September 11, 2007, 12:00 AM

Paid search ROI increases 800% for lighting retailer Form Plus Function

Technology from ClearSaleing reveals which keywords justify investment by tracking keyword performance not just to sales but to profitability.

ROI increased 800% from paid search programs at the e-commerce site of Form Plus Function, which sells contemporary lighting products, since the company adjusted the program based on insights from search engine marketing company ClearSaleing, the retailer reports. The vendor’s analysis revealed which paid keywords justified investment and which did not with a formula and technology that tracks keyword performance not just to sales but to profitability, the retailer says.

A keyword may regularly generate sales, but if a keyword costs 60 cents and the profit margin on the item is only 50 cents those sales aren’t profitable, according to Randy Smith, ClearSaleing’s president.

ClearSaleing’s Purchase Path Tool technology also tracks a user’s interaction with all of the ads the user clicks throughout the purchase process, rather than giving credit only for the sale only to the last ad a user clicked before purchasing. The automated tool then allocates the revenue from a sale across all of the keywords that lead to the purchase, providing a more accurate view of the degree to which each keyword contributes to a profitable sale.

Lette Brin, the founder of Form Plus Function, says she previously had been spending “thousands” on paid search each month unprofitably. She says she was surprised when the analysis showed that some keywords which generated sales did so at unprofitable margins.

As a result, “We cut out a lot of expensive keywords,” she says. Form Plus Function then significantly expanded the size of its keyword program based on the analysis, spreading it out to include more keywords that didn’t generate many sales but that produced a better margin for the retailer when sales did take place.

The strategy of bidding on keywords that produce fewer, but more profitable, sales is supported by ClearSaleing technology that identifies the margin of a sale on any keyword. Today, though From Plus Function is spending as much as before on paid search, its keyword program is larger and its return on investment higher, Brin says.

ClearSaleing also handles automated bidding for From Plus Function’s keyword program, she adds. The automated bidding system and keyword performance tracking technology replaces an internally created system of “rudimentary” functionality, Brin says.

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