How to Build a CSE Budget That Delivers Returns
Recent online shopping trends and forecasts demonstrate how much emphasis retailers must place on their internet marketing strategies to attract and keep customers. Analysts report that Black Friday 2012 online sales increased 26 percent from the previous year, and even traditional shoppers are using mobile devices to compare prices in-store. This behavior will only intensify in the next few years. Forrester Research recently predicted that U.S. shoppers will boost online sales by 45 percent between now and 2016.
With so much consumer activity moving online, retailers must be strategic in the ways in which they market products to internet shoppers. A significant part of those strategies will center on comparison shopping engines (CSEs) such as Google Shopping, PriceGrabber, Shopzilla and others. However, marketers are still struggling to make informed, profitable decisions about which CSEs are worthy of their budgets. Too many retailers look first at the cost per click (CPC) and never dig deeper to determine actual CSE value. In reality, it's the revenue-per-click (RPC) data that should influence retailers’ CSE investment decisions. Marketers that know how much revenue each click generates can then determine the return on investment by considering the CPC.
How to Assess the Value of CSEs
Surface-level analysis about conversion rates per channel and average CPC isn't enough to help retailers determine what they should pay for Google Shopping referrals, for example. To answer that question, companies need to look more closely at RPC. We did just that recently when we evaluated customer data our analysts collected from consumer-focused online retail sites over the course of a year. This data included hundreds of millions of dollars worth of conversions and showed several trends that are instructive to businesses trying to navigate the CSE landscape.
First, we looked at the top 10 CSEs by overall revenue and found a significant difference between the top player in terms of percentage of revenue generated (Google Shopping at 45 percent) and the last (TheFind at .1 percent).
Nextag, Shopzilla, PriceGrabber, Shopping.com, Bizrate, Become, Pronto and Bing also made the list.
We also looked at CSEs by overlap and RPC. We found that the highest percentage of conversions without overlap from search engines comes from Bing at 38 percent, followed by Google and Shopping.com at 26 percent.
Those CSEs with the highest overlap, especially at the middle-click level, are opportune places to reduce spending. In terms of RPC, we found that Google offers nearly $3 per click, while Become offers closer to $1. This is a valuable metric that helps retailers predict results and prioritize which CSEs to use for specific products in their portfolios.
This is the kind of revenue-oriented data retailers need to make better decisions about pay-for-performance marketing. As consumers increase the amount of shopping they do online, the industry will necessarily shift more toward CSEs and other paid channels.
As this happens, the quality of the data will become even more critical. CPC is just the beginning. To build a CSE budget that delivers real returns, retailers need granular RPC data.
Jeff Zwelling is co-founder and CEO of Convertro, which provides advertisers and agencies with cross-channel analytics and recommendations to attribute, optimize, monitor and adjust marketing strategies.
