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.

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.

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).

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).

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.