Not long after announcing that they would lower CPC rates by as much as 57% for certain categories, Shopping.com has again announced a new pricing structure that should help a good number of merchants lower their costs and increase their return on investment (ROI).

The issue with the current flat CPC rate system that most shopping engines use is that a merchant selling an electronic device that costs say, $5 is paying the same per-click as someone in the same category selling a device for $500.

In order to get the same return on their comparison shopping investment, the former merchant would have to convert at a rate of 100x greater than the merchant selling the $500 product–which is quite unreasonable to expect. As a result there is little incentive to list for any products below a certain price point, even though those may convert at a relatively high rate.

With their new structure however, lower ticket items will have lower CPC rates, while higher priced items will see an increase in CPC rates. The graph below provided by Shopping.com illustrates the effect this will have:

Their main goal is to minimize the discrimination of pricing of items, and attempt to balance out the COS (cost of sale) % among all products offered by a merchant.

For merchants offering a majority of or only high ticket items, they may see an increase in their spend off the bat, but overall the proportions shouldn’t be too drastic since the items they sell are priced so high to begin with.

The new rate card is available on complete here.

One of the initial choices that a merchant has to make when signing on to an engine is to decide whether or not they want to display their company logo on search results pages, or simply limit it to a text listing (example below).

Having experimented both ways with our merchants, we’ve generally recommended against posting logos on the listings for a few reasons.

Additional cost is too high

Shopping engines will generally charge an additional $0.10 per click for the privlelege of displaying one’s logo next to their product listings–and if the end goal is to reduce one’s cost of sale, the extra dime per click can add up quickly to a merchants overall spend on the engines.

Benefits are marginal

The goal of attaching a logo on a search result page is to improve brand recognition, or to take advantage of one’s already popular brand.

The issues here are, if you already own a popualr brand whose logo is recognized, then the text version is certainly not any less recognizable–and if you’re not quite a household name, we hardly believe a few small images flashing by on search results can help you become one.

Bottom line?

In the end if you are even moderately happy with your investment on the shopping engines, we’d strongly recommend against posting your logo up on your listings as it can dramatically increases your costs with little return.

However if you’re a merchant with overflowing cash reserves–first of all be sure to let us know some of your secrets and we’ll share some of ours –but secondly if you want to see a potential increase in traffic, adding your logo to the engines may be worth experimenting with so long as you keep a close eye on the increase in spend.

Personally I wouldn’t bet on a proportionate increase in your revenue.

-Tien

Wishing you a happy feeding experience

Merchants who were introduced to online advertising through PPC campaigns, e.g. Google Adwords, often come into the comparison shopping world with the mindset that higher product placements through bidding wars with others is the best way to promote their business and increase their returns.

Unfortunately not only is this the wrong mindset to be in, it can quickly become a costly lesson to many merchants as they try to break out of their old patterns.

Below we will dispell certain myths that many new merchants have when it comes to product bidding on the engines.

Myth 1: Higher bids results in higher placements

The first misconception that many merchants have is that their product rankings on search results are mainly determinant on their bids as is the case with Adwords. However in our experiences bids have less impact in most engines than many merchants are lead to believe, and in general plays a fairly minor part of the CSE’s algorithms when it comes to sorting out the results.

This is not to say that bidding provides zero impact in a product’s placement, as the mechanism does serve a purpose–but our next point explains why it’s not necessarily beneficial to give products higher placements.

Myth 2: Higher placements is beneficial

While on engines such as Google Froogle Shopping Product Search (where traffic is all free) you would want all your products to rank as high as possible for as many different keywords as possible in order to drive the most amount of traffic to your site–on the CSE’s you want to concentrate on getting as much qualified traffic as you can.

For example if you’re listing a polka-dotted denim designer vintage t-shirt from the1950s, someone doing a search for “t-shirt” is unlikely to be in your target niche of audience, so a high placement on that result page would most likely lead to unqualified traffic and simply waste money–leading us point 3:

Myth 3: Higher investments = higher return

The adage of “spending money to make money” is as applicable to comparison shopping as anywhere else, but it’s not necessarily the case when it comes to bidding.

Simply put, higher bids will cost you more money–not only in the obvious sense that a higher bid results in each click being more costly–but it will lead to more unqualified traffic which can add up quickly.

Using bidding to your advantage

How do we use bidding to our merchants advantages then?

Quite simply, we rarely do and leave the bids at their minimum depending on what category and engine we’re listing on.

In those rare cases that we do though, for instance if we feel a merchant is not getting enough traffic on any of their products, we will increase the bid of certain products to $0.01 over the minimum, which accomplishes two things:

• It leapfrogs that particular merchant over others with similar relevancies in their products and thereby gives them more exposure at very little extra cost
• It doesn’t raise their result placement so high that it starts leading to lots of costly, unqualified traffic, which is certainly guaranteed to needlessly waste money.

There you have it then, while bidding can be helpful in certain situations, our experiences show us that generally it’s best to not worry or deal with product bidding at all.

Of course, handing over your comparison shopping management over to us means that you don’t have to ever worry about another product bid again

Now that is a discussion worth pondering over.

Tien