PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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Google also last year began charging retailers to place their products in image arrays that appear prominently in the center of a search results page, listings that previously were free. These Product Listings Ads, or PLAs show images of products, prices and the merchant's name in Google search results and are targeted to consumers in the market to purchase an item, not, for example, looking for a Wikipedia entry on sweaters. Google offers tools to help retailers maximize return from these ads, such as negative keywords, meaning the retailer doesn't bid on searches with a given term. An accessories retailer that sells only handbags and shoes, for instance, might buy the negative keyword "costume jewelry" to prevent its PLAs from appearing for shoppers searching the web for a new necklace. If a shopper clicked that retailer's ad, the retailer would have to pay for that click, which almost certainly wouldn't lead to a sale.
Jon Hoch, president of Power Equipment Direct Inc., bids on negative keywords to save money when bidding for placement in Product Listing Ads. The retailer, which operates 13 niche e-commerce sites that sell power equipment, gets about 40% of its traffic from paid search, including traditional paid search and PLAs. Hoch has one employee dedicated to managing PLA campaigns who is tasked with ensuring that the retailer won't pay for a click that won't lead to a sale by maintaining a list of negative keywords. For example, its list includes "equipment parts," "manuals" and "used snow blowers" because it doesn't want its ads to show up when shoppers search for something it doesn't sell.
Hoch says he also bids only on items he has a wide assortment of, such as air compressors, and not items he has few of, such as paint sprayers. "We bid more on our better-selling products with deep inventory," Hoch says. "We have more than 100 types of air compressors, and we show the best-selling ones in our Product Listing Ads."
Retailers can still drive traffic and sales from paid search if they haven't started using PLAs. Some, such as Schwarz of RibbedTee, haven't made the move in part because of the work required. PLAs are separate bids from traditional paid search ads and require the same maintenance as bidding for conventional search results page ads, including organizing keywords in campaigns that Google can understand and overseeing bid management.
However, Schwarz still works to fine-tune his traditional paid search advertising. For example, he bids on keywords and keyword phrases related to the now-defunct Towncraft brand of undershirts, which have a cult following, because RibbedTee offers a similar style of undershirt called Retrofit. One of those paid search ads reads: "Towncraft Undershirt Replacement. New Retro Fit Tees. Soft & Lightweight. Made in USA. RibbedTee.com." Over the last 30 days that ad has generated 10 times more revenue than the cost of the ad, Schwarz says.
Optimizing digital ads is a task that is never complete. There's always tweaking and testing that retailers can do to improve ROI. The good news is that with new management tools and a wide swath of niche sites that can attract just the right eyeballs, the tweaking is often worth the time.