Continuously improving paid search ROI, especially a large and mature program, requires close monitoring, good cross-team communication, flexibility, and advanced technology. For an online store, accurate inventory data and insight into the vertical-specific ramifications of that data is a major key to success.
Situation
Inceptor provides search marketing services for a well-known multi-channel retailer in the highly competitive athletic apparel industry. In business for more than 35 years, this retailer sells top brands and prides itself in offering the largest selection and hottest new fashions. As a result of 5 years of Inceptor’s efficient management and pro-active expansion of their paid search program, our client’s dynamic inventory of over 26,000 product SKUs is represented by over 1.6 million keywords.
Challenge
The client’s goals are to drive sales at specific efficiency levels (Cost of Marketing) while hitting internally defined budgets. As the paid search campaigns matured and expanded in size, the challenge was to unearth additional opportunities to improve ROI, especially in preparation for the increased competition and higher CPCs anticipated in Q4.
Keeping up with the ever-changing inventory levels and product availability for an account of this size required an automated, yet very accurate approach. We needed a way to effectively monitor our client’s product inventory levels without having to manually check and recheck millions of keyword URLs to ensure availability.
Solution
A primary way to maximize ROI is to ensure that the media budget is not wasted on non-converting clicks. With weekly PPC spending in the 10s of thousands of dollars and weekly revenue in the 100s of thousands, the algorithm for optimizing paid search to account for changes in inventory needed more granularity. With this problem in mind, the Inceptor Comparison Shopping Engine (CSE) team developed technology and process to manage these large scale PPC and CSE campaigns in an integrated fashion.
- CSE advertising programs require product “data feeds” to keep the shopping engines up-to-date. Our client was already providing a daily product feed for processing and submission to the CSEs. So we used this daily CSE data feed to automatically identify when product-specific bids needed to be paused/eliminated in the CSE and PPC programs due to product unavailability.
- The Inceptor team understood that determining “availability” in the apparel industry presents a unique dilemma. The problem goes beyond simply identifying those items that are totally out-of-stock. For bidding purposes, availability also requires having a sufficient variety of sizes in stock. For example, if only size 5 of a specific model of shoe is in stock, a click on a PPC ad for that product is unlikely to convert.
- In addition, retailers often discount the price on last season’s products, especially those with limited size or color availability. If these bargains are included in the feed to the CSEs, the listings are even more likely to generate many clicks, but very few conversions.
- The Inceptor CSE team developed a specialized algorithm to determine what combination of sizes is “sufficient” enough to warrant any ongoing spending on clicks, both PPC and CSE.
- Another complexity involves the effect of inventory changes on optimization for entire categories of products. So the team enhanced its in-house-developed link checking tool to verify not only that all landing pages in the paid search campaigns are still active, but also to identify cases where a keyword represents an entire class of products that should be considered “unavailable” for bidding purposes.
The positive impact of this automation project improved efficiency in both time and money. The time previously devoted to troubleshooting inventory issues was re-allocated to expanding and optimizing the account. And, by eliminating thousands of unnecessary clicks on low inventory/out of stock products, the saved budget was re-assigned to higher converting areas within the account.
Results
A preliminary test of the newly developed technology was performed in late Q3 and the full program was rolled out in time for the busy Q4 holiday season.
During the test period in the relatively slow early fall season, the retailer benefited from exceptional PPC savings, while continuing to maintain revenue at current levels. A comparison of the key metrics 6 weeks before and 6 weeks after the new technology was initially implemented shows:
- Cost of Marketing (Spend/Revenue) decreased by 18%
- Average Weekly Spend decreased by 14%
- Average Weekly Cost per Sale fell by 10%
- Average Weekly Revenue increased by 1%
To ensure we obtain the best possible results, the availability determination algorithm and link checking technology is continually tweaked based on ongoing results as well as new insights into the apparel sizing/availability dilemma. During Q4, the campaigns were diligently optimized and re-optimized and savings were re-applied to expand the scope of the campaigns. As a result, the year over year results for Q4 were outstanding:
- Revenue increased by 46%
- Cost of Marketing decreased by 17%
- Spending increased only 21%
Many agencies promote a fully integrated paid search offering but few can demonstrate the concrete effects on a large scale client’s business and overall revenue contribution. Working hand-in-hand with our client, we were able to create a highly successful, proactive campaign leveraging the synergy between CSE and PPC programs.
