Your Affiliates Should Not Compete Against You

Catalogers must continually generate new buyers to keep their house-file healthy. They’re always keen to discover hot new channels for acquisition, and to uncover tricks for wringing more new buyers from established channels.

Over the past five years, online affiliate programs have become increasingly popular among catalogers. Many of these catalogers also run search marketing campaigns. Managed wisely, search and affiliates can co-exist peacefully.

When these programs are left unchecked, however, many catalogers find themselves competing against their own affiliates, driving up their overall marketing costs, increasing their use of discount offers, decreasing their average margin, and possibly harming their brand. Here are some tips on taming your affiliate programs.

Use Selective Addition to Manage Your Affiliate List; Not Selective Deletion

Because an affiliate program requires strict guidelines that are consistently enforced, most marketers will find it more efficient to let the right affiliates in one at a time, rather than ousting affiliates after they have done harm to your marketing results or your brand. The top 5% of your affiliates will generate 95% of your sales. Evaluate the economics of choosing to ignore all the smaller affiliates – you may find they take too much work for their paltry return.

Don’t Let Your Affiliates Bid on Your Brand Name

Google currently only permits ones advertiser per keyword per domain: When the keyword is your brand name and the domain is your site, you, not your affiliates need to win that placement.

Some retailers hypothesize that it’s sufficient to be number one in organic results for their brand name. In fact, however, there’s proven incremental value in being visible in both paid and unpaid search results.

Allowing your affiliates to advertise against you on your brand can increase your cost without increasing your sales. Don’t let them. Mid-sized retailers report cost savings of $50k and more from this simple change.

Examine the Core Economics of Your Affiliate Program

When an order results from a paid search ad placed by one of your affiliates, you may pay three intermediaries: the search engine, the affiliate network, and the individual affiliate.

For the marketer doing paid search without affiliates, at least one middleman is removed.

In the case of a cataloger running their paid search in-house, there is only one entity to be paid: the search engine serving the advertising. In the case of a cataloger running their paid via a search marketing agency, there are two entities collecting fees: the search engine for the advertising, and the agency, for managing the campaigns.

Even without studying the numbers, fewer middlemen usually means greater profit.

Study your numbers. Understand what value is being added by each link in the affiliate chain, and the expense of generating that value.

Make Sure your Affiliates are Providing Incremental Business

Your affiliates should be helping you tap new veins of customer acquisition. Ideal sources include churches, synagogues, PTOs and PTAs, clubs, schools, as well as professional and community organizations.

It’s counterproductive for affiliates to simply be competing against you for the same pool of online customers.

Insist on Transparency

Avoid the “black box.” The methods your affiliates use to attract new customers should be completely transparent to you. Where are the affiliates advertising your site? What do those pages look like? Are the affiliates using your offers correctly? Is their presentation of your company brand-appropriate? Allowing affiliates to advertise on inappropriate sites can lead to embarrassment or worse.

Reduce Reliance on Discount Programs

Many affiliates will drive traffic to your site with ads offering discounts and coupons. Retailers who allow their affiliates to market this way should revisit this decision for at least two reasons.

• Cannibalization: When an affiliate offers coupons in response to searches on your competitive terms, or worse, your brand name, you often sacrifice margin on orders you would have received without the discounting. It’s unlikely that you would pay someone to hand out discount coupons in the lobby of your retail store. Likewise, allowing your affiliates to distribute coupons on paid search rarely makes economic sense.


• D.I.Y: If discounting is part of your overall marketing strategy, then you can probably execute more effectively by doing it yourself. Affiliates realize that many people begin their online shopping with a search on the phrase “[your brand name] coupon.”

  Working with an in-house team or paid search provider, you can craft your own discount ad copy and destination pages. You can then test the effect of these campaigns against a range of other approaches within your advertising program. And you can do so without paying a commission on a discounted sale.

  Giving up margin hurts. When you must do so, decide where this tactic makes the most sense. For example, rather than offering online discounts to new customers as a result of a loosely managed affiliate program, catalogers may choose to invest in a reactivation program.

The bottom line? Know what your affiliates are actually doing for you, how they’re doing it, and what you’re paying them for. With this knowledge, you can do more of what is really working, and less of what isn’t.

Break out Brand vs Non-Brand Paid Search Economics

Digging into the details can help you win sales from each advertising dollar. To maximize return on their paid search efforts, savvy direct marketers slice and dice their reports, analyzing their results by phrase concept, copy, landing page, engine and time of day. The resulting insights help retailers spend more on the advertising that performs well and less on the advertising that doesn’t.

One of the most important analyses a retailer can perform is the breakout of brand vs non-brand paid search economics. As you drive your program to its target metric, evaluate its success excluding the effect of the sales and cost associated with sales on your brand.

Don’t Let Your Brand Name Searches Mask Poor-Performing Terms

By brand we mean your brand itself (”Toyota”), as well a variations, misspelling and domains (”Toyota motors”, “Toyota USA”, “Tyota”, “Toyota.com”, etc.).

The brand vs non-brand breakout is significant for every marketer. How to approach it depends on the nature of your business.

For all retailers, searches on your brand are often among your most profitable campaigns. Indiscriminately rolling brand name results into your programs overall results can mask the performance of less effective terms. This leads you to continue to over-investing in poor performing terms.

Marketers working with third parties on paid search should make sure their partners also pay heed to this distinction. Your affiliates and your search provider will always be happy to report strong aggregate results. It’s up to you the retailer to determine how much of the good news should be credited to the messenger.

Catalogers Should Recognize the Influence of Print

If you’re a cataloger, searches on your brand name are a product of the catalogs that you mail and any other offline advertising you buy. Therefore, to truly evaluate the success of your paid search program, you need to report on these ads tied to your brand, separately from your other ads.

Failure to do so can lead to inefficient cross-subsidization among your marketing programs, with your catalog paying the true costs associated with brand –phrase orders credited to paid search

Some catalogers may in fact be willing to tolerate some subsidization by their brand name terms, allowing their print media to offset a portion of paid search cost. Likewise, some marketers may choose to allow brand-name phrases to bankroll bids on more competitive terms. But the decision to subsidize should be always be made deliberately not due to lack of visibility.

Brand vs. Non-brand for Non-catalogers

For non-catalogers, the brand vs. non-brand breakout is less clear cut.

If you’re both a direct retailer and a manufacturer, and you compete against your retail resellers your brand name is simply a “word in play.” As with all other phrases associated with your business, you will be bidding on this term alongside all your resellers.

The same holds true if your company’s name contain a generic term describing your good and services. For example, a retailer of men’s trousers doing business as “Best Possible Pants” could not attribute orders on the phrase pants to people searching for his brand.

The bottom line? When analyzing your search marketing campaigns, report on results with and without your brand terms. Partitioning your analysis in this way will likely provide you key insights on what is working and what isn’t.

Bidding For Position Is Dangerous

Faced with the bid spasms of some of their competitors, marketers may be tempted to measure their success by the most readily visible metric: Position on the page.

But bidding to position is dangerous. Clicks typically do rise with position but sales-per-click may not, and worse, this approach to bidding ignores data that is essential to performing successful bid calculations.

If you’re Coca-cola, the size of your Google spend relative to your investment in , say, TV, is small enough to let you go for position 1 at any cost . But for the typical direct marketer, a more nuanced approach is called for.

Avoid Dangerous Twitch Bidding

Responding to a competitor’s bid spasms can be just that: a dangerous twitch very much like the movements favored by stock market day traders. These momentum investors often flame out in the long run.

If you want your paid search program to profitably endure, it pays to adopt the measured stance of a Warren Buffet, or his Columbia University mentor Benjamin Graham. Applied to search marketing, the mode of the value investor dictates taking a scientific approach to your own business and the competitive marketplace.

Bidding Wars Benefit the Engines, not Retailers

There’s neither art nor science to bidding for position. Indeed, the engines make it easy; Within Yahoo! Search (formerly Overture), the dashboard lets you do just that.

But bidding wars benefit the engines, not retailers: Convince more than 3 advertisers than they need to be in one of three top positions and the race is on.

This kind of competition can mean economic devastation for your search program.

Consider this comparison to the twentieth century arms race: The former Soviet Union had a nuclear arsenal capable of razing the world many times over, but locked into competition, it kept upping the ante, eventually bankrupting itself. Worth keeping in mind the next time you’re tempted to race a competitor up the page.

The smartest marketers realize that just as in their offline programs, success in pay per click advertising depends on managing to target efficiency.

As always, applying the fundamental economics of your business is key:

For retail sales, subtract COGS (Cost of Goods Sold,) ad cost, and variable expense to compute ad-level profitability. (For businesses using paid search for lead generation, divide ad cost by lead to compute cost per lead.)

Audit Your Data

Given the foundational role of cost, make sure your data is accurate—or even relevant.

Tip: Make sure your internal team or search provider is reconciling ad cost with the authoritative data provided by the engines themselves. If you or your vendor rely exclusively on internal data to report on clicks and cost, you’re not capturing the reality seen by the engines, upon which your actual search advertising fees are based.

Govern Your Program with Relevant Rules

With fundamental profitability metrics in place and all data including cost, audited for accuracy, your program is ready for more precise adjustments. How will you deal with the debut of new terms that have yet to receive an order? Where is the threshold for lowering or raising a bid, and within what window of time?

The answers to these questions matter. For example, consider a retailer of high-end goods for whom conversion follows careful consideration. Suppose their target A/S ratio is 20%. Suppose that in week 1, a given term incurred $200 of cost with $0 of associated sales. Should bids for the term be decreased?

Suppose that in week 2, the same term again incurred $200 of cost and but generates a $4000 order. Depending on the retailer’s interval for term evaluation, the A/S ratio is either infinity or a very attractive 10%.

We painted our example with broad strokes and for a single term; but real-life ambiguities play out across thousands of search terms. The need for statistically relevant rules to govern your efficiency-based program is clear, and the effort will pay off.

Each Element of a Search Ad is Ripe For Testing

Savvy direct marketers understand that ongoing testing is the key to improving results.

Done right, paid search advertising lends itself well to this rigor: Each element of a paid search ad- keyword, copy, and destination page- can be the basis of a profitable test regimen.

You’ll notice that many of the same best practices from offline testing apply online as well.

Test Shouts, Not Whispers. Test One Thing at a Time.

Testing takes effort, attention, and sometimes money. Don’t test tiny tweaks. Favor bold tests that have the potential to really change your marketing. Subtle tests will, at best, yield subtle results, often too small to detect.

Multivariate testing (aka scientific tests, design of experiments, or Taguchi testing) offers marketers the chance to vary many factors at once in a statistically valid way. We strongly recommend a walk-before-you-run approach. Start by changing one element at time, determining if that elements helps or hurts in isolation. After you have a strong testing program in place, you can later bring in a consultant or software to help with more advanced testing methods.

Make Sure Every Ad Has a Unique Tracking Code. Make Sure Your Tests Are Statistically Valid.

Each code should describe a distinct combination of phrase, search engine, destination url, and ad copy. Without accurate tracking, you can’t distinguish losers from winners. Detailed tracking also lets you “slice and dice” your results after the fact along different dimensions, gaining more insight from the same testing effort.

Make sure you can separate marketing signal from marketplace noise. Familiarize yourself with basic statistical significance calculations. As a very rough rule of thumb, if you plot conversion rates over time, a test needs to increase conversion by more than 1.5 times the normal range of variability to be significant.

Keep a Testing “Notebook

For each test, document what was tested, why, and what happened. Just a few brief sentences can prevent you from repeating mistakes or wasting time on questions that have already been answered.

Before the test, write down a clear hypothesis of what you’re trying to prove or disprove (”Test 6: Our hypothesis is that bringing visitors coming into our site from paid search to the new simplified product page template will increase conversions relative to the current grid-style product page template”).

Write down your decision metrics, and the roll-out plans. (”If the new pages increase closing by a significant amount, e.g. 50+ more orders than the control for the week, we’ll discard the grid template in favor of the simpler template.”)

After the test, record what actually happened. (”Despite one very large order, the simple treatment did not work, actually reducing conversion, but by a statistically insignificant amount. Next steps: keep the grid, test another challenger later this month.”)

Accept That Many Tests will be Duds

Be patient and be prepared for the fact that most tests produce a null result. And the more successful your program becomes, the harder it is to move the needle. Because your current marketing approach represents years or decades of thoughtful improvement, many alternatives won’t test out better.

Should this realism about the difficulty of hitting home runs dissuade you from testing?

Not at all. When you do test your way into an improved marketing strategy – be that better copy, better destination URL choice, or better landing page design – you’ve struck gold, more conversions for the same cost. While success may not come easily, the potential rewards are well worth it.

Get into a Testing Groove

As much as direct marketers recognize the value of testing, many admit that they test far less frequently than they think they should. Work with your team to establish a rhythm to your testing. Instead of one-offs driven by the latest buzz, establish a plan for a series of tests and stick to it.

Introduction
Computers are great at simple repetitive tasks requiring extreme precision.

Much of paid search marketing fits this description. If you’ve managed paid search campaigns by hand for more than a few thousand terms, you know what we mean.

Updating thousands of bids daily, testing copy across thousands of ads, keeping myriad of tracking codes straight—a human quickly goes crazy trying to keep it all straight.

Bid Robots
Enter the bid robots.

These helpful pieces of software automate much of the intricate drudgery of tracking, managing, and optimizing bids for paid search campaigns. An intelligent and reliable bid robot is a key weapon in a paid search marketer’s arsenal.

But as useful as a smart bidding robot can be, even more important to success in paid search marketing is making sure a smart person supervises that ‘bot, particularly during key selling seasons.

The danger of driving with the rear-view mirror
Bid robots operate on the basic premise that tomorrow will look like today—that is, the recent past and present are reliable predictors of the near future. And this premise is usually right. Want to predict tomorrow’s weather? Take a look outside today. Crazy as it seems, predicting tomorrow’s weather by stating what happened today is on average more accurate than the National Weather Service.

The problem is that predicting the future based on the past breaks down as soon you’re not in steady state. And a direct marketer’s calendar is full of exceptional events, only some of which can be anticipated. There are the winter holidays, your peak selling season, changes in the competitive landscape, and new developments in the search engine’s algorithms, to name but a few.

A machine may know that bids on blue-striped widgets are best set by looking at the last few weeks’ worth of conversion data, but it doesn’t know that you just mailed a catalog. Or that Madonna was just spotted in Paris wearing blue stripes. Or that your top competitor just went broke. That’s why you need a smart human collaborating with your robot, watching it and twisting the dials to keep it on track.

What the robot knows and doesn’t know
Consider Q4, the peak selling season for most catalogers and retailers. As you enter the season in October, business can be pretty slow, and your robot could place bids accordingly.

In late November, as consumer spending ramps up, your robot follows suit. December week 1 is strong, week 2 stronger, week 3, stronger still.

Your robot is tracking bids to results every step the way. In fact, based on recent history, the robot might stomp the accelerator to the floor during December week 4.

What your robot doesn’t know is that, given your merchandise and shipping schedule, suddenly it’s too late for your shoppers to buy from you and get it in time to place under the tree for Christmas. Headed toward a brick wall, your ‘bot needs a smart human to step on the brakes, as recent data don’t contain any hints about the end of the season.

During holiday 2004, we heard unpleasant stories of retailers who left their robots unchecked, leading to costly and unprofitable bidding overshot the holiday. These retailers privately shared their dismay that their bidding systems kept spending in early January like it was still early December. Ouch.

Slow reaction times of bid robots
On the other side, robots can also be slow to react to the beginning of a holiday. The migration of shoppers to the web has made quick reflexes even more important. Over the past decade, we’ve seen holiday selling seasons become increasingly compressed. Online shopping and consumer willingness to wait for ever-stronger discounts make for a late start, rapid acceleration, and a sharp peak.

Online, when holidays do come, they come in like a freight train. Again, a smart human supervising a smart robot can help you get the jump on the holidays.

Robots don’t know what your customer is thinking; you do
Unlike a machine flying solo, a seasoned marketer also understands that conversion is always a function of the kind of traffic coming to your site, not just the quantity.

Consider the person shopping for Christmas ornaments on December 15. She’s likely busy and rushed. She waited to the last minute. If she’s paying for expedited shipping to get the goods in time, she’s more likely to be affluent.

Compare this person to the shopper looking for same ornaments on January 15. With more time than money, this second shopper is in the parking lot before the store opens, price-sensitive and looking for a deal.

Robots cannot see beyond their data
At its heart, a robot is just a collection of rules and algorithms. It can’t see beyond its data.

When you talk to your search provider or in-house expert, you should be able to ask questions about the basis of their robot’s approach.

While you can’t expect an agency to reveal the code behind their technology, you should expect specific concrete answers. Your agency’s explanation of the bidding approach being used to spend your precious advertising dollars should make sense to you, and should gibe with your understanding of direct marketing. A bid robot may be proprietary, but should not entirely be a black box.

Use robots and humans
The bottom line?

Understand that bidding requires both smart humans and smart machines. And dig in a little, asking your agency or technology partner about the approach their faithful bid robot uses when buying clicks for your firm.

Introduction
Where keyword paid search allows marketers to advertise on relevant phrases, feed-based search allows you to advertise relevant URLs.

These shopping comparison data-feeds can be an effective way to ensure the engines send traffic to every page on your site that you wish. They can be effective at pulling value from the “long tail” of the search distribution.

Choose which shopping comparison sites to work with
Working with companies ranging from start-ups to the Fortune 500, we’ve found it profitable for catalogers to provide feeds for such sites as Yahoo Shopping, Yahoo SiteMatch Exchange (the former Inktomi), Froogle, Shopping.com, Pricegrabber, MSN Shopping, and Gifts.com. While these sites command far less traffic and generate far fewer sales than Google or Yahoo search, they can provide modest additional revenue at reasonable advertising cost.

This article gives you some tips to help you get more out of the feeds.

How can you advertise your pages via the feeds?
Work with your in-house IT resources or out-sourced agency to prepare special files containing information on each URL you want to promote. Information for each page typically includes the product name, description, price, and image link. Independently or through your agency, submit these special files to the feed engines. Typically, retailers submit feeds daily or weekly.

The decision to in-source or out-source feeds depends on the availability of IT resources, and the skill of your marketing team in optimizing feeds for each engines.

Working with an advertising agency
If you choose to work with an agency, ask them if they are building your feeds themselves or if they too are outsourcing them.

If your agency is outsourcing their feed work, ask which company is actually doing the work, and what level of service—frequency of updates, speed of problem resolution, billing audits, etc.—you can expect from your agency and their partner.

Consistent reporting
Make sure your reporting platform integrates all your efforts across all the data-feed venues into one set of unified reports. It’s helpful to also integrate your paid keyword search into the reporting as well. This lets you avoid “double counting” orders.

As an example, double counting can occur when prior to purchasing from you a person clicks on both a paid search ad (say, a Google AdWords ad) as well as a data feed ad (say, a Yahoo Shopping link).

Valid Feeds vs. Effective Feeds
There are 2 aspects to feed quality: feed validity and feed effectiveness.

Feed validity is about making sure your feed is well-formed, adhering to the engine’s spec. Feed effectiveness is about making sure your feed is the most effective marketing vehicle it can be. While all effective feeds must be valid, often valid feeds aren’t particularly effective.

Conform to Content Specs
Each feed engine has its own rules governing content: copy, superlatives, use of brand names, etc. Make sure your feed conforms to these specs.

Taxonomy Matching
Creating a valid feed hinges on matching your product categorization or taxonomy to that of each feed provider.

The feed providers often place urls sent to them into a slot in their taxonomy, in effect, a “bin.” Your goal is to make sure each of your product pages lands in a bin, and in the bin most likely to be explored by a qualified customer.

Product Categorization Challenges
A key challenge is that product categorization may change seasonally on both the retailer and engine side. You can help your products get listed in the appropriate categories by staying on top of the engine’s changes and as well as your own changes.

Tip: Make sure your internal expert or agency is informed whenever your merchandising team revises product categorization. Failing to do so can lead to mis-matched or “orphaned” urls.

Fresh Feeds
Set up an automated routine to remove discontinued items from your feeds. This should be done automatically each day or week.

Feed Monitoring
Continuously monitor your presence on the feeds: Most of the feeds will simply drop any urls they consider malformed, but only some will tell you when they do so.

While it may not be practical for retailers with broad assortments to confirm the presence of every sku, it’s worth checking regularly on your most important products.

Feed Effectiveness
Feed effectiveness is where it becomes clear that serving feeds is not just an IT function, it’s a job for your marketing team. As with paid search, you want to fine tune your program to hit specific economic targets.

The techniques you use are actually of a similar flavor to those that characterize organic search optimization:

Success in natural search starts with getting your pages found (indexed) and increases as you tune these pages to increase their importance in the eyes of the engines.
Success with feeds starts with valid data and increases as you get more of the right terms and words into the right data fields.

Batch Optimization
But unlike natural seo, here you’re not optimizing single pages, you’re optimizing a batch.

You need an algorithm that handles your entire product assortment. While some of the engines allow you to improve placement by bidding, many do not. Success depends then on what you send: Each feed requires it own recipe.

You’ll also want to use product titles that reflect how most people describe the things you sell; jargon can make you hard to find.

Feed Trimming
Just as effective paid search requires monitoring of individual keywords economics, success with the data feeds depends on atomic analysis.

Obviously you want to remove chronically under-performing products, and there are times you may want to suppress marginal performers as well.

Retailers are often excited about the prospect of using their feeds to showcase their entire product catalog, but this is not always wise.

Say a cataloger offers 400 skus. If all her sales are generated by the top 80 items, she should consider eliminating the remaining 320 from the feed.

An extreme example, but relevant, as many retailers will find it challenging to control the order in which their products are presented by the shopping comparison sites. By intelligently pruning your product list, you can make sure your best products aren’t competing for attention with your duds.

Feed Testing
Each feed for each engine requires its own recipe, and just as the best chefs are always experimenting, smart marketers are always testing.

Work with your internal team or search agency to establish a feed testing regimen. Test one feed algorithm against another. As always you’ll want to ensure that each url has a unique tracking code identifying the specific product on your site and the engine where your ad is served.

Conclusion
The bottom line? Approached intelligently, the shopping comparison data feeds can help search marketers sell more.

Introduction
Over the past ten weeks, we’ve built a checklist of best practices for success in paid search advertising. We’ve seen how a savvy marketer girds their search program with the fundamentals of direct marketing: establish the target economics that make sense for your business, understand how such essentials as list, offer, and creative play out in this medium, and always keep trying new things, carefully measuring results each step of the way.

Ultimately, winning at search requires getting the details right. Once you’re up and running with the basics, reap more from your advertising budget by exploring the subtleties and mastering nuance.

The tips in this article are among the details worthy of your attention.

Don’t restrict your attention to top phrases
Much has been written about the “long tail” of search marketing, but many retailers still have trouble seeing beyond their biggest—and often most expensive—terms. The reality is that while a handful of phrases may account for the lion’s share of your profits, additional sales can result from the artful gathering of “crumbs,” low traffic terms where competition is typically sparse.

The key is to understand how to gather crumbs efficiently. A skilled in-house expert or agency should have a concrete technique for wringing aggregate value from terms where individual traffic is low and statistically relevant data lacking.

Study search queries to determine negatives
While building an exhaustive term list is core to successful search, knowing what to leave out is important, too. Creating your list of words to exclude requires both common sense and analysis.

For example, a retailer of light bulbs may enter paid search with the knowledge that tulip bulbs should be excluded from her list, but in time may also learn that certain wattages are simply not profitable and should no longer be bid.

Mine your inbound search terms and your site search logs to find negatives (and, of course, to grow your phrase list, too).

Track delay between click and conversion
Day-parting has become part of every search expert’s vocabulary. But just as important as staying abreast of new trends and techniques is bringing depth and accuracy to their application: Are you responding to the right data? If you’re day-parting, are you bidding based on the time of the click or the time of the order?

Track delay between click and conversion
Search is still a young medium and marketers need to carefully scrutinize the customers they meet in this space. Dependent on your industry, your search customers may appear to be more or less profitably acquired than those you meet through other programs. But as always, don’t over-react to the short read: track subsequent purchases to understand how much you can spend on a paid search customer. Make sure to assign unique catalog tracking codes to your search acquired buyers.

Those are just a few of the details worth exploring; as you analyze your own business and the subtleties of your individual results, you’ll discover more. When looking for areas to explore, apply permutation to the fundamentals of paid search.

Next is a quick recap of the pointers we’ve covered in this series.

Grow Your Phrase List
A comprehensive keyword list is key to pay-per-click marketing success. For 2,000 products, test 5,000 to 20,000 unique phrases. Test product categories, product names, brands, problems solved by products, misspellings, alternate forms, and idioms.

Target Your Ad Copy
Increase your click-through rate and ad efficiency by matching the ad copy to the phrase. The search phrase indicates what the user wants; use your limited copy to highlight relevant goods and services.

Track Everything
Assign unique tracking codes to every ad. Report and analyze results by concept, phrase, copy, landing page, engines, bid, time and day. Integrate your paid search tracking with your site analytics system.

Bid For Profit, Not Position
For retail sales, COGS, marketing expense, and variable expense from sales to compute the profitability of each ad. For lead generation, divide ad cost by leads to compute cost-per-lead. Bid to maximize your success metric. Use statistics to determine significance. Bidding wars benefit the engines, not retailers.

Test. Test. Test.
Improve your campaigns through ongoing testing. Test shouts, not whispers, and document every test. Test additional phrases, new copy, and landing pages.

Monitor Brand vs. Non-brand
If your brand is well-known, break out sales and costs related to brand ads. Search on your brand indicates brand awareness and offline advertising. This is especially relevant to catalogers.

Tame Your Affiliates
When you let affiliates advertise against you on your brand name, you increase your cost without increasing your sales. Don’t let them. Mid-sized retailers report cost savings of $50K+ from this simple change.

Supervise your ‘Bots
Make sure a smart person supervises your bid robot, particularly coming into and out of key selling seasons. Retailers reported gaffes during Holiday ‘04 by leading bid platforms.

Make sure your feeds are valid and effective
Optimize feeds for each paid inclusion and shopping comparison site to increase sales and ad efficiency. Tune copy to increase traffic and conversion. Remove underperforming URLs.

Conclusion
May your search marketing bring you more sales, profitably acquired!

Natural Search Marketing Myths Debunked

Search marketing is hot: analysts predict the industry will reach almost $15 billion in marketing spend in 2005, up more than 30% over 2004.

There are two primary flavors of search marketing: paid search, dominated by Google’s and Yahoo’s pay-per-click networks; and natural search, also known as “organic search”, “unpaid search”, or “search engine optimization.” As cost-per-click fees have risen over the last few quarters, marketers have increased their focus on natural search efforts.

To help catalogers improve their online sales, this article examines ten common misconceptions about natural search marketing.

Natural Search Misconception 1: Don’t Try This Yourself At Home

Some natural search experts would have you believe the entire field is shrouded in mystery and insanely complex.

It isn’t.

Yes, gaining top rankings on highly competitive terms takes specialized expertise (”mortgage re-fi”, “New York hotel”, “search engine optimization”).

However, many retailers can gain large improvements in their natural traffic from only modest improvements to their sites, an enjoyable “90-10″ situation.

Tip: Get educated. For a gentle introduction, pick up a copy of the “For Dummies” search engine optimization book (Kent, 2004). You may discover small improvements to your site can yield large improvements in your traffic. If you later decide to bring in a consultant or an agency, you’ll have a much better understanding of what expertise and services you’re buying.

Natural Search Misconception 2: Natural Search Is Free.

While site owners don’t pay per-click fees for natural search traffic, smart marketers find it worthwhile to make some investment in improving their natural search rankings.

How can you spend money on natural search? Most commonly, retailers hire a consultant, hire an agency, purchase training for in-house staff, purchase content, or upgrade their site technology.

Tip: Establish a program, budget, and revenue goals for increasing natural search.

Natural Search Misconception 3: Natural Search Is Expensive

Search marketing is a young field. Prices have yet to stabilize. You can pay consultants or agencies small fortunes for their services. Sometimes this is money well-spent, sometimes not.

How do you know if your pricing is fair? Learn exactly what services you’re buying. Compute a rough hourly cost for this work. Compare this rate to what it would cost to do the work in-house. Compare this rate to what you pay other professional service providers, like outsourced designers, programmers, or accountants.

Paying large fees to outsource large amounts of work can make good business sense. Paying large fees for “secret” information does not (see Misconception #1).

Make sure any contracts you sign have friendly “out” clauses if you don’t see good efforts and results within a reasonable time frame.

Tip: Make sure you know exactly what you are buying, and roughly what you’re paying per hour.

Natural Search Misconception 4: We sell widgets, so winning means ranking #1 for “widget”

Many retailers believe that winning at organic search means gaining the top position on Google for their “hero phrase” – that single word or two that best describes what you sell.

This limited view is wrong for two reasons.

First, you likely face incredible competition for that top spot. For a variety of reasons, your site may not be able to obtain (or even deserve to obtain) the top position for your hero phrase.

Second, this view misses the importance of optimizing the entire site to score high on more specific searches. While individually these more specific searches command far less traffic than your hero phrase, collectively they can equal or surpass the hero phrase in traffic.

Tip: Look beyond optimizing for a few hero phrases. Make every page on your site more search-engine effective.

Natural Search Misconception 5: All that matters is getting the HTML tags right

Yes, it is important to use smart HTML for the search engines. Pay particular attention to your title tags, headlines, and link text. However, other factors are equally important, including inbound links from relevant sites, well-written content, site architecture, page size, load speed, URL structure, and site availability.

Tip: Develop a holistic approach to optimizing your site, focusing on inbound links, content, and markup.

Natural Search Misconception 6: All search agencies are created equal.

They’re not. There are big differences in experience, expertise, staff, and tools among agencies offering search marketing services. How to pick the best agency for your firm? Hire an agency dedicated to search, rather than a general online agency. Check client references carefully. Seek an agency that offers transparency: you should clearly understand the work they’re doing for you, and what you’re paying them to do it.

Tip: If you choose to hire a search marketing agency, select a firm specializing in search.

Natural Search Misconception 7: Sales resulting from natural search should equal the sales from paid search.

Many retailers desperately seek to learn the “correct” ratio between natural and paid search revenues. Sadly, there’s no one correct ratio for all retailers.

The ratio of natural search revenues to paid search revenues could be low for several reasons. It could be you’re doing a poor job with natural search. Or it could be you’re doing a great job with paid search. Or it could be your site, or your merchandise category. Conversely, it could be high for just as many reasons.

As a very general rule of thumb, retailers with both strong natural and strong pay-per-click programs report a ratio of natural search revenues to paid search revenues somewhere between 0.8 and 1.2.

Tip: As a manager, don’t focus on the relative size of the two efforts. Instead, charge your marketing team to grow each program by appropriate percentages this year.

Natural Search Misconception 8: We need natural search optimization “applied” to our site.

Would any cataloger ever say anything like this? “We’ve finished building all the pages for our upcoming catalog; before they go to our printer, we’ll send the pages to our design-and-copy-optimization agency to rebuild them.”

Just as optimizing copy, photography, and layout occur at every point in the print catalog design process, so should decisions regarding natural search optimization occur at every point in your web design process.

Yes, you may have an existing site that performs poorly for natural search, and so need improvements. And making those improvements will require some work for your in-house staff or agency (see Misconception 2).

If you’re like most catalogers, however, your site is constantly evolving. Going forward, make sure all new pages are designed to score well for the engines. It is more efficient to build decent pages in the first place than to suffer ongoing retrofitting.

The key here is training. Your web merchants, writers, designers, and developers can and should understand the rudiments of natural search. They needn’t be experts, but as the 90-10 rule applies, teaching them the basics will pay off handsomely.

Tip: Going forward, train your staff to build search-engine-friendly pages.

Natural Search Misconception 9: If we really get natural search done right, we can turn off our paid programs.

Perhaps. Most likely not.

The relationship between natural search and paid search resembles the relationship between public relations and paid advertising. Both have their role in the smart marketer’s portfolio. Few companies rely solely on one to the exclusion of the other.

Over the long term, I believe it will become increasingly important for catalogers to have strong paid search programs. (Disclaimer: my firm provides paid search marketing services.)

Tip: If your paid search programs are generating true incremental revenue and earnings (do make sure you understand the role your brand name plays in your campaigns), keep them running!

Natural Search Misconception 10: Paid search is dead; long live natural search.

Search engines are not public utilities. They’re for-profit companies and they’re very smart. Most (if not all) of the major engines want to wring as much ad revenue as they can from their traffic.

A rush to embrace natural search by retailers, if taken to the extreme, would represent a threat to the engines’ business model. If enough consumers opted to block paid search ads, or if enough retailers opted out of advertising (both of which are highly unlikely), the engines might respond by blurring the church-state separation between natural and paid search.

Looking into my crystal ball, I predict we’ll see this blurring regardless over the next two years.

Just as the rise of TIVO and other television ad-zappers have led the television networks to generate ad revenue from paid product placement, thus blurring the line between advertising and content on television, so might some of the major engines monetize their natural search traffic via paid-inclusion style programs.

Tip: Keep a close eye on future developments in paid inclusion advertising.

Conclusion

Search marketing presents a great opportunity for catalogers. Don’t rely on paid search alone: if you haven’t invested time or money in your natural search efforts, now is the time to get started. There’s still time to influence this fall’s critical holiday season.

May all your pages rank highly, and may all your visitors buy!