Shop tactics: how business-based search advertising drives smarter sales

As e-commerce matures and becomes just another part of everyday business, there’s a need – and an opportunity – to be as sophisticated online as we are offline.

Today what’s seen as a healthy minimum of salesmanship in the high street is still an exotic vision online. Where are the shop floor strategies online, and how are tactical trading decisions executed? It’s not enough anymore to just sell over the internet; as online advertisers we now need to shift our efforts up a gear to focus on greatest margin contributions, best customer experience and lowest costs for goods sold.

Just driving sales may even be a loss-making activity if customer acquisition costs and profit margins are not aligned. Maximising the generated margin from products sold requires constant effort. How do we get there? By ensuring that the high margin product is sold instead of the lower margin alternative, and that the complementary product is sold at the same time.

In the offline retail world, trading decisions like these govern where products are positioned on the shop floor or which item a salesman encourages you to buy. In high street terms, this translates to a retailer selling his chocolate sauce next to the ice cream, or a car salesman pushing you in the direction of one car over another. For an online retailer, this means promoting the cheap 19-inch LED television with high margins instead of the exclusive 50-inch plasma 3D TV with a lower margin.

Until now, the typical web shop has presented little more than an alphabetical list of products for each product category. In other words “ice cream” is found in “Frozen Goods” and “chocolate sauce” under “Condiments”. Generic advertising drives “broad” traffic to the web shop in the hope that users might complete a purchase. The opportunity to manage margin creation on a customer-by-customer basis is limited. The task of replicating the offline store’s shop floor strategies and trading decisions is today beyond what is humanly possible to manually accomplish online.

RealTime Ads™ helps the online retailer to transfer their shop floor strategy to the online environment and to execute trading decision in real-time based on actual stock positions and market conditions. RealTime Ads™ pushes and promotes products based on set trading decision rules for every search query.

RealTime Ads™ delivers aggregated performance results back not according to how a keyword has performed, but how the business rule performed. We can proactively set bids based on product data and stock levels or even external market data – the equivalent of building pyramids of promotional stock on the shop floor – rather than reacting to how a keyword performed two weeks ago.

Business-based search marketing is search advertising that aims to maximise absolute net margin contribution. It is not driven by search trends and click prices; it’s driven by how to sell products. It acknowledges that success is a combination of selling as much as possible of the product with the highest relative margin with the greatest working capital requirements to the lowest customer acquisition cost possible.

To only measure number of orders and cost per order isn’t sufficient and can even be misleading. Cost per order is a cost measure; in contrast we’re focusing on metrics that can illustrate value creation. How much more have we sold, how much additional margin was generated by selling the right products, what cost of obsolescence was avoided by selling the right products? How much manual labour time have we saved, and what additional sales were generated from spending that valuable time on envisaging and testing new trading decisions?

According to business-based search marketing, the name of the game isn’t buying traffic but selling products.