CPC Rate Changes – Thank you Amazon & Become

Tis the season for shopping engine CPC rate increases. Five years ago, it was common to see all the shopping engines implement a 25% CPC rate increase across the board…because, well…fork lifts also see a lift in conversion during the holiday shopping season. Yeah, I didn’t buy it either.

The original party line was that conversion rate goes up 3x during the holidays and the shopping engines were adjusting CPC rates to get their fair share for driving qualified leads. If you pressed a little bit, the shopping engines would talk about CPC rates on Google AdWords going up; and if the CSEs’ traffic acquisition costs (TACs) were rising, then they’d have to pass that additional cost onto the merchants. OK, that made sense, but that also pointed out how dependent the shopping engines are on Google AdWords.

Fast forward a couple years (to 2007), and Shopping.com did something different. They didn’t do an across the board increase in CPC rates, but rather implemented a variable rate increase. At the time, Alisa Weiner and Tomer Shoval explained:

We’ve done some analysis looking at previous years, looking at deltas in different categories in rate cards from our search partners. As opposed to one size fits all, we’ve done the analysis to figure out what’s needed to cover our costs. And we’ve moved the [rate increase] from November 1 to November 15 to better reflect when that increase kicks in. What we’re trying to do this year is be more sensitive to reflect what we’ve seen in the past. In some categories the keywords [cpc rates] increase more, in some categories the keywords [cpc rates] increase less.

So you’d expect the other shopping engines to follow suit. Well, that didn’t exactly happen the last couple years. Of the big, tier 1 shopping engines, NexTag and PriceGrabber have stuck with their across the board CPC rate increases. Bad!

Shopping.com stuck with its guns and maintains its variable rate increase. And they got Shopzilla and Pronto to copy that model.

However, for the first time in the last 5 years, two major shopping engines have no CPC rate increases. Amazon Product Ads and Become are my PPC shopping engine heroes of this holiday shopping season with no CPC rate increases in any categories.

So if you’re not up and running with Become or Amazon Product Ads, what are you waiting for?

Amazon buys Diapers.com, What’s Google to Do?

Amazon bought Quidsi, Inc., the parent of Diapers.com, Soap.com, and BeautyBar.com for $545M. Last year Amazon bought Zappos for about $1B.

This acquisition and Amazon’s continued ecommerce dominance has the greatest impact on Google. While Google’s ecommerce ambitions are widely reported, Amazon just seems to be firing on all cylinders while Google’s main ecommerce offering, Google Product Search, still says it’s in Beta. Now, I’m poking a little fun at my friends in Mountain View as Google Product Search is the largest shopping engine and Google owns a keiretsu like offering of commerce opportunities for merchants through Product Ads (a Google AdWords product), Google Checkout, Google Affiliate Network, Google Local Shopping, Google Commerce Search, and more. In other words, Google is no commerce slouch.

But Google needs to stand up and take notice of this acquisition and Amazon’s fairly fast movements because if Amazon has everything a shopper needs, Google’s relevance for shoppers is greatly diminished. And if you believe that 40% of searches are commerce related (I don’t know where that number comes from, but everyone uses it so I’m going to use it as well), then Google needs to figure out how to make sure consumers don’t bypass the search engine.

It’s not going to happen, but Google should just buy Amazon. We’d finally get the Googazon we’ve been dreaming of for years.

Holidays Come Early – Amazon’s One Day Sales

Sears got into the holiday spirit months ago with Sears Layaway and Kmart Layaway.

Driving into Palo Alto this morning at 6am, I noticed the holiday lights wrapping the trees on University Avenue.

Since getting into retail, I’ve always thought of the holiday shopping season starting November 1st, the day after Halloween. But as everyone has been reporting, the holidays arrived early this year.

Now Amazon is getting into the game with ‘Countdown to Black Friday’ sales. Not sure how many categories are running this promotion, but the first I’ve been notified of is in the Electronics category. This splash page should work for everyone. Today’s inaugural deal is the Toshiba 55-Inch 1080p LED HDTV with Net TV for $1199.99, a 50% markdown.

From Amazon:

We’re counting down the weeks until Black Friday with spectacular deals every Friday, starting October 29 and running weekly through November 19. Check back every Friday to find fantastic prices on select electronics, video games, and more. And all of these hot deals relate to a theme, including the Deal of the Day and Lightning Deals. Bookmark this page and come back each week to see how you’ll save on items that help you “Connect,” “Play,” “Watch,” and “Listen.” All deals are good while supplies last, so don’t delay!

Morning Roundup – October 12, 2010 – Gymboree, Walmart, Beso, Amazon buys BuyVIP, Demandware

-I forgot to mention that the Morning Roundup was inspired by Morning Lowdown over at paidContent, one of my favorite blogs.

-I didn’t realize that Bain’s acquisition of Gymboree would be “the largest leveraged buyout over the last 3 years bu more than $1 billion,” according to The Chronicle with Bloomberg.

–Walmart gets a jump on the holiday shopping season. According to the press release, “Research shows that this holiday season will be more difficult than most for budget-savvy customers. Families are looking to save money by cutting gifts for extended family and friends to create a memorable holiday for their immediate family.” (Walmart Customer Insights, 2010).

-Real time shopping search. OK, not exactly, but I like Beso’s What Users are Viewing Right Now dynamic feature on the homepage. Makes the site jump a little more…feel a bit more social.

–Amazon buys BuyVIP.com. Private sale sites have been second to only Groupon’s meteoric rise in the last couple years. BuyVIP is a European private sale site. From Internet Retailer, “BuyVIP.com is an excellent complement to Amazon’s European business and will provide another unique way for Amazon customers to find and discover unique and compelling products,” says Greg Greeley, vice president of European Retail at Amazon.”

–Demandware offers entry level pricing. From Internet Retailer, “”Establishing a strong ecommerce presence is critical for early stage retailers. Unfortunately due to a lack of platforms that are both robust and affordable, many great brands have been forced to launch on lesser inexpensive solutions, fully knowing that they would have to re-platform as the business grows,” said Jamus Driscoll, vice president of marketing for Demandware.” Love that quotation…lesser inexpensive solutions. I’m not convinced that Demandware is the right place for an ‘early stage’ retailer to start. “Re-platforming” can be incredibly expensive, but going with Demandware to start could be like going with Omniture to start in the world of analytics. Yes, it has incredible functionality, but you’re not going to use 80% of that functionality at the start, and you’ll have to hire 3 consultants just to pull the right reports. I wonder if Demandware is feeling pressure from Magento.

Thoughts on Google’s Search within a Search

Google started testing it’s search within a search feature more than a month ago. As I said in my initial post, the important things to note about the new functionality were 1) the Google Shopping link and 2) the ever-present Google Adwords listings.

In Bob Tedeschi’s NYTimes article on March 24, he went with the shocker of a headline: A New Tool From Google Alarms Sites. In the article, industry pundits like Alan Rimm-Kaufmann expressed concern over the feature. Ice.com’s ever-present VP of Marketing, Pinny Gniwisch said “Google’s new feature did not appear when users searched for Ice.com, but he said he would object if it did.” And the article pretty much stated that Amazon had requested that Google remove the Amazon search within a search feature.

When the feature first launched, Borders, BestBuy, and OfficeMax were the other large retailers discovered to have the feature active. BestBuy is the only retailer that still seems to have the functionality live.

The main point I picked up from Bob Tedeschi’s article was that the basic problem publishers/retailers had with the new functionality was that Google is selling Adwords ads against brand names. A big no no in the eyes of so many.

But the most important line in the article is Alan Rimm-Kaufmann’s quotation: “Some of our retail clients have pretty horrible site search,” he said. “So for them, this will be a benefit.”

Well, I’ll go a step further and say that this will be an extremely popular and well accepted program for 1000s of retailers.

Why?

Because it’s not only that some retailers have horrible site search, it’s that 10s of 1000s of retailers have a long way to go to providing a smart shopping experience. When sites don’t have proper site search, proper categorization, and don’t provide a logical UI, consumers can’t find anything or at least give up fairly quickly.

There are a lot of factors which contribute to a low conversion rate for retailers, but with Google search within a search, 10s of 1000s of poorly thought out sites can benefit because Google will bring consumers directly to product pages.

And while I agree that the creme de la creme of the brand name retailers will not put up with Google Adwords ads featuring competitors next to their precious content, the creme de la creme might represent less than 1% of all internet retailers (there are only 400 IR top 400 retailers out of about 300,000 online merchants).

Some portion of the other 299,600 merchants on the web are going to be fine seeing competitor product listings right next to their own. In fact, 1000s are already are used to it. Amazon might not want Google to display competitor listings in Adwords ads next to Amazon search within a search content, but Amazon enables a similar ability on Amazon.com through its Marketplace and Product Ads programs.

Google Product Search – Google Taking Ecommerce Seriously

As TechCrunch reported earlier today, Google is testing secondary search boxes for top retailers like Amazon, Borders, BestBuy, and OfficeMax. While I couldn’t get the searches to work properly, if you search in the Amazon search box (see screenshot below), Google will keep you on Google.com, display the normal AdWords listings, and display Amazon’s content in place of Google’s normal organic results. Also important to note, at least in my searches using the Amazon box, Google highlights its own Shopping search results through its universal search link for Shopping (see screenshot below).

I could only get the Amazon, OfficeMax, etc. search boxes to come up in IE.

Amazon search box on Google:

Results page – Searched for ‘red sweater’ – the Amazon ‘organic’ listings are at the bottom of the page as something is wrong with the UI (see next screenshot). The important thing to note is the use of Google’s own Shopping link and those ever present AdWords listings:

Obviously Amazon’s ‘organic’ listings are supposed to be displayed as Google’s organic listings usually are displayed, but the UI seems to be off:

Amazon Becomes the Largest Shopping Engine

Amazon sent a blast email out this morning announcing its Product Ads program.

I’ll have lots of comments on this before the end of the week, but I at least wanted to spread the news. With Amazon Product Ads, merchants can now list products on Amazon and drive consumers back to their sites as opposed to having to buy through Amazon. That’s a BIG change.

From the email

Product Ads is an advertising program designed to give customers seamless access to products available on web sites external to amazon.com. As a seller, you simply upload your catalog and set your cost-per-click bids. We will then display highly targeted ads for your items on select amazon.com product and search pages. Customers can click over to your web site and purchase the product directly from you. Product Ads uses a cost-per-click model, and there are no monthly fees. You only pay for clicks generated by your ads. You can manage how much you spend by setting a daily budget.

Amazon Invests in Bill Me Later, Will Add Payment Option to Amazon.com

eBay has PayPal. Google has Google Checkout. And now Amazon will have Bill Me Later.

According to the press release via Techcrunch, Amazon will invest in Bill Me Later and also add Bill Me Later as a payment option on Amazon.com.