The growth of e-commerce shows no signs of slowing. $14.8 billion was spent on paid search in 2011, but many retail search programs experience average performance and wasted ad spend. The way your customers are shopping is changing. Thanks to explosive growth in mobile, online and brick-and-mortar stores are converging. Shoppers are spending more time researching products and reading reviews from others like them in order to make more informed product decisions. Capturing them as they are comparison shopping and when they're ready to buy are critical moments that translate into millions of dollars in revenue every year. Learn ten ways retailers can adjust their paid search program to increase web and in-store conversion. DOWNLOAD THIS FREE E-BOOK TO LEARN: Why retail paid search should be managed differently than other industries Tips for improving your keyword campaigns How to use user generated content to predict sales Ways to integrate paid search with your product inventory to optimize ad spend How to target higher value customers

1. RETAIL
PAID
SEARCH
GUIDE
Ten Advanced Tips
for Driving More Revenue
Through Paid Search
RETAIL INSIGHTS E-BOOK
#searchguide

2. RETAIL PAID SEARCH GUIDE
01
THE RISE OF
PAID SEARCH
Internet Advertising revenue climbed to $32 billion
in 20111, an increase of 22% over the previous
year—and the growth of online advertising is
showing no signs of slowing. The bulk of this
spend comes from search advertising, which
jumped 27% 2. Paid Search continues to be a
critical factor in driving revenue for retailers.
PAID SEARCH FOR RETAIL IS UNIQUE
Retail paid search is complex and requires a deep
understanding of retail as an industry, the needs
of specific retailers, and consumer behavior.
Managing the different aspects of paid search,
such as product categories, sub-categories,
individual products, and promotions in real-time is
difficult for many organizations.
We’ll explore ten ways retailers can drive more
revenue in 2012 and beyond through paid search.
#searchguide

3. RETAIL PAID SEARCH GUIDE
02
USE A CUSTOM
01 ALGORITHM
At the heart of every paid search management AN EFFECTIVE RETAIL ALGORITHM MUST:
platform is an algorithm—a set of mathematical
equations that uses a variety of inputs to achieve 1. Be Retail-Centric
your retail goals. Most search platform vendors It must take into account all of the retail-specific
take a one-size-fits-all approach in developing factors that affect paid search campaigns. This
their algorithms. This would work fine if all types includes pausing keywords that advertise out-of-
of online sellers, all products, and all customers stock products, establishing the appropriate look-
were similar, but retailers have unique business back period, adjusting campaigns for seasonality,
structures and goals. An algorithm must be able and factoring in customer acquisition cost and
to report on metrics such as; margin, marketing lifetime value.
contribution, the cost to acquire a new customer,
2. Be Unique
the total cost per order, and more. In nearly any
It must be specific to the unique needs of the
complex retail scenario, a custom retail algorithm
retailer, reflecting their product categories and
is essential.
sub-categories, their specific customers’ buying
The kinds of products e-tailers sell are very behavior, and their strategic business objectives.
different than what travel agents, financial firms,
and auto manufacturers sell online. Differences 3. Be Adaptable
in product offerings lead to major variations in The algorithm must be continuously refined to
terms of how buyers of certain products types reflect newly-learned information.
shop, which in turn dictates how their algorithms 4. Be Inclusive of Marketing Promotions
should be developed. The algorithm must be actively managed to
coordinate with your changing offline and online
marketing efforts. Conversion rates (CVR) change
when retailers run promotions or offer discounts.
Most search platforms are not “told” about these
short-term events. As a result, their algorithms
observe sudden spikes in CVR and falsely assume
they will continue forever. And when the promotions
end and CVRs fall, these platforms will over-
penalize the involved keywords for dropping in
effectiveness.
CASE STUDY: Jewelery Television Overcomes Paid Search Plateaus
After implementing a custom algorithm, Adlucent employed two principal strategies to help JTV drive revenue
and improve efficiency.
1. Restructuring JTV’s online advertising accounts:
Adlucent added 51,000 keywords, along with more than 9X as many campaigns and 10,000 more ad groups
to better represent the quality scores.
2. More active bid management:
Using its retail-optimized Deep Search™ software platform, Adlucent was able to make more frequent bid
changes in response to real-time campaign performance data.
In less than a year, revenue from paid search soared 78% while margins improved 25% for JTV
#searchguide

4. RETAIL PAID SEARCH GUIDE
03
MANAGE YOUR
02 BRAND & NON-BRAND
KEYWORDS SEPERATELY
GOALS FOR BRAND & NON-BRAND TERMS The key is to manage brand terms separately
Most retailers do not manage their brand-related from non-brand terms, with different cost of sales
(trademarked) and non-brand (product-specific) (COS, or A/S) goals. Your expectations for CVR
keywords independently. This is a mistake and and ROAS should be different as well—they’ll be
a missed opportunity. Non-brand terms are best lower for new customers, but it is typically worth
for new customer acquisition. While brand terms it in the long-run.
assist in closing a sale, the customers most likely
to encounter these terms are usually already THE PITFALLS OF BLENDED GOALS
acquainted with the retailer. Both brand and non- The goal of paid search is to increase your reach
brand terms are important, but they need to be and acquire new customers. By aiming for a
managed separately. blended COS, you are deterred from growing non-
brand traffic. In fact, you cannot increase non-
Brand campaigns typically have brand traffic without simultaneously increasing
“57% of online impressive performance stats brand searches or you will disrupt your blended
average. Since brand searches are influenced
including high click-through rates
shoppers begin (CTR), high quality scores (QS), by awareness generated through a multitude
of marketing channels, it does not make sense
high conversion rates (CVR), low
their shopping cost per click (CPC), and high for you to use a blended average. The result
of blending brand and non-brand targets is an
return on ad spend (ROAS). These
process from a campaigns perform well because overemphasis on navigational brand traffic and
a de-emphasis of building long-term growth
the customers clicking on these
search engine” ads already know you — from a through non-brand terms.
prior purchase, previously-seen
– E-tailing Group ad, search result, or your general THE HIDDEN VALUE OF BRAND TERMS:
reputation.
1. Organic Search
Brand terms serve to drive repeat customers,
The success of brand terms is indicative of the
but they are still valuable. Having a branded ad
overall success of your brand marketing initiatives.
accompany organic results still drives incremental
Advertising your brand on search engines closes
value. On average, for advertisers who appear
the loop on other marketing initiatives, but does
in the top rank organic slot, 50% of ad clicks are
little to acquire a new customer; which is the real
incremental. This means that half of all ad clicks
value of search engine marketing.
are not replaced by organic clicks when search
ads are paused.4
We know 57% of online shoppers begin their
shopping process from a search engine rather 2. Messaging
than going directly to retailers’ websites.3 Even Take a look at the products that are being sold
if customers already have an affinity to buy from through your brand terms. Is there adequate
you, they are still likely to use a search engine and
keyword coverage on them? Are you using them to
click on your branded ad to come to your website. test promotional ad copy and messaging? There
are a lot of insights hidden here.
This means that with brand terms, you are paying
for a click that was used as a navigation shortcut. 3. Competition
It can still result in a sale but you should pay less By purchasing your brand terms you are
for that click than one from a new customer. protecting yourself from affiliates and competitors
who may be bidding on them.
#searchguide

5. RETAIL PAID SEARCH GUIDE
04
USE RATING & REVIEWS
03 TO PREDICT PRODUCT
CONVERSION RATES
READ THE REVIEWS The highest-rated, most reviewed products can
If you’re paying attention to how Amazon.com then be promoted over the lowest-rated, least-
merchandises products, you might suspect that a reviewed products. Once actual performance data
product’s customer reviews can serve as a viable has begun to accumulate, reliance on predictive
proxy for conversion rate (CVR). proxies can be reduced.
The higher the ratings, the higher the CVR. This PREDICTING THE FUTURE
makes sense as positive product reviews are given When building campaigns for new products
to good products, and customers seek out products that have no historic CVR data or replacing an
that are reviewed favorably by other customers. existing product with a newer model, you can use
the review quantity and average rating as two
Ratings & reviews on a website can boost conver- elements of a scoring mechanism to predict CVR.
sion by as much as 10% to 40%.5 The particular values will vary by retailer, category,
product type, and several other factors as every
NO NEWS IS BETTER THAN BAD NEWS retailer is different.
You might be surprised by the impact of ratings and
reviews on CVR. Adlucent studied a major online You can promote the highest-rated, most reviewed
retailer with 67,000 conversions on 9,800 products products over the lowest-rated, least-reviewed
with at least three reviews. The products were culled products. Once you begin accumulating actual
to try to isolate the effect of ratings and reviews performance data, you can reduce your reliance on
from other factors, such as price competitiveness. predictive proxies.
In the study, products A LENS ON THE BUSINESS
“Ratings & reviews with an average rating of Ratings and reviews can help you improve overall
4.0 or higher showed a business performance, beyond just driving
can boost conversion dramatic 65% higher CVR profitable revenue growth through SEM.
versus those with a rating
by 10% to 40%” of 1.9 or less. Adlucent First, you can match customer demand data
found that products derived from search engines with ratings and
– Bazaarvoice with no reviews actually review data to find areas of opportunity. Research
had higher CVRs than the ratings and reviews of brands, categories of
products with several bad reviews. In other products, and specific products that you do not
words, it is better to have no reviews at all than a currently carry. Products with favorable reviews
preponderance of negative reviews. Keep in mind tend to sell better, so consider adding these highly
that it is still important to have some negative rated products to your catalogs.
reviews as they add legitimacy to the rest of them.
Second, products with unfavorable reviews tend to
THE MAGIC NUMBER have higher than normal return rates. By merging
In his article, “The Magic Behind Amazon’s 2.7 paid search performance data with ratings and
Billion Dollar Question,” Jared M. Spool suggests reviews data, you can identify and resolve issues
that the ratio of unit sales to reviews on Amazon. before they lead to margin erosion or customer
com is 1,300 to 1. If accurate, you could deduce losses. In many cases, you can rectify issues by
how well a product is selling simply by counting improving the product descriptions, resolving
the number of reviews it has received (e.g., two delivery issues or fixing incorrect specifications.
reviews = 2,600 unit sales).
#searchguide

6. RETAIL PAID SEARCH GUIDE
05
In other cases, you can approach your manufacturer your merchandising division should be researching
to share with them customer feedback and search the ratings and reviews of brands, categories of
performance data so they can make the quality products and specific products that you do not
control changes necessary to improve customer currently carry.
satisfaction.
Ratings and reviews are just one way for
Improving performance means understanding and merchandisers to uncover new opportunities and
delivering the products that customers want most. find the right product mix, but they are accessible
To that end, in addition to the number of reviews, and should already be included in marketing plans.
TARGET REPEAT
04 CUSTOMERS
The two most important metrics retailers should Figures like these explain why Zappos’ year-over-
focus on are customer acquisition and lifetime year revenue growth resembles a hockey stick–
value (LTV). Understanding the measurements hockey sticks are pretty linear after the blade. Once
behind these two figures will help you drive a Zappos acquires a customer, they use numerous
sustainable business. tactics to increase customer loyalty such as their
one-year return policy, free shipping both ways,
WHAT ARE YOUR CUSTOMERS REALLY and 24×7 phone-based customer service.
WORTH?
LTV is predicting the future value of a customer LTV AND PAID SEARCH
and making the appropriate investments now to What does this have to do with paid search?
secure that value. Managing LTV well makes the Well, knowing what a customer will be worth in
difference between linear growth and exponential the long-run influences what a retailer should
growth. Currently, only a handful of retailers be willing to pay to secure the position in search
understand this and use it to guide their marketing results necessary to acquire that customer.
and pricing decisions.
Imagine if you knew that a customer was worth 3.6
Zappos does a phenomenal job of managing LTV. times the value you believe they have today. In that
In 2008, CEO Tony Hseih released some striking case, you would be willing to bid much higher to
data on Zappos’ success: secure a more competitive position because ads in
the top positions capture significantly more traffic.
» More than 75% of purchases are made by If you are not optimizing campaigns based on
repeat customers lifetime value, you’re allowing another retailer to
take future customer revenue that could be yours.
» Over 50% of their customers purchase again
» Repeat customers have a 27% higher average Retailers like Zappos and Amazon do not optimize
order value (AOV) & will order 2.6 times more their campaigns to obtain one incremental sale.
in the next 12 months (3.6 times per year) Instead, they optimize their campaigns around
obtaining one incremental customer. Most
» The 12-month LTV of a Zappos customer is retailers do not know the LTV of their customers.
over $300, 175% higher than their first pur-
chase indicates
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7. RETAIL PAID SEARCH GUIDE
06
It’s not always easy to measure, but it is important THREE KEYS TO LONG-TERM CUSTOMER
to get started. One way you can start is to integrate ACQUISITION:
your financial databases (that contain pricing and
cost of goods sold data) with your marketing and 1. Manage your campaigns for non-brand (product)
analytics partners. By bringing all this information terms and brand (trademark) terms separately.
together into one place, you should be able to Spend more paid search budget on non-brand
receive reporting and manage on LTV metrics at terms because they attract new customers.
the keyword, brand, category, and retailer levels. 2. New customers tend to have a lower AOV than
This knowledge will help you to make more repeat customers. To balance, set free shipping
informed decisions about appropriate ad spend thresholds or other incentives a bit above your new
for new customer acquisition. customer AOV.
Managing Lifetime Value well means making 3. Do not use third party payment processors
investments today that will yield multiplier-effect that will not share customers’ email addresses with
benefits tomorrow. It is the difference between you. Email marketing is the most cost-effective
slow-growth and hockey stick growth. marketing and retention tactic available.
INTEGRATE
05 INVENTORY
Integrating paid search campaigns with product Start by creating custom landing pages for these
inventory can lead to dramatic improvements products and direct traffic to them. This strategy
in marketing campaign efficiency and revenue will often turn a non-converter into a customer.
growth. In particular, doing just one straightforward
thing—pausing keywords for products that have AVERAGE CONVERSION RATES CAN BE
gone out of stock, and then re-starting them when MISLEADING
the product is back in stock—can boost marketing In paid search terms, when a product goes out
campaign efficiency by as much as 30%. of stock, CVR drops dramatically but most bid
management systems don’t adjust right away.
ONLY ADVERTISE WHAT’S IN STOCK Instead, their paid search decisions look at a rolling
Conversion rates (CVR) approach zero when a average CVR which lags behind the real-time CVR,
customer discovers that the product they are and averages decay slowly, even though the real
looking for is out of stock. CVR may plummet. While waiting for the rolling
average to catch up to the truth on the ground, ad
After all, finding the same product from another site spend goes to waste and revenue drops. A more
is often just a couple clicks away. Any campaign advanced strategy would re-allocate paid search
that drives prospective buyers to a product that resources to a better performing campaign.
you can not sell is a waste of your ad dollars. Ad
budget that could have been driving immediate When an item comes back in stock, the problem
sales of in-stock products goes to waste. Worse, is the same in reverse. Most systems, in response
running ads for out-of-stock items provides a to rising CVRs, gradually “bid up” CPC ad spend,
poor customer experience, eroding brand value, again based on rolling window averages thus
preventing return visits, and reducing a customer’s under-advertising a hot item.
lifetime value.
Eventually, CPC rates should reach a correct level,
ELIMINATE EXCESS INVENTORY but when the product falls out of stock, the cycle
Retailers are constantly adding new products repeats. Furthermore, the effects of these cyclic
and models, and discounting older items. dips in inventory cloud the pool of historic data
Developing a strategy to reduce excess inventory from which future CPCs are calculated, causing
and eliminate discontinued products is key. dramatic instability in a bid management system.
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8. RETAIL PAID SEARCH GUIDE
07
INTEGRATING INVENTORY INTO PAID SEARCH expense. This modeling can be used to quantify
A smarter approach integrates retail inventory with the financial impact of not keeping the highest-
paid search technology. margin products in stock.
When a product goes out of stock, paid search THE EFFECTS OF LONG SHIPPING TIMES
bids are paused and the portion of ad spend is Like out of stock products, long shipping times
re-allocated to other well performing campaigns. also have a significant impact on conversion rate
Efficiency is maintained, and waste reduced. (CVR). From a customer’s perspective, if a product
Revenue grows dramatically as advertising dollars will not ship for ten days it might as well be out of
are spent on the best-performing keywords. stock if another retailer ships faster.
Inventory information should not just flow one- A marketing team must measure declines in CVR
way. A search marketing division or agency should caused by extended shipping delays, then pause
return business intelligence on which high-demand keywords accordingly. The ad spend can again be
products are frequently out of stock or are on reallocated to higher converting products.
the verge of going out of stock, helping to match
supply and demand. Marketing budget dollars are limited. Do not spend
them to advertise products that you can not sell.
A marketing team should also help identify a Smart marketing management is also smart
retailer’s most profitable products by factoring in inventory management.
the costs of goods sold (COGS) and advertising
CASE STUDY:
Buy.com doubles conversion rates and increases profitable revenue
Buy.com set ambitious annual ROAS goals. In order to achieve them, Adlucent focused specifically on
non-branded, product-level terms and quickly expanded coverage across the entire Buy.com catalog.
Adlucent leveraged its advanced retail Deep Search™ modules to optimize for revenue and profitability by
predicting key factors, such as product effectiveness and competitive seasonal trends, and then integrated with
Buy.com’s inventory activity to effectively manage bids based on product availability and sales priorities.
The result? Conversion rates doubled and profitable revenue grew.
ADJUST FOR
06 SEASONALITY
Seasonality is a term retailers use to describe the as 300%—as customer urgency increases. For the
fluctuating demand for products. It’s also one marketer, PPC advertising is more effective when
of the most important factors that affects PPC customers are more motivated.
conversion rates in online retail.
Average order value often trends downward
THE IMPACT OF SEASONALITY as customers become more focused on
Seasonality influences conversion rates (CVRs) their purchases and are less susceptible to
and average order value (AOV) changes during up-sells, cross-sells, and other point-of-sale
seasonal spikes. recommendations. If their purchase is a gift, the
price is often lower than what a person might
Conversion rates often jump dramatically when spend on themselves.
traffic spikes occur–for some categories as high
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9. RETAIL PAID SEARCH GUIDE
08
THE IMPORTANCE OF PREDICTION When modeling year-over-year changes, keep
These dramatic shifts in CVR and AOV during in mind that year-over-year doesn’t always refer
seasonal spikes have a significant impact on how to the same date of the year. Make sure to line
aggressively you should bid in your PPC campaigns. up your dates correctly as customer buying
behaviors vary by day of the week during the entire
The model that illustrates the relationship between year and conversion rates trend upward during
CPC and CVR is: holiday seasons. Overlaying these factors on top
of your predictive model improves your campaign
performance.
(AOV x CVR) FOUR RULES FOR SEASONALITY:
CPC = 1. Identify seasons and micro-seasons for every
ROAS product.
2. Predict changes in AOV & CVR based on
historical sales data, day of week, year, & other
If you are adjusting the CPC in response to shifting factors.
CVRs & AOVs, you are too late. Retailers need to
predict seasonal changes and adjust proactively. 3. Adjust CPCs proactively in anticipation of
Doing so involves modeling year-over-year forecasted changes.
changes in CVR and AOV, normalized by recent 4. Plan for and measure the effect of roaming
performance, then adjusting CPCs and building holidays like Easter and Mardi Gras on your
campaigns—all well in advance of the forecasted traditional seasons and micro-seasons.
seasonal spike.
DEVELOP A MOBILE
07 STRATEGY
Mobile has quickly become the next frontier for They may ask their friends which televisions they
advertisers. Understanding the benefits and would recommend by posting the question on their
psychology behind its use is critical. If you have Facebook wall. After narrowing their search, they
simply designed a mobile friendly website and copied may visit a local electronics store to see the tv
your web paid search strategy, you are setting in person. If they are still interested, the shopper
yourself up for failure. Your goals for online and will likely access their smartphone and conduct
mobile should be different. an in-store mobile search to compare prices and
read customer reviews. Google named this process
Developing a paid search strategy starts with of product research the Zero Moment of Truth
understanding the psychology of your buyer. It is no (ZMOT).
secret that shoppers today are spending more time
doing research before making product decisions. Mobile paid search connects retailers and
consumers at the ZMOT by enabling them to serve
Let’s use an example personalized messages to shoppers during the
“Consumer behavior of someone shopping
for a flat-screen tv.
research process. A shopper may not be ready to
purchase at that moment, but a retailer becomes
is a critical component This consumer is likely
to start their search
a part of an important branding opportunity that
may result in a sale at a later time. This example
of mobile planning” online, looking at
various brands and
shows why your mobile performance should not
be measured solely on direct revenue, and should
features. instead consider all potential facets of attribution.
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10. RETAIL PAID SEARCH GUIDE
09
Whether on a tablet or a smartphone, mobile within apps. As with paid search, consider mobile
shoppers exhibit different behaviors. A person users’ behavior to determine the right approach for
shopping on their smartphone may be searching developing and deploying mobile display ads.
for a local business in order to make an immediate
purchase. A tablet owner may spend his or her Whenever you are employing a new strategy,
evening browsing the Internet, their mobile searches start by testing a small sample of your current
influenced by offline advertising. Understanding product line. Create separate campaigns for your
your customers shopping behaviors on mobile mobile ads as factors like bids, budget, keywords,
devices is essential. Start by measuring the source and ad creative will be different for mobile.
of your traffic. Determine which devices are driving Continuously monitor and refine your strategy to
the most traffic and then optimize your mobile site maximize performance. Once you feel comfortable,
or develop an app based on your buyers’ needs. add additional products from your portfolio.
Once you have identified your target audience, FOUR TIPS TO HELP YOU GET STARTED
it is time to optimize your customer acquisition WITH MOBILE SEARCH:
strategy. What are the best methods to reach
your prospective customers—paid search, mobile
display, or both?
1. Study Buyer Behavior
Analyze how people are shopping for you now.
Do they do a lot of research before making a
PAID SEARCH purchase? What tools do they use?
Paid search will account for 40.2% of mobile
advertising by 2015.6 There are many factors to
consider when developing your campaign. For
2. Be Mobile Friendly
It may sound intuitive, but only 22% of the IR 500
example, keyword length should be shorter for
had a mobile commerce site or app last year.7
smartphones as users will spend less time typing
Determine whether you want to invest in a mobile-
search queries. Also, make sure your creative is
friendly website, an app, or both.
tailored per device and preferred action. Is your
goal to drive an immediate online conversion or
drive someone into a local store to buy? Bid more 3. Optimize Your Customer Acquisition
aggressively for the higher positions during the Strategy
evenings and weekends as this is when mobile Are you going to use paid search, mobile display, or
users are shopping on their couches, browsing both? Manage your mobile and online campaigns
for local information and searching for product separately and consider factors like bids, CTA,
information in stores. keywords, and ad creative.
MOBILE DISPLAY 4. Measure & Optimize
Standard text ads can be purchased on smartphones Start by testing a small portion of your products.
and tablets with full Internet browsers. If you Continuously monitor and refine based on
participate in Google’s Display Network, your ads performance.
can be placed on mobile-enabled websites and
STOP PROMOTING POORLY
08 PERFORMING PRODUCTS
Why would you pay to promote a product with a and ignoring product returns, you’re allocating
high return rate? dollars to the wrong areas and providing a bad
customer experience. Analyzing returns data
Spending money on products that frequently can provide valuable profit and loss benefits
get returned may sound crazy, but many paid to retailers and their suppliers, and promote a
search programs make this mistake. If you are positive brand experience.
basing marketing campaigns on gross sales
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11. RETAIL PAID SEARCH GUIDE
10
FOUR WAYS TO PROVIDE A BETTER 3. Allocate Marketing More Efficiently
CUSTOMER EXPERIENCE: Running campaigns for products with high return
rates represents wasted ad spend. Don’t compound
1. Improve Product Merchandising these mistakes by extending their reach to valuable
Look for products, categories and sub-categories website real estate or an e-newsletter promotion.
that are showing high return rates. Pause campaigns
for those products immediately, then research the 4. Deliver a Better Customer Experience
cause and take the appropriate action. No customer enjoys the returns process, and once
they go through it, they may never purchase from
2. Provide Feedback to Manufacturers you again. Make sure your website accurately
It is sometimes necessary to involve the product’s describes the product you are selling and consider
manufacturer to resolve a high return rate. It may eliminating products that can not be fixed.
be a design issue, or something as simple as the
product description or assembly instructions.
TAKE ADVANTAGE OF
09 SEARCH ENGINE OFFERINGS
There are three key areas where you should 2. Rotating Ads for Testing
g e t started—building out tight ad groups, Rotating ads for testing is one of the most powerful
rotating ads for testing, and using focused search engine tools. A 10% improvement in CTR
targeting. Focusing on these three opportunities on an ad will result in a 10% increase in overall
will help you improve Quality Score (QS), lower the revenue on the account (assuming the same
CPCs on your account, and increase your reach CVR and AOV) as well as improve overall CTR
(impression share) on desirable keywords. and QS. Incremental improvements in messaging
can help retailers avoid the dreaded plateau
1. Building Out Tight Ad Groups in performance.
Google recently increased their campaign limits
per account because they realized that advertiser’s 3. Using Focused Targeting
had a strong desire to segment and target their In addition to basic location, language and network
keywords further. targeting, both Google and UM allow for device
targeting. Separating your campaigns by device
Tightly themed ad groups with highly related will enable a host of bidding options, ad scheduling
keywords will allow for the highest ad text optimization, and ad text testing. Also, as mentioned
relevancy. Your ad text will have the maximum earlier, mobile and tablet users generally behave
amount of bolding for any keyword in a given ad differently than traditional searchers and should be
group, resulting in higher CTRs for each keyword, a segmented and optimized separately.
better QS, and a lower CPC.
In contrast, inflating ad groups with thousands of TAKING IT ONE STEP FURTHER
keywords allows for simpler reporting and In addition to the traditional search engine options,
categorization of keywords, but often masks Google and UM are constantly releasing betas
performance of single keywords, destroys CTR and and new features. These advances often lead to
quality score, limits promotional possibilities, and immediate increases in traffic, improvements in CTR,
leads to higher CPCs in the long term. reduction in CPCs, and incremental revenue gains
that can give retailers a leg up on their competition.
In addition, because impression share is measured
at the ad group level, separating ad groups by
match type will allow you to see your true market
penetration. Accurately controlling your reach and
budget, all while working to optimize for lower CPCs,
will give you a compounded advantage over time.
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12. RETAIL PAID SEARCH GUIDE
11
RECENT BETAS INCLUDE: » New Match Types
» Ad Extensions After Google changed their broad match algorithm
Sitelinks, Enhanced Sitelinks, Location Extensions, in 2008, advertisers realized that broad match
Communication Extensions, Product Extensions, keywords were no longer as reliable as they should
Deep Links be and started migrating towards more exact match
keyword types. Unfortunately, in order to capture the
These new ad formats have changed the CTR traffic of the old broad keywords, accounts have
norms for search engine marketing over the past become bloated by variations like misspellings and
few years. One, two, and three line Sitelinks greatly plurals. In response, Google released the Modified
improve the CTR of search terms as ad formats are Broad Match keywords in 2010 which helped
optimized. advertisers regain some control.
» Product Listing Ads » Near Match beta
Google added Product Listing Ads (PLAs) as a Google recently announced the launch of Near Match
beta in 2009 and rolled it out to the public a year beta, a program designed to build more granular ad
later. The program started with incredibly low groups for positive and negative keywords to avoid
CPCs that have now inflated astronomically in triggering irrelevant traffic and paying for unwanted
the face of rising competition for limited spots. clicks.
While some worry that PLAs may cannibalize other
paid search efforts or organic traffic, research Search engine strategies are constantly evolving and
indicates that revenue from these ads is largely changing the search landscape. Retailers should
incremental. Some of Adlucent’s clients have seen continue to monitor trends, test their strategies, and
up to 20% of their revenue driven through PLAs. participate in betas.
MONITOR
10 KEY METRICS
Retailers should never become complacent when GROSS PROFIT PER IMPRESSION (GPI)
measuring paid search programs. While basic GPI is measured at the ad level with the following
revenue, conversion, profit margin, and traffic formula:
metrics will satisfy your CMO, they will only provide
a limited view of the true potential. Regularly
monitoring your performance metrics will help you (Ad Revenue - Ad Cost)
better optimize your search program.
= GPI
Search Engine Metrics Impressions
There are a variety of search engine metrics you
can measure. These include impressions, clicks, Retailers can use GPI to determine which ads are
cost, revenue, and orders. Retailers can also truly delivering the most value to their program.
analyze behavior before and after the click, or look These ads return the most profit per impression
at a combination of the two. served. GPI is superior to CTR and CVR because it
analyzes both before and after the click.
If you really want to take your PPC program to the
next level, consider using the following metrics:
#searchguide

13. RETAIL PAID SEARCH GUIDE
12
THE RATIO OF % AD SPEND AND » Product Descriptions
% AD REVENUE BY MATCH TYPE Does the product have an accurate and helpful
The percentage ad spend is measured at the description? Does it have an image? Analyzing the
keyword level and then rolled up to match type. effects that various attributes have on conversion
Exact match keywords are the most controllable rate will help to determine bidding and optimization
and generally have the highest ROI. It is important strategies for new products.
to regularly monitor the ratio of spend and revenue
(percentages) by match type in order to see if
» Cross Channel Sales
you are pushing an optimal amount of your ad
How is this product doing in other channels?
spend through exact match keywords. An optimal
Does it sell on CSEs? We’ve seen products with a
amount will essentially put the ratio at one for all
high sales rank on CSEs have a much higher paid
match types.
search CVR than the average product.
PRODUCT METRICS
We already know inventory, shipping, and ratings
» Product Breadth and Depth
How many types of a single product do you have?
and reviews can impact the success of products,
Do you have each color and size? How do these
but there are a few other product related metrics
factors affect CVR?
that will help you understand and control the
performance of your account.
Each retailer is unique and performance goals vary.
It is important to measure traditional metrics like
» Price revenue growth and return on ad spend, but also
The price of a product can greatly affect the establish retail-specific performance tracking
performance of your ads. Although higher priced metrics. Always create separate campaigns for
items often convert at a lower rate than lower testing factors like match type, location, and devices.
priced items, the more expensive items have
a greater payoff. Retailers should analyze the
tradeoff between ROAS and price. If products are
priced too low, consider adjusting the CPCs.
These ten tips are intended to help you improve your paid search campaigns. Retail paid search
is complex and requires a team with deep retail expertise and sophisticated automation software
that responds to real-time changes in the marketplace. Adlucent offers predictive search and
shopping analytics powered by its Deep Search™ platform that is personalized and curated by
retail experts.
ABOUT ADLUCENT INTERESTED IN LEARNING MORE?
Adlucent is a marketing technology and analytics www.adlucent.com
organization based in Austin, Texas, focused solutions@adlucent.com
solely on Retail and eCommerce. Leveraging 1.800.788.9152
its Deep Search™ analytics platform, Adlucent’s
experts help the smartest retailers acquire new Submit a demo request at –
customers and grow revenue profitably through www.adlucent.com/#getintouch
digital marketing. Launched with a decade-
long relationship with Amazon.com, Adlucent’s
client base includes multi-channel brands such
as Anthropologie, Buy.com, Free People, Jewelry
Television and Oriental Trading Company.
#searchguide

14. RETAIL PAID SEARCH GUIDE
Appendix
SOURCES SHOPPING STATISTICS
1
Google Shopper Sciences 2011 Macro Study 84% of those use online sources to guide them. Of
2
Internet Advertising Bureau and PwC 2012 those, 54% comparison shop for products online —
3
Etailing Group 2010 Google Shopper Sciences 2011 Macro Study
4
Google AdWords study
5
Bazaarvoice client case studies On average, for advertisers who appear in the top
6
eMarketer 2011 rank organic slot, 50% of ad clicks are incremental.
7
eMarketer 2011 This means that half of all ad clicks are not
replaced by organic clicks when search ads are
paused — Google AdWords study
DICTIONARY
AOV (Average order value) Average dollar amount 57% of online shoppers begin their shopping
spent for each customer order process from a search engine — Etailing Group
COGS (Cost of goods sold) The total cost of AD SPEND STATISTICS
making a product that is sold Internet advertising climbed to $32 billion in 2011,
with ad revenue up 22%. At $14.7 billion, the bulk
COS (Cost of sale) The purchase cost or inventory of the spend was made in the area of search
value of merchandise sold advertising, a jump of 27% — Internet Advertising
Bureau and PwC
CPC (Cost per click) The dollar amount you pay per
click of an ad
MOBILE STATISTICS
The projected mobile spend will reach $4.3 billion
CTR (Click-through rate) The number of clicks that
by 2015, with paid search accounting for 40.2% of
your ad receives divided by the number of times
that spend.— eMarketer 2011
your ad is shown
CVR (Conversion rate) How often a click on your ad 22% of retailers in the Internet Retailer Top 500
resulted in a conversion, a meaningful action like a report having an m-commerce site or app, which
sale, lead, or sign-up is 110 of 500 — Internet Retailer 2011
GPI (Gross profit per impression) Profit per 43% of local searchers on mobile devices
impression served physically showed up at the business location with
22% of those users actually made a purchase. —
LTV (Lifetime value) Cash flows attributed to the AT&T study published in Search Engine Land 2011
relationship with a customer
70% use their smartphones while in a store — The
PLA (Product listing ad) Search ads that include Mobile Movement: Understanding Smartphone
richer product information, such as product image, Users, by Google and Ipsos OTX MediaCT
price, and merchant name, without requiring
additional keywords or ad text 74% of smartphone shoppers make a purchase,
whether online, in-store, or on their phones — The
QS (Quality score) How relevant your ads, Mobile Movement: Understanding Smartphone
keywords, and landing page are to a person seeing Users, by Google and Ipsos OTX MediaCT
your ad
53% of shoppers make a purchase after conducting
ROAS (Return on ad spend) How much profit a search, with 40 percent doing so at a retail
you’ve made after ad spend has been factored in store — The Mobile Movement: Understanding
ROI (Return on investment) How much profit Smartphone Users, by Google and Ipsos OTX
you’ve made from your ads compared to how MediaCT
much you’ve spent on them
ZMOT (Zero Moment of Truth) The research a
shopper does before deciding which product to buy