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Retail PPC (is hard!)

IRX 2015Pete Whitmarsh – 25/03/15

Background

Intro – aka. Why should I care?

0

500

1000

1500

2000

2500

3000

2007 2008 2009 2010 2011 2012 2013 2014

Annual Number of Searches (Billion)

Annual Number of Searches (Billion)

Total % of clicks to paid

20.00%

22.00%

24.00%

26.00%

28.00%

30.00%

32.00%

34.00%

36.00%

2009 2010 2011 2012 2013 2014

Text Ad + PLA Click-Through Rate

Text Ad Click-Through Rate

Which position?

Top 3 are important

CTR on lower positions

decreasing

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2009 2010 2011 2012 2013 2014

Click-Through Rate in Paid Positions

Position 1-3

Position 4+

Evolving SERPs

2010 NOW

45% Paid 88% Paid

Setting Targets

Target setting

AOV = £60

Average margin = 30%

Average profit per sale = £18

CPA target = £15

Product AOV Margin Profit per Sale

A £30 30% £9

B £60 20% £12

C £90 40% £36

Target setting

Don’t use CPA as a target

(Unless you only have one product)

…or number of clicks, conversions etc.

ROI / ROAS / Cost of sale

Average margin = 30%

Target Cost of Sale = 25%

Target ROAS = 400%

Product AOV Margin Profit per Sale

A £30 30% £9

B £60 20% £12

C £90 40% £36

Target ROAS / ROI

Can be used…

…but only if you have a static

margin

Encourages lower volume RO

I

Spend

Pro

fit

Spend

Profit

Profit increases to a point

Hard to know what shape

this curve is

Ultimate goal is to find the

point of diminishing returns

Point of diminishing

returns

Profit

The best measure of success

Give your agency the right data to provide this

– Cost price of items

– Margins per item

If possible, don’t cap the budget

Valuing Clicks

Valuing clicks

Understand the value of every click

Core principle of PPC

Simplest form…

𝑃𝑟𝑜𝑓𝑖𝑡 𝑝𝑒𝑟 𝑠𝑎𝑙𝑒 × 𝐶𝑜𝑛𝑣𝑒𝑟𝑠𝑖𝑜𝑛 𝑟𝑎𝑡𝑒 = 𝐶𝑙𝑖𝑐𝑘 𝑝𝑟𝑖𝑐𝑒

The bidding problem

What is the conversion rate of a

keyword with 1 conversion from 10

clicks?

Only 95% sure that the Conversion Rate is

between 0.25% and 44.5%

The bidding problem

Determining the conversion rate on broad high-volume terms is easy

The problem occurs in low-volume long tailed terms

Solution:

– Look to other similar terms

What else influences conversion rate?

Time

Season

Location

Device

Weather

Previous visits to site

Make suitable adjustments to take advantage of this

Time of day

Opportunity to adjust bids based on performance

0

5

10

15

20

25

30

35

40

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Conversion rate Average Conversion Value

Location performance

Best converters (>5.5%) Worst converters (<4%)

The full value of a click

Understand the full value of a click by considering

– Paths to other campaigns or channels

– Lifetime value

– In store visits

– Cross device conversions

– Referrals

– Brand awareness

– Micro conversions

– Returns

Large product inventories

Consider

Different levels of keywords

Men’s Shoes

Men’s smart shoes

Men’s black

leather shoes

Men’s black Ted

Baker shoes

Ted Baker MARTT

shoes black

MARTT shoes

Ted Baker

black lace

ups

Men’s black

derby shoes

Size 9

designer

shoes

Men’s

dress

shoes

Granularity

What happens when…

Price changes?

Product goes out of stock?

Product comes back in stock?

Product gets renamed?

URL changes?

New colour gets released?

Category level

What happens when…

Minimum price changes?

Minimum priced item goes out of stock?

New cheapest item?

Range decreases to 4?

The problem of scale

Granularity is easy for a small set of products, but…

We often have a colossal number of potential Ad Groups

Keeping up-to-date is a difficult problem

How do we solve it?

More people or less granularity?

Equivalently:

– More operating costs or lower return?

How about a third option…

Creation

Updating

BiddingError

checking

Integration

AutomationKeywords

Ads

Ad groups

Campaigns

Prices

Stock

Sales

Pauses

Keyword-level

Structured

Mathematical

Double checks

Manual & automated

Ad platform API

Brand Bidding

Bidding on brand

Do you…

– Bid on brand terms?

– Avoid brand terms?

– Test whether it actually makes a difference?

Brand bidding

Our methodology

– 20 minute randomised

intervals

– Paid vs Organic report

Recent results:

Queries Clicks CTR

Both shown 16525 15004 91%

Organic Only 26129 19020 73%

Increase in CTR 18%

Extra Clicks as a Result of PPC Ads 2975

Total Cost £990.07

Cost per EXTRA click £0.33

Product Listing Ads /

Google Shopping

PLAs

Top recommendations

– Get your title right

– High quality images

– Keep feed up-to-date

– Normalise colour terms

– Calculate your bids

– Split brand and non-brand

– Use negative keywords

– Consider the competition

Going Global

Global Market

Considerations

Website:

– Local payment methods

– Localised address fields

PPC accounts:

– Research how people search

– Research what messages people respond to

– Research what competitors are doing

Make sure you get it right…

Don’t just translate

People search differently

People respond to different

messages

…Even in English

Pants / trousers

Thongs / flip-flops

Sneakers / trainers

Sweaters / jumpers

Court Shoes / pumps

Braces / suspenders

Vest / waistcoat

Takeaways

Takeaways

Paid search is still growing

Pick sensible targets – not CPA

Calculate bids and bid adjustments according to performance

Use automation to take it to the next level

Test brand term performance

Get your PLAs right

Go global – but be sensible

Email:

Tel:

Web: www.searchlaboratory.com

Twitter: @searchlabs

Contact details

Pete Whitmarsh

Peter.Whitmarsh@searchlaboratory.com

0113 2121211