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Explaining Nextag’s Poor Performance

In last month’s Digital Marketing Report, we noted that Comparison Shopping Engine (CSE) growth has been strong overall, but there was a notable outlier: Nextag. For two consecutive quarters, poor ROI has contributed to Nextag’s loss of traffic and spend share among RKG’s clients.

Before jumping into our take on why this is happening, let’s review how the current CSE landscape may be affecting Nextag.

Rise of the Network

Over the last year, the CSE landscape has evolved from numerous stand-alone comparison shopping sites to a more concentrated group of large networks. Shopping.com acknowledged this in a big way when it rebranded to the Ebay Commerce Network in 2013. ECN is not the only CSE to embrace the partner network as many have been successful in growing the breadth and reach of their networks.

With the rise of the network comes the need to address the fact that all traffic is not created equally. Some CSEs, notably ECN and Shopzilla, adjust their CPC rates based on the quality of traffic. The idea here is simple: if the traffic source tends to convert well, you can pay more for it. If clicks rarely lead to orders, maintaining ROI necessitates you pay less.

CSEs know which of their partners generate the best and worst quality traffic via the aggregate conversion data provided by tracking on merchants’ checkout pages. (Tracking must be installed by the merchant and is optional but recommended).

Nextag’s Predicament

When the (inevitable) end of free Google Product Search traffic came, the Google Shopping affiliate Beta allowed CSEs to run Google Shopping listings from their merchants’ feeds.  Google became an official CSE network partner and CSEs finally started paying for their highly-qualified leads (unless the merchant has expressly disabled the Beta in the Google Merchant Center, as RKG recommends).

As CSE networks began having to pay for this formerly free traffic, they passed along the cost to merchants by way of increased rate card CPCs. In the case of Nextag who, prior to the switch, received 65% of their traffic from Google searches, this resulted in a huge increase in cost that trickled down to merchants.

At the same time, Nextag’s conversion rates began to tumble as RKG merchants opted out of the affiliate Beta. While most CSEs have a robust partner network that effectively minimized the impact of not advertising on Google, it seems the collective quality of Nextag’s partner sites is not as strong as that of other CSEs.

In addition, if the quality of traffic from the network partners is less than what was provided by Google, we would expect CPCs to drop on most CSEs. We’re not aware that Nextag has implemented a version of value based CPC calculation, which means that CPCs aren’t adjusted based on quality. This helps explain Nextag’s frequent rate card increases as the PLA landscape has become increasingly competitive, driving up Google CPCs.

Conclusion

So if Google traffic – perhaps also the highest quality traffic – is being removed from Nextag’s partner network, advertisers are left paying Google CPCs for sub-Google standard traffic. We believe this is the primary issue plaguing Nextag’s performance and the cause of the drop in quantity and quality of their traffic. Simply said, unless the quality of traffic improves or the CPC advertisers pay decreases, Nextag will continue to lose share to engines delivering a better ROI.

RKG is working to test our theory and we’ll be following up with our findings.

  • Robyn Hoyle
    Robyn Hoyle is a Senior Analyst working with Comparison Shopping...
  • Comments
    3 Responses to “Explaining Nextag’s Poor Performance”
    1. Joe Meier says:

      I manage the comparison shopping feeds for a retail site and have had similar issues with Nextag, taking them in and out of our mix of traffic sources depending on the ROI. I agree with your affiliate/Google observations and wanted to add one of my own into the mix. For us, Nextag vastly over reports clicks compared to our Google Analytics tracking. At last check, they were reporting 65% more clicks than we saw in GA. We’re confident in our tracking code, etc., and don’t ever expect these two sources to exactly agree, but no other shopping engine is even close to this kind of discrepancy. Have you seen anything like that? Any ideas? Maybe a particular affiliate of theirs sending these “phantom clicks” or something?

    2. Robyn Hoyle Robyn Hoyle says:

      Thanks for sharing your observation, Joe. We also use flexible tracking to estimate traffic by engine. However, to ensure that the numbers we report match what the engines bill us, we’ve set up daily data exports from the CSEs to back fill our data. We’ve never noticed any significant discrepancy between the two data sets. For a 6-week window I just sampled, our tracking accounted for 94% of what Nextag reported. Sorry we can’t shed more light on what you’re seeing!

    3. Joseph Minz says:

      “”sub-par” is an understatement. My conversion jumped from 20% to 120% in the beginning of Q4. I had no choice but to pull my clients off them for the holiday season. I went berzerko’s on my clients feeds after the holiday rate increase was removed and got it back down to 38%. If I cant get back in the 20′s in the next 30-60 days I’ll might just throw in the towel. Their admin center is a sham, their product mapping is ridiculous. I can write a book on the problems with the Nextag admin center and how companies are losing a ton of money, seems to be the one thing Nextag perfected. There’s a reason I’m seeing my competitors leaving (kind of whats driving me to make it work).”