This post is the first of an initial nine part series on Comparison Shopping Engine (CSE) marketing best practices. Though much of CSE marketing is unique to its medium (such as bidding for product ad placement and data feed optimization), there are a lot of other aspects to it that are quite familiar to retailers. Many of the best practices in the CSE channel have been simply ported over from the offline direct marketing world or the retail channel merchandising sciences.
Stir the product mix
Fundamental to retail channel marketing (online or offline) is the concept of the ‘assortment.’ The assortment is made up of a set of products that will be offered for sale. That product set is also called the product mix.
In the constraints of the offline world where floor space, shelf space, catalog space and sales person mind share are limited… assortment planning is key to merchandising the right product mix that will achieve a retailer’s goals. In the CSE channel, the main constraint on the product mix is ad budget. Not every product is worth spending money on to get traffic from. Beyond that, not every product is ready or appropriate to merchandise. Unfortunately, some retailers are still in a position where they basically send their entire catalog to every shopping channel they are on.
Assorted thoughts » Unfortunately, some retailers are still in a position where they basically send their entire catalog to every shopping channel...
Creating smart assortments
The products in a merchant’s catalog need to be qualified into an appropriate assortment by filtering the available SKUs by criteria such as: stock level, condition, price point, margin, gross profit dollars, product type and/or product category (to name a few). Adding this level of retail intelligence to qualify the products listed on the comparison shopping sites is a key to creating smart assortments. By doing this a retailer can typically increase their ROAS (Return on Ad Spend) and GMROAS (Gross Margin Return on Ad Spend) by 100 to 300%.
Beyond looking SKU at level criteria to qualify an assortment, it's essential that a retailer's reporting system is able to report performance metrics by SKU and by shopping channel. Really smart channel assortments are those that are dynamically adjusted based on reported SKU level ad performance. The incremental gains to be had in doing this are easily in the 300 to 500% ROAS range. Frequent adjustments (preferably with every outgoing data feed) are key. As a general axiom, it follows that the more rapid the adjustments, the higher the return.
More assorted thoughts » Really smart channel assortments are those that are dynamically adjusted based on reported SKU level ad performance.
From smart assortments to a portfolio view
Creating smart assortments (product and performance criteria qualified) will take you 90% of the way to optimizing your ad spend based on the assortment issue alone. In order to fully optimize your ad budget base on assortment the retailer needs to view all their assortments published across all channels as an ad portfolio. In fact, creating the channel specific assortments is the first step in creating an ad portfolio that can be highly optimized.
Some vendors who specialize in search engine bid optimization talk a lot about a 'portfolio' approach to keyword bid optimization. This means that they are trying to find the most efficient place to spend the next incremental ad dollar across a portfolio of keyword ads. This is an appealing concept and one that is rarely applied to shopping search.
In the shopping search (CSE) channels each product listing is an ad with a specific return associate with it. It's a bit too crude to view the ROI on just a per SKU per channel vector over time. It's important to have a view of the best performing product listing ads across all channels and let your CPC bid dollars flow across channels to the product listings in the ad portfolio of that have the greatest potential to deliver exceptional return.
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