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EcommerceBytes-NewsFlash, Number 2865 - August 08, 2012 - ISSN 1539-5065    2 of 4

How Google Shopping Changes Impact Merchant Traffic - Part 2

By Ina Steiner
EcommerceBytes.com
August 08, 2012




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Online sellers are coping with the loss of free traffic from Google Product Search. EcommerceBytes talked to three companies to find out what effect the Google Shopping changes have had on their clients and get advice on what sellers can do to adapt.

Frank Kochenash is Vice President of Product Services at Mercent; Larry Weeks is Director of Performance Marketing at Channel Intelligence (CI); and Mike Effle is CEO of Vendio.

Part 1 of this series looked at what changes merchants have been seeing over the past 2 months since Google's bombshell announcement and how they reacted to the news.

Today, EcommerceBytes asks our three panelists what merchants should know about getting exposure on Google Shopping. (See this article for more information about Google Product Listing Ads, aka PLA.)

EcommerceBytes: Should merchants continue to send their product feeds to Google Merchant Center even if they are not participating in Product Listing Ads?

Larry Weeks (CI):Yes, if they are going to participate in other Google programs using the feed such as commerce search, Affiliate Network, Google Display, Google Catalogs and others.

Frank Kochenash (Mercent): Absolutely. However, if a retailer does not plan to participate in PLA (effectively being renamed Google Shopping) by October 1st, then our experts recommend they may as well stop sending the feed because there will be no where else for it to go.

From our perspective, we are recommending all Mercent clients send a feed, participate in PLA, and if there are budgetary or performance concerns, we're advising them to bid very low, even $0.01 per click, in order to test the new platform.

Mike Effle (Vendio): As long as feeds are being accepted, we recommend that merchants continue to deliver their products to Google Merchant Center. Their items will be included in searches made directly on Google Shopping, and the ongoing experiments should continue to provide sales leads at no direct marketing cost. Merchants will also then be able to measure the impact on their business as Google makes ongoing changes. Of course, this additional direct store traffic at zero cost can help increase margins near term.

EcommerceBytes: How should merchants decide which items to advertise via Google Product Listing Ads?

Larry Weeks (CI):Based on strategy that is supporting a specific goal. Is it driving more visits? More sales? More new customers or some blend of all these? If ROAS (Return on Ad Spend) / COS (cost of sales) a concern, then only bid up on high margin items or best sellers and bid down on the rest. Track category and product-level PLA performance and bid accordingly.

Structure Adwords campaigns to be able to send long tail or all non important items at a very low bid and only bid higher on important or profitable items. Google offers incentives right now to send all products, 10%-off ad spend each month till the end of the year.

Frank Kochenash (Mercent): We recommend they advertise 100% of their product portfolio and bid to meet performance goals. If performance can't be met with even a penny bid then they should filter out the product(s) from PLA distribution.

Mike Effle (Vendio): As with all channels, merchants will need to test to identify what works best for their individual products. Testing on a subset of some top sellers that have reasonable margins is a good place to start. Merchants already advertising on Google AdWords can determine what categories or brands are doing well and list those items.

Merchants are also reviewing their top performing products from other paid cost per click (CPC) shopping engines like Nextag, Shopzilla, Pricegrabber, and Become. Data is key. If merchants aren't capturing and reviewing data now, they should consider finding a solution that can help make smart marketing decisions.

EcommerceBytes: What is the average percentage of listings merchants are choosing to advertise on a CPC basis?

Larry Weeks (CI): The merchants who are on a CPA model with PLA are advertising the entire catalog. The merchants who are on a CPC model, that CI actively manages, are able to send the entire catalog because we have a bidding system in place that allows very low bidding for poor performing products / categories or on very long tail items, which affords the retailer the ability to manage cost and ROAS while sending all products.

Prior to the announcement of Google Shopping becoming an all commercial program, some retailers were only publishing (setting Publish Flag in the feed to "True") the best performing or most important products in their catalog, while still sending everything to the free part of Product Search.

We assume those who don't have the resources to dynamically bid based on performance or some other logic may still be only publishing partial catalogs due to ROAS or budget constraints.

Again, we should note that Google is incenting retailers to send all products by offering a 10% monthly credit on Ad Spend through the end of the year.

Frank Kochenash (Mercent): Generally clients are listing 100% of what is eligible. If they're not it's because they're ramping into the program.

Mike Effle (Vendio): It varies per each merchant's unique situation, average selling price (ASP) across their products, margin, and conversion rate. We see some merchants promote 100% of their items with CPC programs, and others promote less than 15% of their catalog. What is more interesting than the average CPC participation across businesses of all sizes, is comparing the behavior of businesses of similar size.

SingleFeed has subscribers across the spectrum. We consistently see that smaller businesses use CPC less than bigger businesses, instead relying on traffic from free CSE's (formerly Google Product Search).

Those businesses, big or small, that figured out how to make a profit after their CPC spend have the experience and confidence to continue to do so. But most small- and medium-sized online retailers relied almost exclusively on free traffic to their stores from Google Product Search. These merchants generally have insufficient budgets to experiment and take risks with CPC advertising that has a less predictable margin than the success fee models used by marketplaces like eBay and Amazon. Some merchants will learn to maintain traffic to their stores, but many will migrate more of their sales back to fixed margin sales channels. The size and speed of this migration will not be known for some time.

To Be Continued
In Part 3, EcommerceBytes asks our three panelists for specific advice about bidding for clicks and how to manage their product feed to optimize their advertising efforts.

"How Google Shopping Changes Impact Merchant Traffic - Links"

In Part 1 of this series, panelists look at what changes merchants have been seeing over the past 2 months since Google's bombshell announcement and how they reacted to the news.

In Part 2, EcommerceBytes asks panelists how merchants should decide which items to advertise to get exposure on Google Shopping and what merchants should know about getting exposure on Google Shopping.

In Part 3, panelists offer specific advice about bidding for clicks on Google Product Listing Ads and how to manage their product feed to optimize their advertising efforts.

Part 4 wraps up the series by identifying the biggest challenge for merchants in coping with the changes and revealing specific strategies and tactics retailers are using as they go from free Google Product Search to the new Google Shopping platform.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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