But losses mount for the home furnishings e-retailer that went public in October.
Comparison shopping engines are changing – so should retailers’ strategies for using them while fighting cost-per-click inflation.
As the cost of keywords in paid search marketing continues to rise, other online marketing channels are getting more interest from retailers, including comparison shopping engines. Scot Wingo, CEO of channel management services provider ChannelAdvisor Corp., says that his company’s clients now spend anywhere from 15% to 40% of their online marketing budget on comparison shopping engines.
There, as with paid search, the costs retailers pay per click are rising as competition for position on those engines rises, but Wingo notes that retailers can keep those costs in line by paying attention to how they use comparison engines. “Without changing your strategy, if you just look at it on the surface, comparison engines are getting more expensive, just like paid search,” he says. “We work with retailers to tweak their strategy to find ways to fight that inflation. Those tweaks can make a huge difference in the quality and quantity of traffic you are getting.”
One way to optimize spending on comparison shopping engines is to make sure the retailer’s data feed to the engine is aligned with the right product category. A retailer that set up a product feed five years ago and is still using the same feed format is losing out. Five years ago, for example, it made sense for any retailer doing a product data feed of then-new MP3 players to feed it to the closest available category at the shopping engine, stereo systems, for instance. But today, that same engine has a dedicated MP3 section that should be getting the retailer’s feed, Wingo says.
“There is now a lot of staying on top of how your products are getting to the engine and being displayed there,” he adds.
Retailers also need to take advantage of newer pricing options at some engines that allow retailers to bid on cost-per-clicks they are willing to pay for specific products, at prices generally below the regular rate card. That’s particularly useful for retailers with products priced too low to generate a profitable margin on conventional CPC pricing, Wingo says.
One consequences of paying CPC costs lower than the traditional rate card is that a comparison shopping engine’s quality score system, based at least partly on whether a retailer is paying CPC costs on the rate card, might cause retailers that are paying less to show up lower in results listings displayed by the engine, Wingo notes. However, that’s only on the initial, default display of results.
“Our data show that over 80% of consumers come in and hit the price sort button, so we feel price and brand outweigh the initial default sort,” he says.