September 23, 2004, 12:00 AM

At Drs. Foster & Smith better bids breed bigger margins

A new bid management system from Atlas OnePoint is helping Drs. Foster & Smith improve on search engine marketing and focus on a much more important metric than sales: operating margin.

Kurt Peters

Executive Editor

 

In certain aspects of search engine marketing, being number one isn’t always best. In fact when it comes to keyword search and bidding, there are plenty of times when Drs. Foster & Smith finds it much more profitable to be the fourth or even fifth listing on a particular page.

Like many other Internet retailers, Drs. Foster & Smith, a multi-channel retailer of pet supplies, used to think that spending significant online advertising dollars to secure the top bid-and location-on a major search engine such as Google or Overture would produce the best results, particularly a high volume of click throughs.

But a new bid management system from Atlas OnePoint that the multi-channel retailer installed in May, is helping Drs. Foster & Smith focus on a much more important metric: operating margin.

With its previous bid system, Drs. Foster & Smith had to manually review and update each of its keyword campaigns.

But better technology and a new full-time search engine marketing analyst are helping Drs. Foster & Smith, No. 68 in Internet Retailer’s Top 300 Guide to online retailers, achieve a better return on advertising spending and improve operating margins.

The new Atlas OnePoint technology has an advanced modeling tool that lets Drs. Foster & Smith automatically analyze the potential return on investment for pay-per-click search engine keywords and advertising campaigns, which helps the company conduct better sales forecasting and campaign analysis.

For instance, in one recent campaign Drs. Foster & Smith placed a particular keyword lower on the page. While the campaign produced $90,000 less in total sales, better modeling, better forecasting and a more precise placing of the keyword resulted in operating margins increasing by $30,000.

Margins improved because the retailer was able to maximize the bidding process in a way that delivered fewer, but more motivated buyers that clicked through and placed an order.

“If we are selling a $200 pond pump, we don’t necessarily want to be in the top spot because these are shoppers looking to spend money on a big-ticket item and they are going to do their homework,” says Joseph Voellinger, Internet marketing manager for Drs. Foster & Smith. “We would rather optimize our bid and be farther down on the page where we can forecast where we are going to get click throughs from very serious buyers.”

Technology from Atlas OnePoint is helping Drs. Foster & Smith reduce by 50% the amount of money it bids at times on certain key words, the company says. “Our new management system is rules-based which helps us improve margins through better optimization of our bids,” says Gordon Magee, Internet analyst with Drs. Foster & Smith.

 

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