Red Bricks Media’s News Blog

by Ryan Hailey, Campaign Operations Manager

The Comparison Shopping network, like any other media channel, certainly has some costs, barriers to entry, and common pitfalls and errors that would make an otherwise seemingly profitable marketing channel…well…not so profitable. In order for a CSE campaign to be successful, it is necessary for a company to analyze all its facets and weigh the costs and potential benefits of self-managing versus delegating CSE management. We’d like to share some insights gained by researching this rapidly growing market.

An Emerging Market:

Comparison Shopping Engines are becoming the largest online business-to-consumer medium. They allow consumers to quickly compare prices, access product information and reviews, and make purchases within a few clicks of a mouse. New studies have shown that 60% of online consumers use a CSE prior to making a purchase. CSEs are also responsible for over one third of all e-commerce sales ($54.3 billion in 2007) and have more market share than auction sites and shopping portals combined.

The top four independent CSEs: Bizrate, Shopping.com, Shopzilla and NexTag now own over 61% of the shopping search market, according Hitwise. Google Product Search, Yahoo Shopping, and MSN Shopping combined own less than 15% of the market. These independent comparison engines obviously have differentiated themselves offer a better user experience.

The CSE Landscape:

There are dozens of comparison shopping engines, each trying to differentiate themselves from the rest. Some tout themselves as delivering the lowest priced product matches, while others find a niche that deliver only certain kinds of products, whether it is electronics, baby gifts, or healthcare goods.

Many advertisers who lack the necessary time and resources to examine the entire CSE market tend to opt into only the largest ones, such as Shopping.com, Shopzilla, NexTag, and Bizrate. While these well-known engines do represent a big chunk (roughly 60%) of the comparison shopping market, advertisers who choose only the major CSEs are missing out on a sizeable portion of the market. This is a common faux pas that advertisers make when they manage their CSE efforts in-house as opposed to outsourcing management to online marketing professionals.

In order to maximize potential revenue and product/brand visibility in the CSE market, advertisers must survey the entire CSE landscape. Once this is done, the advertiser can exclude comparison sites that don’t suit their campaign’s motive and choose those sites that do.

CSE Pricing:

When surveying the CSE landscape, pricing models should play a very important role in the decision of which CSEs to opt into. There are three pricing models that shopping engines use: Cost per Click (CPC); Cost per Order or Cost per Acquisition (CPO/CPA), and free, and it is also worth noting that many of the larger CSEs require a minimum investment or deposit that varies between sites.

Cost per Click is the most common pricing model, where advertisers pay for every time an ad is clicked, and is also the most similar to typical Pay-Per-Click campaigns. Some CSEs that follow the PPC model charge a fixed cost-per-click rate for each product type depending on the margin, whereas others allow competitive bidding, which gives the advertiser the opportunity to build out a CPC optimization strategy.

The CPO/CPA pricing model, used by Shop.com and Jellyfish, is also very attractive since it is basically a risk-free investment; you are only charged when the consumer purchases the product.

The last and most popular pricing model is the “free” model. Only a few CSEs use this model, including Google Product Search and TheFind.com. Their profits are derived from selling ad space on their results pages. A common strategy for advertisers that are just entering the CSE market is to start by launching campaigns only on the free portals. This will allow the advertiser to gauge the competition and see how aggressive to be. In the end, however, opting into as many CSEs that suit and help achieve campaign goals is typically the best practice.

Campaign Development and Product Categorization:

Shopping engine placements are contextually pertinent because they’re delivered, along with other related products, on a keyword basis. Product ranking in the search results will be determined by how well a merchant’s keyword search term matches the keywords related to a product’s title, description, and other relevant information provided in the product data feed.

Choosing the right keywords in the product titles and descriptions definitely helps with achieving higher placement. For advertisers that are already managing PPC or SEO campaigns, a CSE campaign can simply be an extension of that, since you already have a developed keyword universe.

However, a new level of complexity is added when bidding at the product level rather than at an ad group or keyword level. A common pitfall in managing CSE campaigns involves product categorization. If an advertiser mis-categorizes its products (i.e. toys, electronics, clothing, etc), they can drastically harm the campaign by either paying too high a CPC or risk not having their product listed. To ensure products are listed and are in the best position possible, advertisers need to optimize their data feed.

Data Feed Management and Optimization:

The largest challenge in CSE management lies with uploading relevant information to different comparison engines. Only a few CSEs, known as “crawlers,” will actively search retailers’ websites and gather information to upload on their comparison site. All others require the advertiser to format and manually upload relevant information via XML.

Relevant information is generally consists of developing and maintaining variable fields, such as keyword-driven product titles and descriptions, file headers, display and destination URLs, product categories, price, model number, UPC, manufacturer name. This must be done for each separate comparison engine and every time product information changes, so it becomes an incredibly tedious task when managing multiple CSE campaigns.

The solution is using a third party Data Feed vendor such as MerchantAdvantage, Quigo, or SingleFeed. Each Data Feed vendor’s offering varies slightly, depending on the size, depth, and dynamics of the product catalog. Pricing schemes and CSE compatibility also vary between the vendors. We use Data Feed tools to centralize data feed management across multiple engine upload formats, meaning the advertiser only needs to enter all information once.

The Data Feed tool formats the information and uploads it to all CSEs. Data Feeds require frequent modification and many companies do not have the resources to invest. But, if an advertiser ultimately decides to have a full-scale CSE campaign, finding the right Data Feed tool is essential for success.

Many sellers make the mistake of relegating Data Feed management to the in-house IT Department since they deem it a technical process. The problem is that the information that goes into the feed is marketing material. Some very useful blogs and websites that contain valuable information about Data Feed Management and Optimization are: www.loveyourfeed.com, www.csestrategies.com, http://wordpress.com/tag/comparison-shopping-engines/.

Campaign Management and Testing:

In starting out a CSE campaign, advertisers should be able to get their feet wet without huge costs or time constraints. They can manage a CSE campaign manner similar to most PPC campaigns.

A majority of CSEs follow the CPC model, allowing the opportunity to bid on a product of keyword level. Users can remove underperforming products just as they would pause keywords in a PPC campaign. Advertisers need to frequently evaluate their campaign in order to understand consumer behavior in search as well as industry trends. This is in part why sellers turn to advertising and industry professionals for CSE management.

Advertisers should also take an active role in landing page development and testing. Each landing page serves as a sort of home page, making not only the case of why to buy the product, but why they should buy the product from you. Advertisers can also test by changing product descriptions, discounts, and special offers. Most of all, advertisers need to be constantly evaluating their campaigns to maximize CSE potential.

The Price Factor – Barriers to Entry:

While price can be a large factor in your CSE ad placement, each engine uses its own particular algorithm for ranking and displaying search results. Each also has different criteria and charges for participating merchants. Most of the major search engines use product price as a common sorting focus, followed by store rating and reviews, popularity, relevancy, and placement bids. In fact, about 70% of click-thrus on comparison sites are not on the seller with the lowest price.

It would be prudent to say that upscale sellers may have a more difficult time seeing positive results in their CSE endeavors. However, they still have the opportunity to advertise any niche products they may have and look for areas that aren’t covered by their competitors.

Sources:
http://searchengineland.com/070504-105037.php
http://www.clickz.com/showPage.html?page=3628428
http://www.comparisonengines.com/
http://www.csestrategies.com/
http://www.loveyourfeed.com/
http://www.rimmkaufman.com/rkgblog/2007/07/24/feed-optimization/
http://www.ecommerceoptimization.com/comparison-shopping-listing-guide/
http://multichannelmerchant.com/webchannel/affiliate/marketing_shopping_around_0101/
http://www.seobrien.com/2006/10/comparison-shopping/small-businesses-rejoice/
http://www.revenuetoday.com/readarticle.php?name=Comparison+Shopping+Engines+Drive+Sales
http://www.channeladvisor.com/comparison_shopping/summary.html
http://www.hitwise.com/

by Beth Morgan, VP of Operations

During the Web 1.0 boom it was all about the eyeballs. Content was king, and publishers scrambled to fill the Web with information and amusement that would lure people in. Now that we’re seeing the second rise of the Web, content is still king. But it turns out that, as has been common all throughout history, people are less interested in what someone else tells them than in what they and their friends are thinking and doing. Giving people the power to produce their own content and customize their own experiences, essentially democratizing the Web, has brought over 100 million new users to the Internet in the U.S. alone.

Which brings us to the most uniquely people-powered advertising vehicle the world has ever seen: paid search.

Pay-per-click is different from every other mode of advertising out there because the publisher only makes money if someone finds the ad relevant and interesting and clicks on it. The amount that the advertiser bids for each click does figure in to how often an ad runs and where it is placed, but an even bigger factor is how tempting and clickable an ad is. The people are in control! If you as an advertiser fail to interest your target market, they will not click on your ad—and even if you’re willing to pay a small ransom on every click, the engines might choose to not run it all.

So what does this mean for advertisers? Essentially it means that you must re-adjust the way you strategically think about your paid search campaigns, because things you’ve learned about how marketing works might not be true for search. Some examples:

1) Your ad might not appear when you look for it.  With traditional pay-per-eyeball advertising—TV, print, banner ads, etc—you agree to pay a set amount to advertise at pre-determined times and places for a set length of time. If you pick up a magazine or look at a website during that time frame, you will see your ad.

With paid search, though, the engines are unlikely to run your ad with every search, especially when you first launch a campaign. They are constantly running their mix of advertisers through a massive algorithm to determine, essentially, who earns them the most money. Proven advertisers are going to be given more credit than new ones.

They’ll mix your terms in slowly, and then more and more if your ads are successful.

2) You might not WANT your ad to show up every time you look for it. Think about it: are you running ads because you want people to see your neat-o copy, or because you want to sell stuff in a cost-efficient manner? Paid search gives you great real-time data about how your ads are performing, which allows you to get rid of keywords that just aren’t working for you. You may think a certain keyword is absolutely vital to your business, but if those Empowered People don’t agree and don’t click on your ad, the price that Google charges you to keep your keyword in a high position may be more than it’s worth.

3) Decide ahead of time what you’re willing to pay.  Budgeting for traditional marketing is easy: you get X dollars to spend, you buy X dollars worth of placements, and then you look at the stats to see if it was cost-effective. Costs in paid search, though, are both variable and hard to estimate ahead of time. You could have $100,000 set aside for search, but if no one searches your terms or clicks your ads, you might end up spending only $2,000. Google can project approximate cost per clicks before you actually launch your campaign. Use this figure with your average conversion rate to project a cost per action (CPA). Does this number comply with your marginal profit and loss expectations? Realize throughout this process that projections in a market-based environment are imprecise.

4) Write the best ad for each of your market spaces.  If people are clicking on your ad, you’re hitting the right market. Because pay-per-eyeball advertising is so expensive, it is vital to examine where and when ads are running to find the places and the times that yield the best results. Day-parting is a savvy way to make sure your ads are hitting your target when they are present and paying attention.

With paid search, though, people declare themselves as potential customers not by visiting a website or listening to a radio program, but by actively searching for a term relating to your product. If they’re really interested they’ll click on your ad and visit your site. This means that unless you have conversion data that shows visitors convert differently at different times of the day (which might very well be true), day parting isn’t a vital part of search strategy. You think your customers don’t wake up before 9am? Then they won’t be searching and clicking before 9am. Once again, the people decide when your ads run.

5) Rigorous and regular ad copy testing MUST be a part of your program.  When I was traveling through Europe in college, my group would frequently be met at train stations by hordes of people from competing hostels, waving brochures and pictures to try to lure us back to their establishments. Paid search is pretty much just like that.  At the very moment a searcher declares their interest in something, they are met with dozens of contenders clamoring to satisfy that need. Since Google and Yahoo both give better placement (and often a lower price) to ads that get more clicks, it behooves every advertiser to experiment to find out what will work best. Headline, call to action, benefits statement, even display URL—the smallest things can have a big effect. You also want to track results right through to conversion—ads that produce big clicks don’t always convert the best, and that’s the ultimate goal.

So as you can see, with paid search your potential customer is in a unique position to determine when and where your ad runs and even how much it costs. It’s a dynamic and powerful system, but also far less predictable than other forms of advertising. Figure out how to please your customer better than the competitors, and you will be rewarded with a brilliantly cost-effective marketing channel.

Like winning your first Oscar, winning your first Gold Addy award is an experience you’ll never forget. There’s nothing like a shiny trophy to boost anyone’s spirits, and we here at Red Bricks Media are celebrating our newly acquired Gold and Silver Addy Awards for our creative work with clients Wells Fargo and THQ.

Our Gold Addy winner, a Wells Fargo Advantage Funds creative piece, was a print media kit. This client commissioned us to design an identity theft kit for its financial advisors that would encourage consumers to “Unlock the Facts about Identity Theft.” It features an innovative lockbox envelope design, filled with pamphlets and brochures that warn consumers about the dangers of identity theft.

Our bold creative for the hub of THQ’s integrated buzz marketing campaign also won a Silver Addy. THQ wanted to spread brand awareness for its latest first-person shooter, Frontlines: Fuel of War. Red Bricks Media’s team dreamed up an interactive online game that immersed users in the world of Frontlines. Account Manager Ben Kou, Copywriter Peter Vaughan, and Interactive Designer BorFang Su led a team of designers, campaign managers, and strategists on the project.

After winning in our local Addy Awards division, our work went to the district level competition, where both campaigns won Silver Addys. We’ve sent these campaigns on to the national level and are keeping our fingers crossed for another RBM victory!