The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
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The Internet Retailer study analyzed the results of 14 to 18 keywords for each merchandising category. Informational and other sites dominated some categories that seem natural for retailers to appear high in. In appliances, for instance, Wikipedia, epinions.com and ConsumerSearch.com occupy the top three listings. Sears Holdings Corp.’s Sears.com ranked sixth. Best Buy Co. Inc.’s BestBuy.com, which offers an online kitchen and laundry design center that helps shoppers determine which appliances they want, ranked No. 17, even behind NASA.
In consumer electronics, Circuit City Stores Inc.’s CircuitCity.com, Overstock.com and Crutchfield Corp. ranked fifth, seventh and eighth, respectively, behind Wikipedia, CNET Networks Inc., Amazon and HowStuffWorks.com. But BestBuy.com ranked No. 24 right behind TigerDirect.com, an e-commerce site operated by Systemax Inc., at 23.
In pay-per-click search marketing, the story is just the opposite. Retailers occupied all but 11 of the top 60 spots. In paid search categories, Sears and Target Corp. each held four of the top spots, Amazon, Circuit City, J.C. Penney Co. Inc., Lowe’s Cos. Inc. and Staples Inc. each held two. No other retailer was represented more than once.
A measure of how well retailers have nailed down paid search marketing is reflected in how Internet Retailer scored retailers when they appeared in paid rankings. To rank web sites within their merchandising segment and by keyword, Internet Retailer assigned point values every time a retailer appeared in the first five paid and natural results in each category. For instance, that total gave Sears.com in the appliance category 384 points and No. 2 Lowes 179 points. The corresponding scores for natural search results in appliances were 90 for Sears (223 for Wikipedia) and 26 for Lowe’s, which ranked No. 22.
Retailers are more comfortable spending their money advertising in paid search listings because results are easier to track, Sandberg says. It is much simpler to advertise on a pay-per-click basis and see the return for every dollar spent than to sink a substantial amount into re-tooling a web site to make it more search-engine friendly, with longer-term results.
The fact some retailers are submitting winning bids for multiple terms within a category-in some cases as many as 50% of words in that category-tells search engine marketing analysts that online merchants are using a broader mix of paid keywords and phrases to drive traffic and sales, build brand awareness, and prevent competitors from bidding on certain words.
The research turned up some interesting anecdotes of retailers bidding on both very diverse and similar sounding paid keywords. For example, Victoria’s Secret, a multi-channel retailer of underwear and intimate apparel, was the top bidder over nine weeks for the keyword “outerwear” in the apparel category.
Another good example was “couch purse,” a paid listing by Coach Inc., the handbag and leather goods company. The company explains that “couch purse” is an intentional buy that assumes that shoppers sometimes misspell what they’re looking for. In this case, shoppers inadvertently type “couch” when they mean “coach.” Coach never displays links showing “couch” alone-it’s always with “purse” or “handbag” or other Coach products. And the link takes shoppers to the Coach page that displays the appropriate product. The gambit pays off, Coach says: The conversion rate on those terms is about the same as the conversion rates on legitimate Coach terms.
The research shows retailers are using bid management tools and keyword vocabularies to bid on terms in their core merchandising category. But appearing high up in the paid listings on Google isn’t the only way retailers can generate a better return on pay-per-click marketing. They can also do a better job of testing keywords and scrutinizing the economics of their keyword spending, says Alan Rimm-Kaufman, president and chief technology officer of direct marketing services at consulting firm The Rimm-Kaufman Group.
The importance of testing
Retailers should build up and test a keyword inventory that relates to every SKU and product in their online inventory, he says. “Retailers test their campaigns and measure the results, but they should also compile five to 10 keywords for each of their SKUs and test those,” Rimm-Kaufman says. “The additional testing will produce better keyword combinations and more focused campaigns.”
Beyond measuring the average conversion rate and traffic generated by a pay-per-click campaign, retailers should measure other metrics such as results by concept, phrase, ad copy, landing page, specific search engines and even time of day.
“Retailers can see who their competition is by viewing the rankings on a Google page,” Rimm-Kaufman says. “But they shouldn’t weigh the total outcome of a paid campaign simply on where they rank on a page. They should focus on whether the campaign generated the best return on investment by looking at all of the relevant points.”
With so many relevant points in search optimization and paid search campaigns, retailers have a lot of analyzing to do.
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