April 10, 2003, 12:00 AM

Petco slashes customer acquisition costs with the right data

Using a Coremetrics tool to tracks results from paid placements across engines, Petco refined keyword bidding, flagged underperforming terms and cut customer acquisition costs by as much as 79%.

Pet gear retailer Petco Animal Supplies Inc. saw its web site conversions increase ninefold and its customer acquisitions cost drop by as much as 79% in certain product categories after it optimized its search engine marketing with the help of Coremetrics Inc. analytics.

With the goal of driving better sales through search engines, Petco wanted to track all placements by vendor, category and keyword – without adding staff to do so. Petco’s search engine optimization company NewGate Internet last fall began the initiative by boosting search term purchases from 25 to more than 5,000 across various search engines. Petco used Coremetrics’ Marketing Management Center tool to automate the tracking of results on each placement, quickly zeroing in on those that fell outside of its average cost per customer acquisition of $10.61. Petco was able to reallocate media spending to the most productive placements based on that tracking.

Petco’s placements in the “aquariums” category, for example, were showing a collective CPA of $66.20, with a conversion rate of only 0.08%. Using the Coremetrics tool to identify the top- and bottom-performing keywords related to that category, Petco increased its bid rates for the top-performing keywords ninefold and decreased bid rates for the lower-performing terms by 60%.

As a result, not only did Petco reduce its average customer acquisition cost by 79% and increase conversions in the category ninefold, but its overall return on marketing investment for the aquariums category increased by 190%, according to Heather Blank, director of e-commerce and business development at Petco.

Applying the same strategies to other underperforming categories, Petco increased conversion on its overall search engine marketing campaign by 11%, decreased overall acquisition costs by 6%, and increased overall ROI on search engine campaigns by 14%.

“The Marketing Management Center made the process of optimizing our marketing spend easy and intuitive,” says Blank.

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