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Manufacturers: Fastest Growing Merchant Category on IR500

Friday, August 7th, 2009

Earlier this week, Internet Retailer reported that of the online retailers that made its annual Top 500 List, manufacturers have emerged as the fastest growing merchant category. Given that consumer brand manufacturers have traditionally trailed web only, multichannel retailers and catalogers for online sales, this should catch the attention of manufacturers that have yet to take the plunge into ecommerce.

Top 500 manufacturers grew their combined web sales 15.7% in 2008 over 2007, with web-only growing 12.1%, multichannel retailers 12% and catalogers 5.2%.

Some manufacturers like American Apparel, Jones Apparel Group and Vera Bradley enjoyed year-over-year online growth over 50%, while others like Tempur-Pedic, Palm and Select comfort suffered declines of 40%. Overall, 40 out of 55 manufacturers on the Internet Retailer Top 500 List posted higher web sales in 2008 over 2007, 4 remained flat, and 11 declined.

Benefits of selling online for manufacturers

Going direct-to-consumer online has many opportunities for manufacturers:

Monetize type in traffic (typing “brand” into web browser and hitting the brand.com site) (to make more money)
Monetize product-research traffic (to make more money)
Take advantage of consumer trust of the brand (to make more money)
Take advantage of consumer perception that the brand site offers the best brand selection (whether that’s true or not)
Take advantage of consumer price perception (some consumers will assume they can get the best price direct from manufacturer, others believe they can find better price through eBay/Amazon etc)
Reduce the chance the customer is recommended a competing product in cross-sell/upsell/alternative recommendations/promotions/house brand (as may be the case on retail partner sites)
Offer better service and support (customer deals through you rather than the retail partner as middle man)
Offer better sales tools (such as the Timbuk2 bag builder)
Have a closer connection to the customer than through retail partners (who are not likely to hand over analytics data that gives you that insight about consumer preferences and behavior)

Challenges for manufacturers when starting an online store

Despite the clear benefits (did I mention make more money?), selling direct-to-consumer is not that simple. As Sally McKenzie notes “Manufacturers who sell online don’t just need to become web merchants, they need to become retailers, and that presents some interesting and often sticky strategic issues.” On her eCommerce Consulting Blog, Sally lists 10 reasons why some manufacturers haven’t taken the leap with a direct-to-consumer online offering (summarized below, see her post for full detail):

1. Lack of in-house retail or e-commerce talent.

2. Channel conflict. Manufacturers must consider how selling direct may impact their retail partners.

3. Product lines many not be “retail ready” if they have been assorted for the retail buyer rather than the consumer (assortment, pricing etc).

4. Similarly, content may not be “e-commerce ready” when produced for the retail buyer and may take significant effort to meet consumer expectations.

5. Fulfillment, packaging and inventory management may not be optimal for single piece orders. Often separate processes and systems are required.

6. Customer service requires its own people, process and systems. Expensive, and the in-house vs. outsource dilemma exists.

7. Moving from ʖB to ʖC marketing includes search, email, affiliate and social media expertise. Again, expensive, in-house vs. outsource.

8. E-commerce ecosystem (platform, web services and bolt-on products) must be built from the ground up.

9. This is a lot of work, and there may not be enough people hours to support the project.

10. Lack of a deliberate process to work through #s 1-9.

We’ve asked Sally McKenzie to discuss this topic further with us for our August webinar From Manufacturer to Retailer: Expanding Your Brand through Ecommerce. An ecommerce veteran with over 20 years experience with companies like Eddie Bauer, Classmates.com and Expedia, Sally will speak to the unique opportunities, options, and challenges facing branded manufacturers as they make the migration to ecommerce.

Webinar takeaways:

• Blending brand form and function: making the transition to interactive, direct marketing
• Striking the balance between direct selling and promoting retail partners
• Assorting and pricing for ecommerce
• Making solid ecommerce technology and infrastructure choices
• Resource and organizational planning for success

Please join us Tuesday, August 25, 2009 9:00 AM - 10:00 AM PDT. Sign up today!

Using Google Alerts for Keyword Research

Monday, July 27th, 2009

Google Alerts ping you every time new occurrences of the keywords you track are found by Google’s search robots. This is great for reputation management (tapping into what’s being said about you, your brand or your competitors online) but it’s also a handy tool for keyword research.

For example, I’m subscribed to Google Alerts for the Vancouver 2010 mascots Quatchi, Sumi, Miga and Muk Muk. We’re buying these terms in Google Adwords and using the broad match type so it’s important to do exhaustive negative keyword research. Even though these are fairly specific terms, and we’d like to think all searches including these keywords are looking for merchandise — truth is there are a lot of other reasons someone might include “sumi” or “miga” in a search engine.

Over time I’ve discovered negative matches that my keyword research tools missed:

Andrew Miga (journalist)
Motherson Sumi Systems Ltd
White Snow Sumi Brushes
Sumi Ink Painting
MUK: Muk (EP)
MIGA-World Bank
Western Sumi Student’s Union
Sumi Salad

Negative matches: -andrew -motherson -systems -white -snow -brush -ink -painting -world bank -western -students -union -salad

The tough one is Muk, the self-titled album by the artist MUK. Negative matching “muk” to “muk” won’t work unless I phrase match the keyword “Muk muk” or -ep -album.

It only takes a couple minutes a week to stay on top of this small list. Certainly you wouldn’t want to be alerted every time someone mentions “iPhone” or “skinny jeans” - but for unique terms this works well.

PPC Myth Week Pt 3: Kill Keywords That Dont Convert

Friday, May 8th, 2009

This is Part 3 of our PPC Myth series. Please check out Organic Search Traffic is More Qualified Than Paid and Bid Higher to Appear Higher if you missed them.

There’s a lot of PPC experts out there who will tell you to look at your PPC keyword reports and get rid of keywords that don’t convert. Sounds logical, right? Why spend money on losers when you can spend more on winners? Especially when you’re under pressure to show strong ROI (or ROAS - return on ad spend) or are working with a tighter budget in these tough economic times.

But nixing “non-performing” keywords is not always a good idea.

Attribution

Most analytics reports (including your Adwords report) credit the last keyword clicked before conversion. For example, your customer searched for “kids bedroom furniture” on Monday and found a Cars movie race car bed on your site. The customer searched Google for “Cars movie racecar bed” on Tuesday, clicked your paid or organic search listing and completed the purchase on your site. “Cars movie racecar bed” is credited for the $400 while “kids bedroom furniture” registers as a non-converting click. Because the credited keyword is “long tail” - perhaps that click only cost $0.50 while the more competitive “kids bedroom furniture” costs $2.50 - certainly one appears more “profitable” than the other.

Multiple keyword searches and site visits are not uncommon. According to a 2005 comScore study, people perform an average of 13 searches before converting — leaving 12 keywords out in the cold in conversion reports. (Though these keyword searches may lead a customer to other sites, not just your own). Craig from ClickEquations shares some actual data on visitor behavior on his blog.

There is much debate whether philosophically the first or last click should be credited - or credit be divided across keywords. And there are tools like Omniture SiteCatalyst that allow you to use “linear” allocation (again, Craig shares an example).

But this post does not attempt to solve the attribution/allocation dilemma. Because allocation/attribution is not the only thing messing up your keyword reports! Other reasons keywords may not receive the credit they are due:

Orders placed by telephone. There are ways to track telephone orders, but it is not default in any analytics package.

Cookie deletion. The customer clears cookies, uses another machine or browser or returns to your site after the original cookie expired. Any of these would fail to correctly credit a keyword. (Some estimates suggest 30% of web users regularly clear cookies)

The broad match type. For example, the “kids bedroom furniture” keyword may be matched to a search for “kids bunk beds” which you don’t sell. A high volume of searches for “kids bunk beds” and other searches that cause your ad to appear will boost a keyword’s impressions and will either dilute your click through rate (if your ad is not specific to the search term) or your conversion rate (your landing page doesn’t match the search term). If you use broad match - always use the broad match keyword exposure filter.

Before you hit delete…

1. Add this Google Analytics filter so you can see what exact searches trigger ads from your broad match and phrase match keywords. Anything irrelevant gets added as a negative keyword at the Campaign level (to prevent ads from other Ad Groups from appearing).

The benefit will be a better click-through rate (less clicks but far less ad impressions). You’ll have a lower absolute spend because you’re not paying for irrelevant keyword matches anymore, and your higher click-through rate means a lower cost-per-click. Hurrah!

2. Play customer on your own landing pages. Think about search intent - certain keywords are more “informational” than “commercial.” Would someone using the keyword in a search engine hope to find information or a product page? How can you improve your landing page to connect with that visitor? Does this keyword need its own Ad Group with its own landing page?

3. Chop at the Ad Group level. If you need to save money on PPC, figure out which product/categories are low margin, under-performing or are too expensive per click to keep bidding on and pause or delete the entire Ad Group, rather than killing individual keywords.

Again, deleting individual keywords within Ad Groups may not improve your results, because these keywords may not be getting credit for all the “assists” they’ve made to conversion. And your ads may still appear thanks to the broadness of broad match if the same search just gets matched to a similar keyword. If you do remove a keyword, be sure to add it as a negative keyword at the Campaign level.

PPC Myth Week Pt 2: Bid Higher to Appear Higher

Wednesday, May 6th, 2009

Because top positions typically receive better click through rates than lower, many people use average position as a KPI (key performance indicator) to measure campaign health, and seek to optimize it — either by trying to improve Quality Score* or raising the maximum CPC (cost per click) for the keyword. For some, raising the bid is easier than trying to figure out how to appease the Google Quality Score god.

*Quality Score is Google’s way of scoring the quality (clever name, hey?) of your ad and landing page relevance and attractiveness to searchers. If you’re interested in learning more about Quality Score, Craig Danuloff of Click Equations is writing a book about it and is dripping out chapters on his blog.

Click through rate (CTR%) is the most important part of Quality Score, according to Google’s own explanation of how it ranks ads (Youtube video). CTR% is followed by ad/landing page relevance and landing page quality. The video goes into detail on how ads with high Quality Scores are rewarded by higher positions and lower average CPCs.

It used to be common practice to crank up your bids when you first launched keywords so they would rank higher and get better click through, and turn them down once you established a good click through history. Today, Google calculates your click through rate at each position it tests your ad in, comparing it against other data it has for advertisers in those positions rather than an average across every position. So there’s no need to bid high - your focus should be improving that click through rate!

Tips for Improving PPC Click Through Rates

1. Find negative keywords. Add as many negative keywords as possible to reduce impressions for irrelevant or near-relevant keyword searches. Some negative keywords will be applied at the Campaign level, others at the Ad Group level. You can also find negative keywords by adding a broad match exposure filter.

2. Group keywords more tightly. Studies have shown click through is highest when the ad headline includes the exact keyword the searcher typed in (limited to 35 characters) — especially for brand / color / model number searches. So rather than having one big Digital Camera Ad Group with all your brands and models, you would have a Digital Camera group with only unbranded keywords, and Ad Groups for each brand, and model-specific Ad Groups for each brand.

Some keywords might be so popular / high converting they may justify their own Ad Group so you can write an even more specific ad, like “Ashton Kutcher Coolpix.”

3. Write better ad copy. Some tips include:

Use keywords in your ad’s headline that match your keyword list (you might use Dynamic Keyword Insertion to accomplish this
Write persuasive ad text including value propositions about your business or enticing calls to action
Use numbers like prices and percentages
Capitalize The First Letter Of Each Word. Don’t Laugh, It’s Proven.
A/B test your ads

In this economy, you can’t afford sloppy PPC campaign management. Make sure you do everything you can to improve Quality Score before you ramp up bids on keywords. After optimizing for CTR%, look at improving landing page relevance, not just to please Google, but to convert more clicks to sales.

PPC Myth Week Pt 1: Organic Search Traffic is More Qualified Than Paid

Monday, May 4th, 2009

Welcome to PPC Myth week! Today is the first installment of a 3 part series challenging common misconceptions about search marketing and analytics.

Myth #1: Organic search more qualified traffic than paid

I was surprised to see in print one of the most respected search marketing gurus state “Organic searchers who click on your pages are highly qualified visitors to your site. They are much more likely to make a purchase than some other kinds of visitors you receive.”

In fairness, the guru went on to explain that banner ad clickers are less qualified than searchers actively looking for a product in a search engine. Nevertheless — to claim that organic searchers are highly qualified is false. It also implies that organic search converts better than paid search, comparison engines, email traffic, affiliate leads and so on. This just ain’t so.

1. SOME organic traffic is better “qualified” than others.

Remember, in this context “qualified” means more likely to purchase. If you look through your organic search referring keywords, you’ll find a number of non-transactional terms, and transactional terms that are not necessarily close to purchase or even relevant to what you offer.

Examples from the 2010 Olympic Store:

Non-transactional: “vancouver 2010 schedules”
Transactional, not relevant to our offer: “how do i get tickets for the 2010 winter olympics”
Transactional, too general: “business card holders” (may like our offering but is likely in research/comparison mode)
Qualified: “vancouver 2010 sterling silver heart charm bracelet”

Also, organic conversion can vary by search engine. It’s possible for your market, traffic from Yahoo, AOL or MSN sends you more shoppers and Google sends you more information hunters.

2. SEO vs. PPC - it depends on the keywords.

PPC traffic “quality” also depends on which keywords get clicked - especially if you’re using the broad match type. In fact, broad match can trigger some really un-qualified traffic. If you were only bidding on a certain number of close-to-purchase keywords with the exact match type - you *could* argue PPC is more qualified than SEO if your conversion rates also confirm so.

3. Other channels - it depends…

Comparison engine traffic is *typically* closer to purchase since visitors have already evaluated your offer against competitors and the product against other alternatives, comparison engine traffic should convert better in theory. Your results may vary.

Similarly, email and affiliate referrals have been exposed to your brand and offer before clicking through - you’d expect better results for these channels than search. Again, your results may vary.

Type in traffic (no search engine or other site referred the visit) indicates brand awareness, and perhaps preference. Repeat customers, brick-and-mortar customers or people responding to offline advertising may convert higher than SEO/PPC traffic that’s also clicking on several other results to compare. But direct traffic can also indicate you should filter out your own staff’s IP address or you have missed Javascript tags on some pages (causing a null reference).

So what’s the point of this rant? I don’t want anyone making decisions to invest more into SEO than other channels because they heard that organic search is the most qualified traffic. I don’t want you to set the wrong expectations on organic search, and set goals like “increase organic visits” or “increase conversion for organic visitors.”