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Comparison Shopping Management: Good For Paid Search Campaigns?

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Here is the honest truth, and I love pointing this out!  Comparison shopping management still is and will typically remain much less expensive than pay per click marketing (in the search engines).  Let’s take a quick look at the jewelry industry.  Right now an average cost per click from PPC for most products are somewhere in the neighborhood of $1.50 to $4.00 per click – ouch.  In the comparison shopping engines, we’re looking at $.10 to $.50 per click – yes, much better pricing.  People who are shopping in the comparison shopping engines (CSE’s) are usually buyers.  Not only are you attracting the right people, but also people ready to buy.  The downside is that people who shop jewelry tend to do more shopping than customers of other products.  I think that having a return ratio of 1 to 2 is probably on the poor end.  An average comparison shopping client should be seeing a ratio of 1 to 4 return or better.  With jewelry I think we can be even better – especially if you have the best price (as most people claim).

When Netmark Essentials is starting a paid search campaign for any client or promotion, some of the first questions that come up are, “How are you defining success of this campaign?”, and “What are your recommendations?”

The way we like to answer these questions has significant impact and “tell-tale” to the way your paid search campaigns will be set up and run. This includes keyword selection, product categories, bidding decisions, engine selection, landing pages, analytics, and many more other important factors.

The Netmark Essentials paid search campaign service dives deeper into measuring success than just a typical ROI goal (revenue/ad spend). This goal undervalues the true measure of what drives a successful business — profit.

There was a smart client of ours once brought this point up to me by saying, “You don’t put revenue back in the bank. You put your profit in the bank.”

But, why is measuring to profit so important, and how can it impact your paid search campaigns? While $1000 in revenue is the same regardless of the product sold, it doesn’t always equal the same for profit based on the margin. Let me briefly explain:

For example, a woman’s wedding band and a pair of diamond earrings each cost $1000, but the cost to actually make the woman’s wedding band is much less than the pair of diamond earrings, and therefore is more profitable for the company. If you made your bidding decisions based on revenue, then you wouldn’t care if you sold a wedding band or the pair of diamond earrings.

However, if you look at profit, you would value the sale of the wedding band by four times. Knowing this information would change your allowable cost per click (CPC) for each given keyword.

 

Wedding Band

Diamond Earrings

Click Spend

$500

$500

Revenue

$1000

$1000

COGS

$200

$800

Profit

$800

$200

Revenue ROI

200%

200%

Profit ROI

160%

40%

Evaluating the success of your online campaigns doesn’t stop at high-level results for just paid search. You measure down to the keyword and product level to ensure the most granular level of data. This is the same concept, only pushing the measurement deeper down the sales funnel.  Bottom line, we’ll make better money by focusing funds on products that sell and products that have higher profit margins.

Another point that I’d like to bring up again is the conversion optimization.  We typically bill this as a separate charge from our comparison shopping management, but we’ve seen wonders happen with this and massive improvements have been made by having conversion rates go up.  Because conversion rates go up, each customer or each click is worth more to you.

Either way – if you offer products as your core business, consider the costs involved with both pay per click from the search engines, and comparison shopping.  Dollar for dollar, comparison shopping is one of the best forms of marketing out there.  Lastly, make sure you are aware of the profits and ROI.  The click through rate doesn’t have much to do with the bottom line, however conversions does!

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