PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
In today’s tough economic climate, retailers need to spend marketing dollars more effectively than ever to drive sales. For e-retailers, the best bet is to focus attention on pay-per-click advertising as it allows them to quickly determine the return on investing in keywords and to adjust their marketing strategy on the fly if the return falls short of expectations.
“Search is near the beginning of the customer experience and is a critical component of many retailers’ marketing and lead generation programs,” says Wister Walcott, co-founder and vice president of products for paid search marketing management firm Marin Software. “Paid search lets retailers get rapid feedback on campaign performance and measure their return on investment with pinpoint accuracy. That is not necessarily the case with direct marketing campaigns.”
A multi-step process
Figuring the return on investment on a keyword is a multi-step process that starts with gathering conversion information around the keyword and further segmenting the data by the day of the week or date the keyword generated a sale. This measurement is crucial as shopper activity can vary by the day of the week or date, such as Saturday or the cut-off date to receive an item by Christmas.
Measuring by the click that generated the sale is as important as the conversion event itself, as many shoppers will click on a keyword, leave to research the product at another site, then return to make the purchase.
Marin supplements keywords lacking enough performance data with data from related keywords to obtain a relevant sample. Marin weights the data based on the depth of information using a mathematical model for estimating unknown probabilities.
Once retailers have obtained a reliable revenue-per-click estimate, they can calculate their keyword bids to generate the desired ROI. “Revenue capture is all about being able to measure keyword performance at a granular level,” Walcott says. “Once the revenue generated is aligned with the keyword, retailers can accurately figure the bid price.”
Real-time reporting capabilities in Marin’s platform make it possible for retailers to determine within 48 hours whether the keyword is meeting projected ROI. If the campaign is not living up to expectations, a retailer can purchase new keywords, sometimes at a lower cost that can yield the desired sales volume.
“A retailer promoting a waffle iron may find better results buying the term ‘waffle maker’ or vice versa,” Walcott says. “There are a lot of potential extensions of a search term or keyword that can be more cost effective.”
Marin Software, which offers pay-as-you-go pricing, targets retailers spending $50,000 or more per month on paid search.
In addition to bid optimization, part of the automation Marin brings to the table is a single interface to all search engines. This interface allows retailers to make edits simultaneously to paid search campaigns across all search engines. This feature is made possible by Marin’s Campaign Cloner, which, with a few clicks, replicates campaigns from one search engine to another. Before this, retailers had to visit each search engine’s ad center to initiate or edit a campaign, which is time consuming.
Retailers can also track keyword conversion rates by such criteria as the type of ad that generated the conversion, where the conversion took place on the site, and the type of conversion the ad generated. The last point is important because retailers can have different definitions of what constitutes a conversion. For example, some shoppers buy based on a sale price in the ad, some shoppers may click on an ad only to opt in to a mailing list, others may move from the landing page to a store locator. Depending on a retailer’s objectives, those could all be considered conversions.
“Paid search is becoming much more competitive, which puts a premium on being able to measure keyword revenue generation so retailers know what to bid,” Walcott says. “We bring automation and science to the process to make sure there is a keyword for every paid search ad that generates the desired ROI regardless of how unique the product or narrow the product category.”