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BabyEarth launched and managed Google Shopping Product Listing Ads (PLAs) in-house starting in August of 2011. They selected Adlucent as their paid search agency in June 2012 and tasked them with growing their revenue for both text ads and PLAs. Although they were successful with their overall self-managed paid search program, they were looking for new ways to increase their reach and market share.

Creating Reach Through Relevancy

Leveraging its Precision Product MatchingTM technology and management approach, Adlucent worked with BabyEarth to quickly expand the number of PLA targets from under 100 to over 10,000 in order to better promote the full product catalog.

Adlucent utilized micro-segmentation reporting to identify predictably strong performing products based on results for related SKUs in PLAs and text ads. They also analyzed search queries to determine whether the highest quality matches were being made with products. Those queries closely aligned with customer intent could be optimized and more aggressively promoted, and those not well aligned could be directed elsewhere or negated in an effort to shift resources to product targets with a higher likelihood of converting.

Achieving Targeted Growth

With the increased reach, BabyEarth has seen impressive year-over-year growth:

• Increased PLA revenue for August (193%) and September (201%) 2012
• Average monthly PLA revenue has increased 129% from the time that Adlucent began managing PLAs for BabyEarth

This growth has also increased the value of the overall paid search program. Additionally, at BabyEarth's request, Adlucent has incorporated margin goals into their overall PLA management strategy. This strategy–aggressively promoting products that drive the most value to BabyEarth while actively managing low-margin products–has led to sustainable growth for BabyEarth's paid search program.

MICRO-SEGMENTED TARGETING AND OPTIMIZATION

Adorama began testing PLAs on Google Shopping relatively soon after Google launched them in late 2010, but investing in PLAs long-term hinged on the media being at least as profitable and efficient as their PPC text ads.

Using their Precision Product Targeting approach to PLA management, coupled with Adoramaʼs text ad performance analytics, Adlucent was able to confidently and quickly launch the Adorama program with targets for every product in Adoramaʼs catalog and bids tied directly to proven customer intent. Doing so has allowed Adorama to clearly identify performing products, adjust bids at the product level, and optimize ad text (i.e. product title and description) for top performers.

PRODUCT LISTING ADS PROVE TO BE AN ADDITIVE AND EFFICIENT REVENUE CHANNEL

Adorama has seen the performance and efficiency in their PLA program needed to continue investing in the media type. For the month of June 2012, Adorama saw a year-over-year average click-through rate (CTR) increase of 176% and average conversion rate (CVR) increase of 100%, while costs per click (CPC) were held to a 73% increase. Similar year-over-year increases were also seen in July 2012.

This is a trend that Adorama has seen since they launched their program in June 2011. The month-over-month trend for PLA conversion rates has slightly out-paced costs (7.2% vs. 7.1%), while CTR has increased an average of 10% per month.

In terms of order revenue (using last click to purchase), Adorama saw PLA revenue contribution spike dramatically in Q2; 63% over Q1. Additionally, using Adlucentʼs click funnel analysis by channel, Adorama found that PLA clicks impacted almost half of their non-brand revenue in July 2012.

KEEPING UP WITH EFFECTS OF PLA ADOPTION

As the popularity of PLAs on Google Shopping grows, so will their cost. It will be key for Adorama to ensure their PLAs are exceptionally targeted and relevant to maintain growth of click-through and conversion rates ahead of CPC increases. Having the power to quickly scrutinize and optimize performance of each product at a micro-segmented level will give them the granular control they need to stay competitive, yet cost-effective.

Need For a Customer Lens

Paid search has been a strong customer acquisition tool for Free People, but they had not had the ability to distinctly identify how many new customers they were attracting and which keywords, products and designers were drawing them in. They needed an additional lens to tie bid and ad performance to customer value and need, and then the ability to leverage the insights to begin confidently promoting the right product mix to convert the right customers.

Mapping to Customer Segments

Free People worked with Adlucent to implement Customer Mapping, a tool that allows retailers to use paid search data to more thoroughly understand the intent behind customer purchases and adjust strategies quickly and accurately. By mapping Free People's paid search performance to their custom customer segments, they were able to receive reports detailing the keywords and categories driving the most converting new customers to their site, including brand vs. non-brand comparisons by customer segment. They could also visually analyze AOV differences and promotional responsiveness between customer segments.

Quantifying Customer Impact

Free People was able to see a clearer picture of how they were reaching different segments of their customer base. They determined that non-brand campaigns were generating proportionally more new customer sales than brand campaigns. This knowledge allowed them to run controlled tests for AOV and CPA standards per their different customer segment targets.

Additionally, Free People was able to deduce what brands and products were attracting new customers, giving them the data needed to have very relevant inventory planning conversations with their merchandising team.

Building a Relevant and Profitable Strategy

Wasserstrom selected to work with Adlucent in June 2010. They were looking for a partner who could help them profitably grow their revenue from paid search using a strategy that aligned with their specific business model and goals.

Wasserstrom has two primary customer segments: their corporate customers who have established accounts with Wasserstrom and tend to be reoccurring customers with large order volumes, and their "public" customers who are the primary targets of their PPC advertising. Aligning these unique targeting goals with Adlucentʼs advertising efforts has been a key part of the relationship.

Wasserstrom first launched with only paid search text ads and quickly added Google Display Network advertising. After two years of growth and developing a strong relationship, Wasserstrom tasked Adlucent with adding and developing their Product Listing Ads (PLA) program in anticipation of the end of free Google Shopping advertisements.

Achieving 102% Year-over-Year Growth

Adlucent has been able to drive triple-digit year-over-year revenue growth for Wasserstrom while maintaining a consistent cost of sale. Through year two, average year-over-year revenue growth was 102%. Year three is off to a very positive start with near 50% growth in revenue over year two.

Key Contributing Factors to their Success

• Alignment of goals. Given the two different—yet important—customer segments that Wasserstrom caters to, Adlucent had to take full advantage of their flexible technological architecture to develop appropriate account management and reporting schemes that revolved around Wasserstromʼs objectives. This has allowed Adlucent to drive targeted revenue growth and understand performance of different creatives, bid management tactics and keyword trends within these different customer segments.

The results? Adlucent has driven 81% year-over-year growth of the "public" revenue—revenue driven primarily through non-brand channels. PLAs have been key to this growth in 2012, thus have become a greater place of investment for Wasserstrom. On average, Wasserstromʼs PLAs have garnered subustantially higher average CTRs (136%) and CVRs (118%) versus non-brand text ads.

• Eliminated waste throughout accounts. Adlucentʼs performance-based compensation incentivizes the company to not only increase total revenue, but to constantly monitor and identify inefficiencies and direct those resources to more efficient uses. Adlucent also utilizes micro-segmentation of products and performance data, which allows account teams to understand account trends and quickly adjust their massive portfolios of keywords to capitalize on new opportunities. Key waste-eliminating tactics utilized include a focus on using exact-match while closely monitoring broader-match keywords, fast search query analysis to best understand consumer intent and quickly identify and negate non-revenue driving terms, and then daily bid optimization to ensure keywords are maintained at their optimal positions.

• Finding the right messaging that resonates with target customers. Adlucent has leveraged three key messaging activities to attract new customers and increase conversion and AOV, including: close alignment with Wasserstromʼs merchandising calendar, promotion and content testing in ads and structured landing page tests.

Key Contributing Factors to their Success

The consumer demand data and analysis collected by Adlucent is regularly shared with Wasserstrom and is used to determine future promotions, messaging efforts and merchandising decisions. This amplified level of sharing and feedback has led to a strong relationship between Wasserstrom and Adlucent and years of sustainable revenue growth.

In 11 months working with Adlucent, revenue increased 78 percent while costs dropped 25 percent compared to the 11 months prior to working with Adlucent.

Jewelry Television (JTV)

JTV is the largest retailer of loose gemstones in the United States. Paid search had long been a critical customer acquisition strategy for JTV. Eventually, however, JTV found that its revenue from paid search activities had hit a plateau. As Craig Shields, Vice President of E-Commerce at JTV explains, "The problem was inefficiency. We suspected we could grow revenue without spending proportionately more on ad spend, but we didn't know how."

JTV began searching for a completely new approach to growing its revenue profitably using paid search. The company partnered with Adlucent, intrigued by Adlucent's dedicated focus on working with leading retailers and its unique pay-for-performance compensation model.

Dramatic, Paid Results

Within just three months, Adlucent was able to help JTV increase year-over-year revenue from paid search by 53 percent. And in less than a year, revenue from paid search soared 78 percent, while margins (A/S ratio) improved 25%.

Adlucent employed two principle strategies to help JTV drive revenue and improve efficiency. The first was to increase the relevancy of ads by significantly expanding and restructuring JTV's online advertising accounts. Over 51,000 keywords were added, along with more than nine times as many campaigns and 10,000 more ad groups. By organizing an expansive array of keywords into tightly-focused ad groups, ad copy became more relevant to online shoppers' search queries, leading to higher click-through and conversion rates. In addition, this approach allowed negative keywords to be appropriately implemented, reducing wasted ad spend.

The increased relevancy from account restructuring also helped boost by 32 percent the number of keyword Quality Scores at seven or above. This in turn resulted in higher ad placement ranks at a lower cost per click, further driving revenue and cutting expenses.

A second strategy was more active bid management. Using its retail-optimized Deep Search™ software platform, Adlucent was able to make more frequent bid changes in response to real-time campaign performance data. Rapid, efficient and effective bid optimization is central to reducing wasted ad spend.

Additional Insights and Benefits

By restructuring JTV's accounts, JTV was able, for the first time, to understand their paid search initiatives at the category level, item level, and the intersection of the two. As Mr. Shields explains, "Before working with Adlucent, we knew how campaigns for gemstones like sapphires were performing, and we knew how campaigns for jewelry types like rings were performing. But we couldn't determine how well the intersection of the two—say, sapphire rings—were performing. By working with Adlucent, now we can."

This granular level of reporting shows JTV where they can realize the greatest efficiencies on their ad spend. It also enables JTV to use paid search to better understand consumer demand, evaluate product pricing and demand elasticity, and assess merchandising efforts.

Buy.com, The Internet Superstore™, is among the Internet’s top 50
e-tailers. The site offers millions of products and serves tens of millions of customers monthly. The Buy.com team is highly familiar with the opportunities and challenges of product-level search marketing. Success depends on it.

The Search for Better Returns

Over the years, Buy.com had engaged multiple leading SEM agencies and technology providers. But results had been disappointing. Many struggled with managing a campaign for over 4 million SKUs and the highly dynamic nature of SEM for Internet retail. Higher revenue and new customer acquisitions often came at the expense of profitability – a compromise Buy.com was not willing to make.

Conversion Rate Revenue

Buy.com Turns to Adlucent

Facing a tough economy, strong competition, and aggressive margins, Buy.com sought a partner with a fresh strategy and strong, retail-centric technology. They turned to Adlucent, intrigued by the company’s Deep Search™ technology, geared specifically for retail search marketing. Buy.com was also impressed with Adlucent’s unique performance-based compensation model. After a highly successful 3-month pilot, Adlucent became the agency of record for the entire Buy.com account.

Putting Deep Search™ to Work

To achieve Buy.com’s ambitious ROAS goals, Adlucent focused specifically on non-branded, product-level terms. The Adlucent team quickly expanded coverage across the entire Buy.com catalog. It leveraged its advanced retail Deep Search™ modules to optimize for revenue and profitability by predicting key factors, such as product effectiveness and competitive seasonal trends.

Adlucent also aligned the campaign with Buy.com’s inventory activity. By automating the extrapolation of key data from massive daily feeds, Adlucent could better manage bids based on product availability and sales priorities. The integration of other product-level data, such as ratings and reviews, will further enhance performance and ad relevance.

Doubled Conversion Rates and Increased Profitable Revenue

Within months, Adlucent boosted profitable revenue from paid search by 75%. Equally important, Adlucent doubled conversion rates on paid search campaigns. By expanding keyword coverage, Adlucent captured higher quality leads and exceeded Buy.com’s aggressive ROAS target for non-branded campaigns. Despite one of the most challenging economic climates in decades, Adlucent quickly achieved Buy.com’s goals while setting the stage for continued success and a strong holiday season.

Andra Group owns HerRoom.com and HisRoom.com, one of the world’s largest online retail sites for undergarments – everything from bras and lingerie to boxers and briefs. Marketing the more than 250 brands and categories is a daunting task, made more challenging in a highly competitive environment and lagging economy.

The Search for Superior Return on Investment

The Andra Group had worked with other search engine marketing (SEM) agencies and technology providers. Yet, they were unable to expand keyword coverage beyond brand and generic terms at an acceptable level of profitability. Andra knew it was leaving revenue on the table by not marketing product level ads. Moreover, the company had no way of capitalizing on predictable seasonal trends to achieve higher revenue at acceptable margins.

ROAS Revenue

Andra Partners with Adlucent

Andra set out to find a partner that understood its business and the complexity of marketing a large and diverse inventory. It needed someone with the technology to broaden its campaigns, attract new customers and drive additional revenue at better margins.

Andra found Adlucent, a performance-based SEM company with a record of success with the world’s largest and most complex e-tailers. Andra was impressed by Adlucent’s exclusive retail focus, predictive Deep Search™ technology and its performance-based model that tied compensation to Andra’s success.

Remarkable Returns Leveraging Deep Search™

Adlucent quickly leveraged its Deep Search™ technology to eliminate wasted ad spend and improve Revenue on Ad Spend (ROAS) by over 200% in the first two months. Adlucent also tripled the number of keywords and leveraged its predictive and learning technology to drive greater than 100% revenue growth. Adlucent’s advanced retail modules, like inventory and merchandising, were also used to optimize revenue and profitability by predicting key factors that influence conversion rates and consumer behavior.

It takes a bold approach to shake up an existing market. Discount Office Items, a rapidly growing online retailer, and Adlucent, an innovative retail search marketing firm, are doing just that in their respective markets.

Founded in 2003, Discount Office Items is competing successfully with "big box" and large Internet retailers by making it easy for customers to compare its prices side-by-side with the competition’s on its Web site. Combined with fast shipping and top-notch customer service, this approach has helped Discount Office Items drive double-digit growth. In 2009 the company became one of the 500 largest Internet retailers.

To continue fueling its rapid growth, Discount Office Items needed a search marketing partner that could help the company drive new revenue profitably. After an extensive review, only one firm stood out. The company chose Adlucent, a retail search leader that partners with some of the world’s largest online retailers.

Pay for Performance Model Guarantees Results

Like Discount Office Items, Adlucent has embraced a strategy unlike any of its competitors. Rather than basing its compensation on a percentage of ad spend, Adlucent offers a "pay for performance" model that guarantees its clients’ success. For Discount Office Items, that means Adlucent actually absorbs the cost of the company’s search marketing campaigns, and gets compensated only as the campaigns generate revenue. Discount Office Items CEO Tim Horton says Adlucent’s performance-based model is unlike any other he has seen in the industry.

"Adlucent is the only search marketing firm we found that guarantees results by tying its compensation to our success," says Horton. "Their pay for performance model gives me the confidence that our campaigns are optimized to hit revenue targets, rather than monthly spending goals. That means I no longer have to worry about whether our ad budget is being spent in the right place, because we both have the same motivation."

Ten Times the Online Presence

As an experienced etailer, Discount Office Items already employed an extensive search marketing program. But with thousands of products and dozens of categories to promote, the campaigns were growing more difficult—and expensive—to manage.

To expand Discount Office Items’ online presence profitably, Adlucent used its Deep Search™ platform, developed specifically to manage complex retail campaigns with millions of products. Using Deep Search, Adlucent was able to reallocate time and money to the products and categories likely to be most profitable for Discount Office Items. The result: Adlucent expanded the retailer’s keyword coverage by 1,000%.

Driving Profitable Growth

As a young competitor in a large, established market, Discount Office Items competes by offering consistently low prices on a wide selection of products. To capitalize on this advantage, Discount Office Items provides Adlucent with a daily product feed down to the SKU level, along with key information such as pricing and promotional schedules. The Adlucent team uses this information to quickly identify and promote competitively priced products, instead of wasting ad spend on less profitable products and categories.

Horton believes the partnership with Adlucent will be a key factor in driving the company’s continued growth. "As our revenue numbers grow, it gets that much more challenging to sustain double-digit growth. With Adlucent, we now have the right strategy in place to attract new customers and grow profitably."

Every retail marketer has experienced it: a well-tuned search engine marketing campaign is producing excellent results.

Then, everything changes.

The cost of keywords skyrockets. A suddenly popular item sells out, rendering other keywords useless. Marketers scramble to catch up, while profit margins begin to slide and costs creep upward.

Fortunately, new advances in search engine marketing are putting some retailers well ahead of the game. Rather than reacting to shifts in market demand, these companies are using real-time analytics technology and sophisticated modeling to anticipate buyer behavior. To put it simply, retailers can now predict, with reasonable certainty, what’s going to be hot and what’s not.

THE KEYS TO REAL-TIME SEM SUCCESS

Michael Griffin, founder and CTO of Adlucent, a search engine marketing firm based in Austin, Texas, says the new advances can help retailers better focus their merchandising efforts on their most profitable products. "The vast majority of revenue comes from only 10-25% of the products in a retailer’s inventory," says Griffin. "Retailers need the ability to predict which of their products will be those best sellers, and have the inventory in place when the customer is ready to buy."

Facing a tough economy, strong competition, and aggressive margins, Buy.com sought a partner with a fresh strategy and strong, retail-centric technology. They turned to Adlucent, intrigued by the company’s Deep Search™ technology, geared specifically for retail search marketing. Buy.com was also impressed with Adlucent’s unique performance-based compensation model. After a highly successful 3-month pilot, Adlucent became the agency of record for the entire Buy.com account.

To compete in this online world, where change is measured in seconds, retailers are embracing the latest advances in real-time SEM analytics to make the following moves:

LINK ONLINE CAMPAIGNS TO INVENTORY — by linking automated keyword bidding to their inventory systems, retailers can monitor demand and availability of top-selling products. Keyword campaigns can then be automatically paused and reactivated according to changing inventory levels, so that merchandising dollars aren’t squandered on out-of-stock product, and purchasers can shift their budgets to the products that are likely to be the most profitable.

PREDICT TOP SELLERS — automated keyword bidding systems let retailers constantly monitor, and even accurately predict keyword performance. In a world where change is measured in seconds, this gives retailers the agility and control they need to make instant adjustments to sudden changes. In addition, new predictive technology lets retailers know in advance which items will be top sellers during key seasonal periods, and adjust their campaigns accordingly to reduce wasted advertising spend.

LEVERAGE SOCIAL MEDIA AND CUSTOMER COMMUNITIES — leading retailers have proven time and again that using social media to engage customers in their marketing campaigns can make the difference between an average product and a top seller. Retailers that have taken this step are now taking social media strategies to the next level by linking customer ratings and reviews directly into their SEM campaigns.

ADLUCENT REAL-TIME DASHBOARD

Today’s top online retailers leverage real-time SEM analytics from Adlucent to automatically adjust search advertising campaigns based on real-time inventory levels, product popularity, social and search query trends.

Powered by the company's Deep Search™ technology, retailers have a powerful dashboard to accurately monitor and predict how keywords will behave, thereby maximizing revenue growth while minimizing advertising costs.

Adlucent's Deep Search™ Dashboard

Mumboe provides an on-demand contract management application that helps companies take control of their business agreements. In early 2008, Mumboe officially launched its company Web site and unveiled its innovative application, designed to eliminate software sales hurdles by allowing easy online access.

With limited brand and market exposure, the company launched a Search Engine Marketing (SEM) program designed to build awareness while driving acquisitions. Mumbo needed a partner with in-depth SEM capabilities, who could create highly targeted campaigns, manage bidding and optimize on the fly.

Mumboe turned to Adlucent to implement its Deep Search™ strategies and technologies in an integrated and comprehensive SEM campaign. The objective was to achieve an initial goal of 5,000 free-account signups while continually reducing average cost per acquisition (CPA).

Conversion Rate CPA

Multi-Phased SEM Strategy Triples Conversion Rates

Adlucent developed a multi-phased SEM strategy that was optimized to increase overall site conversions – defined as registrations for a free trial version of Mumboe’s software, Mumboe Express. Adlucent initially focused on landing page design, multivariate testing and overall conversion optimization techniques, quickly doubling conversion rates. Continuing to leverage its proprietary Deep Search™ technology, Adlucent further optimized the campaign, tripling conversion rates within six months of launch.

Seven-Fold Expansion of Keyword Coverage Yields Strategic Market Insight

Given Mumboe’s very ambitious yearend goal, Adlucent conducted detailed industry and competitive analysis, resulting in the expansion of keyword coverage by 700%. This breadth of coverage was an important part of Mumboe’s strategy to use paid search as a tool to research and test different messages across a broad market to discover which were most effective. This extensive campaign enabled Mumboe to gain a better understanding of its market. It also allowed the company to reach its annual new-customer signup goal by mid-October and to eventually exceed it by over 40%.

Year-End Goals Shattered, with Conversions Up and CPA Down by 75%

Mumboe had begun 2008 with only a slow trickle of daily conversions, resulting in a disconcertingly high average CPA. By the end of the year, Mumboe had not only surpassed its annual goal for acquisitions, but also increased daily conversions by over 15x, resulting in a 75% reduction in average CPA.

As savvy marketers know, maximizing search revenue relies on effective campaign optimization. Yet a wide array of myths and faulty notions persist. Despite the best intentions, incomplete data analysis can lead to lost revenue. Among the most pervasive mistakes is relying solely on clicks as the exclusive basis for judging ad text performance and strategy. A closer examination reveals that truly effective optimization relies on evaluating Gross-Profit-per-Impression (GPI).

Leveraging GPI for a leading Internet retailer resulted in a 25% increase in revenue.

CTR: The magic metric

Since the very beginning, the gold standard of success has been CTR. Despite the many advances in SEM, it is frequently still the sole metric for judging ad text performance.

The logic is simple. The higher the CTR, the more traffic, the more revenue. But upon closer inspection, CTR reveals only part of the picture. In fact, analyzed alone, CTR can be virtually meaningless unless assessed alongside other frequently changing data points. What about Conversion Rate (CVR)? How about Cost-per-Click (CPC)? And then there’s Cost-per-Acquisition (CPA).

What is the Best Ad?

	CTR = 1.73% CPC = $0.81	CVR = 3.4% CPA = $23.64
	CTR = 1.22% CPC = $1.18	CVR = 5.7% CPA = $20.88
	CTR = 1.45% CPC = $1.01	CVR = 4.8% CPA = $21.12

Conflicting data proves costly

When we actually begin analyzing campaign data according to multiple metrics, the picture becomes more complex. Conflicting data begins to emerge. What was once a quick glance at the CTR column now becomes a potentially daunting exercise. The example above illustrates the point. One ad may have a much better CTR and a lower CPC while another ad shows better CVR and lower CPA.

The conflicting data leaves the marketer confused, unsure of which metric matters most. Unfortunately, the ambiguity often leads to misinterpretation and, ultimately, the wrong conclusions. In other cases, the uncertainty leads to inaction. In both scenarios the result is inefficiency, wasted ad dollars and lost revenue.

Clicks come close

Despite the potential limitations of focusing too closely on click-through rate, they undoubtedly has its place. While CTR and CPC alone don’t tell us enough, they are fundamental components of the optimization process.

Indeed, they provide the critical basis for calculating Revenue-per-Click and, even more importantly, Gross Profit-per-Click. These metrics go far beyond CTR and CPC, offering key insight into how much revenue and profit each ad is actually generating.

Yet, even these data points are not the final basis for a decision. By focusing strictly on click-related performance we omit one last indispensable piece of the puzzle – impressions.

Profits make an impression

To ignore impression data is to ignore each ad’s real revenue potential. Therefore, the final step in determining a winning ad is to calculate Gross Profit-per-Impression (GPI) – the difference between cost and revenue, divided by total ad impressions. The ad with the highest GPI is ultimately the ad that should remain active. The others should be paused.

Applying this analysis to a leading Internet retailer resulted in a 25% addition in revenue to an otherwise optimized account. By switching all traffic to the most productive ad text, the customer was able to maximize the revenue from the entire impression share of their campaigns.

When impression data becomes part of the equation, the drawbacks of strictly click-based optimization become readily apparent: incomplete analysis, faulty conclusions and lost revenue. Yet many marketers hold fast to historical standards. As agencies and technology providers continue to proliferate, it’s clear that genuine expertise and insight will be the real metrics for success.