grows dramatically as advertising dollars will not ship for ten days it might as well be out of are spent on the best-performing keywords. stock if another retailer ships faster. Inventory information should not just flow one- A marketing team must measure declines in CVR way. A search marketing division or agency should caused by extended shipping delays, then pause return business intelligence on which high-demand keywords accordingly. The ad spend can again be products are frequently out of stock or are on reallocated to higher converting products. the verge of going out of stock, helping to match supply and demand. Marketing budget dollars are limited. Do not spend them to advertise products that you can not sell. A marketing team should also help identify a Smart marketing management is also smart retailer’s most profitable products by factoring in inventory management. the costs of goods sold (COGS) and advertisingCASE STUDY:Buy.com doubles conversion rates and increases profitable revenueBuy.com set ambitious annual ROAS goals. In order to achieve them, Adlucent focused specifically onnon-branded, product-level terms and quickly expanded coverage across the entire Buy.com catalog.Adlucent leveraged its advanced retail Deep Search™ modules to optimize for revenue and profitability bypredicting key factors, such as product effectiveness and competitive seasonal trends, and then integrated withBuy.com’s inventory activity to effectively manage bids based on product availability and sales priorities.The result? Conversion rates doubled and profitable revenue grew. ADJUST FOR06 SEASONALITY Seasonality is a term retailers use to describe the as 300%—as customer urgency increases. For the fluctuating demand for products. It’s also one marketer, PPC advertising is more effective when of the most important factors that affects PPC customers are more motivated. conversion rates in online retail. Average order value often trends downward THE IMPACT OF SEASONALITY as customers become more focused on Seasonality influences conversion rates (CVRs) their purchases and are less susceptible to and average order value (AOV) changes during up-sells, cross-sells, and other point-of-sale seasonal spikes. recommendations. If their purchase is a gift, the price is often lower than what a person might Conversion rates often jump dramatically when spend on themselves. traffic spikes occur–for some categories as high #searchguide
  9. 9. RETAIL PAID SEARCH GUIDE 08 THE IMPORTANCE OF PREDICTION When modeling year-over-year changes, keep These dramatic shifts in CVR and AOV during in mind that year-over-year doesn’t always refer seasonal spikes have a significant impact on how to the same date of the year. Make sure to line aggressively you should bid in your PPC campaigns. up your dates correctly as customer buying behaviors vary by day of the week during the entire The model that illustrates the relationship between year and conversion rates trend upward during CPC and CVR is: holiday seasons. Overlaying these factors on top of your predictive model improves your campaign performance. (AOV x CVR) FOUR RULES FOR SEASONALITY: CPC = 1. Identify seasons and micro-seasons for every ROAS product. 2. Predict changes in AOV & CVR based on historical sales data, day of week, year, & other If you are adjusting the CPC in response to shifting factors. CVRs & AOVs, you are too late. Retailers need to predict seasonal changes and adjust proactively. 3. Adjust CPCs proactively in anticipation of Doing so involves modeling year-over-year forecasted changes. changes in CVR and AOV, normalized by recent 4. Plan for and measure the effect of roaming performance, then adjusting CPCs and building holidays like Easter and Mardi Gras on your campaigns—all well in advance of the forecasted traditional seasons and micro-seasons. seasonal spike. DEVELOP A MOBILE 07 STRATEGY Mobile has quickly become the next frontier for They may ask their friends which televisions they advertisers. Understanding the benefits and would recommend by posting the question on their psychology behind its use is critical. If you have Facebook wall. After narrowing their search, they simply designed a mobile friendly website and copied may visit a local electronics store to see the tv your web paid search strategy, you are setting in person. If they are still interested, the shopper yourself up for failure. Your goals for online and will likely access their smartphone and conduct mobile should be different. an in-store mobile search to compare prices and read customer reviews. Google named this process Developing a paid search strategy starts with of product research the Zero Moment of Truth understanding the psychology of your buyer. It is no (ZMOT). secret that shoppers today are spending more time doing research before making product decisions. Mobile paid search connects retailers and consumers at the ZMOT by enabling them to serve Let’s use an example personalized messages to shoppers during the“Consumer behavior of someone shopping for a flat-screen tv. research process. A shopper may not be ready to purchase at that moment, but a retailer becomes is a critical component This consumer is likely to start their search a part of an important branding opportunity that may result in a sale at a later time. This example of mobile planning” online, looking at various brands and shows why your mobile performance should not be measured solely on direct revenue, and should features. instead consider all potential facets of attribution. #searchguide
  10. 10. RETAIL PAID SEARCH GUIDE 09 Whether on a tablet or a smartphone, mobile within apps. As with paid search, consider mobile shoppers exhibit different behaviors. A person users’ behavior to determine the right approach for shopping on their smartphone may be searching developing and deploying mobile display ads. for a local business in order to make an immediate purchase. A tablet owner may spend his or her Whenever you are employing a new strategy, evening browsing the Internet, their mobile searches start by testing a small sample of your current influenced by offline advertising. Understanding product line. Create separate campaigns for your your customers shopping behaviors on mobile mobile ads as factors like bids, budget, keywords, devices is essential. Start by measuring the source and ad creative will be different for mobile. of your traffic. Determine which devices are driving Continuously monitor and refine your strategy to the most traffic and then optimize your mobile site maximize performance. Once you feel comfortable, or develop an app based on your buyers’ needs. add additional products from your portfolio. Once you have identified your target audience, FOUR TIPS TO HELP YOU GET STARTED it is time to optimize your customer acquisition WITH MOBILE SEARCH: strategy. What are the best methods to reach your prospective customers—paid search, mobile display, or both? 1. Study Buyer Behavior Analyze how people are shopping for you now. Do they do a lot of research before making a PAID SEARCH purchase? What tools do they use? Paid search will account for 40.2% of mobile advertising by 2015.6 There are many factors to consider when developing your campaign. For 2. Be Mobile Friendly It may sound intuitive, but only 22% of the IR 500 example, keyword length should be shorter for had a mobile commerce site or app last year.7 smartphones as users will spend less time typing Determine whether you want to invest in a mobile- search queries. Also, make sure your creative is friendly website, an app, or both. tailored per device and preferred action. Is your goal to drive an immediate online conversion or drive someone into a local store to buy? Bid more 3. Optimize Your Customer Acquisition aggressively for the higher positions during the Strategy evenings and weekends as this is when mobile Are you going to use paid search, mobile display, or users are shopping on their couches, browsing both? Manage your mobile and online campaigns for local information and searching for product separately and consider factors like bids, CTA, information in stores. keywords, and ad creative. MOBILE DISPLAY 4. Measure & Optimize Standard text ads can be purchased on smartphones Start by testing a small portion of your products. and tablets with full Internet browsers. If you Continuously monitor and refine based on participate in Google’s Display Network, your ads performance. can be placed on mobile-enabled websites and STOP PROMOTING POORLY08 PERFORMING PRODUCTS Why would you pay to promote a product with a and ignoring product returns, you’re allocating high return rate? dollars to the wrong areas and providing a bad customer experience. Analyzing returns data Spending money on products that frequently can provide valuable profit and loss benefits get returned may sound crazy, but many paid to retailers and their suppliers, and promote a search programs make this mistake. If you are positive brand experience. basing marketing campaigns on gross sales #searchguide
  11. 11. RETAIL PAID SEARCH GUIDE 10 FOUR WAYS TO PROVIDE A BETTER 3. Allocate Marketing More Efficiently CUSTOMER EXPERIENCE: Running campaigns for products with high return rates represents wasted ad spend. Don’t compound 1. Improve Product Merchandising these mistakes by extending their reach to valuable Look for products, categories and sub-categories website real estate or an e-newsletter promotion. that are showing high return rates. Pause campaigns for those products immediately, then research the 4. Deliver a Better Customer Experience cause and take the appropriate action. No customer enjoys the returns process, and once they go through it, they may never purchase from 2. Provide Feedback to Manufacturers you again. Make sure your website accurately It is sometimes necessary to involve the product’s describes the product you are selling and consider manufacturer to resolve a high return rate. It may eliminating products that can not be fixed. be a design issue, or something as simple as the product description or assembly instructions. TAKE ADVANTAGE OF09 SEARCH ENGINE OFFERINGS There are three key areas where you should 2. Rotating Ads for Testing g e t started—building out tight ad groups, Rotating ads for testing is one of the most powerful rotating ads for testing, and using focused search engine tools. A 10% improvement in CTR targeting. Focusing on these three opportunities on an ad will result in a 10% increase in overall will help you improve Quality Score (QS), lower the revenue on the account (assuming the same CPCs on your account, and increase your reach CVR and AOV) as well as improve overall CTR (impression share) on desirable keywords. and QS. Incremental improvements in messaging can help retailers avoid the dreaded plateau 1. Building Out Tight Ad Groups in performance. Google recently increased their campaign limits per account because they realized that advertiser’s 3. Using Focused Targeting had a strong desire to segment and target their In addition to basic location, language and network keywords further. targeting, both Google and UM allow for device targeting. Separating your campaigns by device Tightly themed ad groups with highly related will enable a host of bidding options, ad scheduling keywords will allow for the highest ad text optimization, and ad text testing. Also, as mentioned relevancy. Your ad text will have the maximum earlier, mobile and tablet users generally behave amount of bolding for any keyword in a given ad differently than traditional searchers and should be group, resulting in higher CTRs for each keyword, a segmented and optimized separately. better QS, and a lower CPC. In contrast, inflating ad groups with thousands of TAKING IT ONE STEP FURTHER keywords allows for simpler reporting and In addition to the traditional search engine options, categorization of keywords, but often masks Google and UM are constantly releasing betas performance of single keywords, destroys CTR and and new features. These advances often lead to quality score, limits promotional possibilities, and immediate increases in traffic, improvements in CTR, leads to higher CPCs in the long term. reduction in CPCs, and incremental revenue gains that can give retailers a leg up on their competition. In addition, because impression share is measured at the ad group level, separating ad groups by match type will allow you to see your true market penetration. Accurately controlling your reach and budget, all while working to optimize for lower CPCs, will give you a compounded advantage over time. #searchguide
  12. 12. RETAIL PAID SEARCH GUIDE 11 RECENT BETAS INCLUDE: » New Match Types » Ad Extensions After Google changed their broad match algorithm Sitelinks, Enhanced Sitelinks, Location Extensions, in 2008, advertisers realized that broad match Communication Extensions, Product Extensions, keywords were no longer as reliable as they should Deep Links be and started migrating towards more exact match keyword types. Unfortunately, in order to capture the These new ad formats have changed the CTR traffic of the old broad keywords, accounts have norms for search engine marketing over the past become bloated by variations like misspellings and few years. One, two, and three line Sitelinks greatly plurals. In response, Google released the Modified improve the CTR of search terms as ad formats are Broad Match keywords in 2010 which helped optimized. advertisers regain some control. » Product Listing Ads » Near Match beta Google added Product Listing Ads (PLAs) as a Google recently announced the launch of Near Match beta in 2009 and rolled it out to the public a year beta, a program designed to build more granular ad later. The program started with incredibly low groups for positive and negative keywords to avoid CPCs that have now inflated astronomically in triggering irrelevant traffic and paying for unwanted the face of rising competition for limited spots. clicks. While some worry that PLAs may cannibalize other paid search efforts or organic traffic, research Search engine strategies are constantly evolving and indicates that revenue from these ads is largely changing the search landscape. Retailers should incremental. Some of Adlucent’s clients have seen continue to monitor trends, test their strategies, and up to 20% of their revenue driven through PLAs. participate in betas. MONITOR10 KEY METRICS Retailers should never become complacent when GROSS PROFIT PER IMPRESSION (GPI) measuring paid search programs. While basic GPI is measured at the ad level with the following revenue, conversion, profit margin, and traffic formula: metrics will satisfy your CMO, they will only provide a limited view of the true potential. Regularly monitoring your performance metrics will help you (Ad Revenue - Ad Cost) better optimize your search program. = GPI Search Engine Metrics Impressions There are a variety of search engine metrics you can measure. These include impressions, clicks, Retailers can use GPI to determine which ads are cost, revenue, and orders. Retailers can also truly delivering the most value to their program. analyze behavior before and after the click, or look These ads return the most profit per impression at a combination of the two. served. GPI is superior to CTR and CVR because it analyzes both before and after the click. If you really want to take your PPC program to the next level, consider using the following metrics: #searchguide
  13. 13. RETAIL PAID SEARCH GUIDE 12THE RATIO OF % AD SPEND AND » Product Descriptions% AD REVENUE BY MATCH TYPE Does the product have an accurate and helpfulThe percentage ad spend is measured at the description? Does it have an image? Analyzing thekeyword level and then rolled up to match type. effects that various attributes have on conversionExact match keywords are the most controllable rate will help to determine bidding and optimizationand generally have the highest ROI. It is important strategies for new products.to regularly monitor the ratio of spend and revenue(percentages) by match type in order to see if » Cross Channel Salesyou are pushing an optimal amount of your ad How is this product doing in other channels?spend through exact match keywords. An optimal Does it sell on CSEs? We’ve seen products with aamount will essentially put the ratio at one for all high sales rank on CSEs have a much higher paidmatch types. search CVR than the average product.PRODUCT METRICSWe already know inventory, shipping, and ratings » Product Breadth and Depth How many types of a single product do you have?and reviews can impact the success of products, Do you have each color and size? How do thesebut there are a few other product related metrics factors affect CVR?that will help you understand and control theperformance of your account. Each retailer is unique and performance goals vary. It is important to measure traditional metrics like» Price revenue growth and return on ad spend, but alsoThe price of a product can greatly affect the establish retail-specific performance trackingperformance of your ads. Although higher priced metrics. Always create separate campaigns foritems often convert at a lower rate than lower testing factors like match type, location, and devices.priced items, the more expensive items havea greater payoff. Retailers should analyze thetradeoff between ROAS and price. If products arepriced too low, consider adjusting the CPCs. These ten tips are intended to help you improve your paid search campaigns. Retail paid search is complex and requires a team with deep retail expertise and sophisticated automation software that responds to real-time changes in the marketplace. Adlucent offers predictive search and shopping analytics powered by its Deep Search™ platform that is personalized and curated by retail experts.ABOUT ADLUCENT INTERESTED IN LEARNING MORE?Adlucent is a marketing technology and analytics www.adlucent.comorganization based in Austin, Texas, focused solutions@adlucent.comsolely on Retail and eCommerce. Leveraging 1.800.788.9152its Deep Search™ analytics platform, Adlucent’sexperts help the smartest retailers acquire new Submit a demo request at –customers and grow revenue profitably through www.adlucent.com/#getintouchdigital marketing. Launched with a decade-  long relationship with Amazon.com, Adlucent’sclient base includes multi-channel brands suchas Anthropologie, Buy.com, Free People, JewelryTelevision and Oriental Trading Company. #searchguide
  14. 14. RETAIL PAID SEARCH GUIDE AppendixSOURCES SHOPPING STATISTICS1 Google Shopper Sciences 2011 Macro Study 84% of those use online sources to guide them. Of2 Internet Advertising Bureau and PwC 2012 those, 54% comparison shop for products online —3 Etailing Group 2010 Google Shopper Sciences 2011 Macro Study4 Google AdWords study5 Bazaarvoice client case studies On average, for advertisers who appear in the top6 eMarketer 2011 rank organic slot, 50% of ad clicks are incremental.7 eMarketer 2011 This means that half of all ad clicks are not replaced by organic clicks when search ads are paused — Google AdWords studyDICTIONARYAOV (Average order value) Average dollar amount 57% of online shoppers begin their shoppingspent for each customer order process from a search engine — Etailing GroupCOGS (Cost of goods sold) The total cost of AD SPEND STATISTICSmaking a product that is sold Internet advertising climbed to $32 billion in 2011, with ad revenue up 22%. At $14.7 billion, the bulkCOS (Cost of sale) The purchase cost or inventory of the spend was made in the area of searchvalue of merchandise sold advertising, a jump of 27% — Internet Advertising Bureau and PwCCPC (Cost per click) The dollar amount you pay perclick of an ad MOBILE STATISTICS The projected mobile spend will reach $4.3 billionCTR (Click-through rate) The number of clicks that by 2015, with paid search accounting for 40.2% ofyour ad receives divided by the number of times that spend.— eMarketer 2011your ad is shownCVR (Conversion rate) How often a click on your ad 22% of retailers in the Internet Retailer Top 500resulted in a conversion, a meaningful action like a report having an m-commerce site or app, whichsale, lead, or sign-up is 110 of 500 — Internet Retailer 2011GPI (Gross profit per impression) Profit per 43% of local searchers on mobile devicesimpression served physically showed up at the business location with 22% of those users actually made a purchase. —LTV (Lifetime value) Cash flows attributed to the AT&T study published in Search Engine Land 2011relationship with a customer 70% use their smartphones while in a store — ThePLA (Product listing ad) Search ads that include Mobile Movement: Understanding Smartphonericher product information, such as product image, Users, by Google and Ipsos OTX MediaCTprice, and merchant name, without requiringadditional keywords or ad text 74% of smartphone shoppers make a purchase, whether online, in-store, or on their phones — TheQS (Quality score) How relevant your ads, Mobile Movement: Understanding Smartphonekeywords, and landing page are to a person seeing Users, by Google and Ipsos OTX MediaCTyour ad 53% of shoppers make a purchase after conductingROAS (Return on ad spend) How much profit a search, with 40 percent doing so at a retailyou’ve made after ad spend has been factored in store — The Mobile Movement: UnderstandingROI (Return on investment) How much profit Smartphone Users, by Google and Ipsos OTXyou’ve made from your ads compared to how MediaCTmuch you’ve spent on themZMOT (Zero Moment of Truth) The research ashopper does before deciding which product to buy