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EcommerceBytes-NewsFlash, Number 2867 - August 10, 2012 - ISSN 1539-5065    5 of 6

How Google Shopping Changes Impact Merchant Traffic - Part 4

By Ina Steiner
EcommerceBytes.com
August 10, 2012




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As Google moves its Shopping engine from a free to paid model, online merchants must develop strategies to cope with a resulting drop in traffic to their product listings. EcommerceBytes talked to three companies to find out what effect the Google Shopping changes have had on their merchant 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.

Today, Part 4 wraps up this 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.

EcommerceBytes: What has been the biggest challenge for merchants in coping with Google's change from free to cost-per-click?

Larry Weeks (CI):Retailers for many years have had a "set it and forget it" attitude regarding free Google Product Search. This change of focus has been very difficult for some. Some retailers were using the free Google channel in their mix to improve an overall channel budget ROAS and as Warren Buffett has said,... "you only find out who is swimming naked when the tide goes out."

Frank Kochenash (Mercent): Budget.

Mike Effle (Vendio): Merchants have another broad set of variables to consider. In the past, merchants had a price for an item, and Google traffic was free. Predicting the profitability of selling any individual product was relatively easy.

In a CPC environment, everything changes. Now, there is a variable cost for each click, a conversion rate that will fluctuate and change the selling margin on a daily basis. Additionally, every product priced for "free" traffic will now need to be reviewed to see if some price changes may be required to afford to continue marketing these products on Google, thereby heightening the need to understand competitive prices as well.

Merchants with experience on other CPC engines can narrow in on the nuances of Google Shopping specifically. For other merchants without this experience using paid search, there is a learning curve, not only for Google Shopping, but also CPC marketing generally, to understand how to drive sufficient sales margin through paid search.

Many merchants we've talked to that do not use a tool to track clicks and sales are looking for ways to get this information in an automated and actionable way. This is why they are contacting SingleFeed, a certified partner for Google Shopping.

EcommerceBytes: What specific strategies and tactics are retailers using as they go from free Google Product Search to the new Google Shopping platform?

Larry Weeks (CI):Tactics will be more like SEO (Search Engine Optimization) than SEM (Search Engine Marketing). Retailers need to focus on data relevancy, as PLA does not use keyword bidding.

We are helping retailers manage what set of products Google shows and matches to certain commerce queries by changing feed content and making that data more relevant.

Mike Effle (Vendio): A specific strategy that we have helped online retailers use quite effectively is to combine their metrics from multiple venues to estimate their spend on Google Shopping. For example, use the information on successful bids from their AdWords campaigns and their campaigns on other fee-based CSEs (Comparison Shopping Engines) to estimate the CPC (Cost per Click) and CTR (Click-Through Rate) to get their total spend.

EcommerceBytes: Do you have any other advice for online sellers?

Frank Kochenash (Mercent): Do it. Be aggressive and learn now rather than learn later. I believe this is the beginning of a new Google Shopping experience; not the end.

Mike Effle (Vendio): Our advice is to Get In The Game! Many online retailers have been able to participate in ecommerce without putting their capital at risk because marketplace fees are known in advance and traffic from Google was free.

There will be a lot of consumer traffic available with fewer merchants going after it, so those that commit stand to gain from the transition. We recommend they get their CSE programs up and running NOW, before Oct 1st, so they know how much traffic to expect before they have to pay for it. This way they'll know how much it's worth to them and can bid/price accordingly.

Big Picture...

Google's #1 stated intention with this change (and even the title of their blog post announcing it), is building a better shopping experience for consumers. Yes, this change encourages merchants to maintain the content that remains on Google Shopping with much greater precision given the financial commitment. More importantly, however, this clear revenue model for Google will likely enable a clearer focus on product-based commerce for Google. Their broad and significant volume of search traffic makes them an immediate participant in ecommerce as a more direct competitor to eBay, Amazon, and other CSEs.

We're only just beginning to see the broader impact on merchants overall. I've previously noted that one of the key shifts in value from eBay to Amazon was watching Amazon be exposed much more highly in organic search, particularly Google. As Google experiments with elevating the visibility of various Google Shopping merchants, additional overall landscape changes are likely.

Certainly, there will be a different set of winners and losers under Google Shopping, and not just among online retailers, but also among the "big guns" of ecommerce - those that drive significant consumer traffic - Amazon, eBay, and CSEs. Online retailers that lack the expertise or pocketbook to use Google Shopping profitably will need to double their efforts to improve their businesses through SEO, social marketing, and the more defined, fee-driven marketplaces with predictable margins. Weaker merchants may not survive this transition, but those who do will gain market share. Above all, merchants should have a defined strategy as Google Shopping becomes a purely commercial model. Adages are well known because they are generally true. Failure to plan is planning to fail.

Links to Previous Installments
In Part 1 of this series, panelists 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.

In Part 2, EcommerceBytes asked the 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.

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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