Ask The Expert: Ecommerce Advertising
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Los Angeles United States
InternetMarketingDotNet
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Re: Ask The Expert: Ecommerce Advertising
11 Aug 2014

Andy wrote:

I think Tim hit the nail on the head - for most small business owners (myself included) the first question we ask is always "what's it going to cost?"

I'll cut to the chase here... some sellers would be happy to make $300 in sales a day, never mind spending that amount in advertising. Why do you recommend spending so much, particularly when just starting and likely to make big mistakes? A business owner's intuition (which may be wrong of course) is to start spending just a little while you learn the ropes.
Andy, I love the question - and I know the $300/day sounds quite scary when you're running a small business.

The reality is that you can't half-ass search. Unlike ebay or Amazon, where you can just list some products, and if it works - that's great, with your own website, you are competing with your most successful competitors. The one who DO already have search figured out, and their websites convert well. If you do half-ass, you will erroneously conclude that search doesn't work for you - which would be untrue

In order to understand what is and isn't working, you need to have data quickly. You can spend $2,000 over the course of one week, or $2,000 or the course of 6 months. If you do it over one week, you can analyze it quickly, and the next weeks will be profitable. You do it over 6 months, and you can't really do any optimization based off the data you have - as it's so sporadic.

So you might say - forget it... Search sounds too complicated, let me stick to eBay, Amazon etc.

But here's the reality. The reality is, the internet is maturing, and you can't afford to be a one trick pony.

A competitor (or your supplier) may come on ebay and under-price you. Amazon may come along, see your success, buy the product directly from the manufacturer and hog the buy box. If you want your business to have longevity, you MUST invest seriously into your website.

It doesn't have to be tomorrow, or throwing your life savings in. However, you do need to diversify just to protect your business in the long haul.

On the flip side, think about the potential, here, if you allow yourself...

What if you could add $500 or $1,000/day in gross revenue to your business? What if you could acquire an email list of customers who you could sell product to directly without having to pay extra margin fees?

Doesn't that change your game?

Just to cut back to the $300/day. It's kind of an arbitrary number. For many high volume industries, it's exactly what the doctor called for. In some verticals, you can get away with alot less.

Andy wrote:

Also do you come across product categories where advertising is never likely to generate a return? For example with low-value products can the margin be too low to support it, or if margins are low does that always mean the PPC ad bids are low too? To put it another way, are there certain product categories that work best for PPC?
The PPC environment is an auction based marketplace. Meaning, for the most part, it's driven by how much you and your competitors are willing to pay. In general, when I see a campaign fail, it's because of one of the following reasons:

1) Business owner wasn't willing to pay as much as his competitor for those sales
2) Website didn't inspire trust/create a good user experience, so conversion rates were below par
3) Pricing wasn't competitive with competitors
4) Lack of offers - e.g. free shipping, coupons etc.
5) Competitor was too big, and already was willing to just break even or just lose money on the first sale to acquire the customer (this is rare, but you should be aware of it)
6) Low AOV's - hasn't increased the AOV's effectively by upselling across the site and in the cart, or the site isn't built right for ordering groups of products.

Continued...
Los Angeles United States
InternetMarketingDotNet
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Re: Ask The Expert: Ecommerce Advertising
12 Aug 2014
We also have a process we use to match the performance targets you have to what the market reality is.

It's fairly simple.



1) Site AOV - this is quite simple. Log in to your Google Analytics account, and see what your current Average Order Value is.
2) Cost of Goods Sold % - what percentage of your gross revenue is simply product cost. e.g. your product costs 60% of the overall price.
3) Min. Profitable CPA - Take what's left on your site AOV (in the above example, it would be 40%, or $32)
4) Ideal CPA - In general I recommend going for 50% net profit. But it can be whatever you decide is your margin target.

Matching it to reality...

1) Average CPC's - Go to the Google Keyword Tool and find what seems to be the common average CPC. (You can low-ball on this, as Google's tool always seems a bit high in comparison to reality.)
2) Website Conversion - put in your current website conversion rate. If you don't know your conversion rate, and you are selling products that are under $200, assume it's 1% (you'll find this one out pretty quickly).
3) Expected CPA - multiply your average CPC by website conversion rate and this should give your expected CPA. If you are at least close to your minimum profitable CPA, then you have a shot at being successful.

Match your expected CPA to Min./Profitable CPA. If it's within 20% of your min. CPA, you should be able to be successful.

Hope this helps.
Leicestershire United Kingdom
Crucial Music
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Joined: May 25, 2011
Re: Ask The Expert: Ecommerce Advertising
12 Aug 2014
I sell on eBay and Amazon mainly (having previously had a bricks n mortar shop) The fees there have increased to a point where having a shop again is on my radar BUT multi channel retailing seems also to be inviting. I am a specialised retailer (collectible records & CDs) and think I probably do need to advertise but the figures (costs) frighten me. It seems you have to be a master copywriter in order to justify the cost of paying for clicks that do not translate to sales. Is it not enough to use content marketing via posts and blogs? Why should I pay Facebook ? Google for ads when I am already paying fees on eBay and Amazon - is their search reach not enough?
Shenzen China Australia
Tim298
Kudos: 446
Joined: Jun 26, 2014
Re: Ask The Expert: Ecommerce Advertising
12 Aug 2014
Hi David - wanted to say thanks for the info and direct answers, really interesting, I used to be all about doing it myself, but over time have learned that there are certain areas - many areas - that its better to use / engage / employ / partner with others expertise. My youthful arrogance and naive approach was fun but led to a load of failed "businesses" - learnings, I think we call them...

I will certainly look to engage or partner with someone with the relevant skills - I think one or two of my previous sites fell short simply because of a lack of my awareness of what was needed on this front - and what impact the investment could have had at that crucial time.

Many thanks - very interesting and informative posts.
Midlothian, VA United States
Jax Music Supply
Kudos: 2,361
Joined: May 25, 2009
Re: Ask The Expert: Ecommerce Advertising
12 Aug 2014
Hi David. I have a couple of questions!

1. Do you recommend using a channel feeder (non-marketplace) such as Go Data Feed?

2. Is using advertising on comparison shopping engines (PriceGrabber, NextTag, Shopzilla, etc.) worth the effort? Is there an effective strategy here?

3. What are your opinions on multiple sites with subsets of your product? Should you advertise both sites? Does it help SEO (not sure if you would know this one)!

Thanks for participating in this forum. Jack
Los Angeles United States
InternetMarketingDotNet
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Joined: Jul 22, 2014
Re: Ask The Expert: Ecommerce Advertising
12 Aug 2014

Crucial Music wrote:

I sell on eBay and Amazon mainly (having previously had a bricks n mortar shop) The fees there have increased to a point where having a shop again is on my radar BUT multi channel retailing seems also to be inviting. I am a specialised retailer (collectible records & CDs) and think I probably do need to advertise but the figures (costs) frighten me. It seems you have to be a master copywriter in order to justify the cost of paying for clicks that do not translate to sales. Is it not enough to use content marketing via posts and blogs? Why should I pay Facebook ? Google for ads when I am already paying fees on eBay and Amazon - is their search reach not enough?
Thanks for the question! This is a bit detailed, and may be worth taking offline.

If the eBay & Amazon margins (11-13%) are too high for you, I'm not sure that paid search is a good fit for you. Iit may be worth sticking to SEO (doing it yourself) etc. I definitely don't recommend paid social except for remarketing.

The exception would be if:
1) You are truly selling unique products
2) The PPC auction marketplace allows you to bid very low for good positions
3) Can charge more on your site

(side note: you can often price your products higher when selling through paid search then through Amazon/eBay. Typically, buyers who start on search, stick to search, they don't also check ebay or Amazon)

That would potentially allow you to get better margins off of search then eBay/Amazon. However, to be honest, I haven't seen that happen much.
Los Angeles United States
InternetMarketingDotNet
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Joined: Jul 22, 2014
Re: Ask The Expert: Ecommerce Advertising
12 Aug 2014

Jax Music Supply wrote:

Hi David. I have a couple of questions!

1. Do you recommend using a channel feeder (non-marketplace) such as Go Data Feed?

Jack
Jack,

I've enjoyed your posts, so thanks for your participation as well!

I'm a bit biased on the GoDataFeed and other providers, as I provide the high end alternative. I tend to find that most merchants don't do a great job with their feed, and need to do a lot of data manipulation and tracking. Godatafeed and many of the lower end platforms just aren't that feature-rich.

You can hack the godatafeed thing to make it work, although if you're going for cheap, but do it yourself, I think some of the platform plugins - especially for Magento do a better job.

Jax Music Supply wrote:


2. Is using advertising on comparison shopping engines (PriceGrabber, NextTag, Shopzilla, etc.) worth the effort? Is there an effective strategy here?
Yes. Your primary growth drivers are going to be Google Shopping and Amazon Product ads. If you want to do it by yourself, and barebones, then feed all of your products to Google Shopping. Identify your top performers on Google Shopping - that convert well at a profitable CPA, and then feed those to the other engines. Then go and optimize each engine. You'll find some of the engines do well for you, others not as well.

There's alot more to it than that, but if you are trying the DIY method, then using this strategy should get you 60% of the way there.

Jax Music Supply wrote:

3. What are your opinions on multiple sites with subsets of your product? Should you advertise both sites? Does it help SEO (not sure if you would know this one)!
It depends on your market. I think in general go for one site. It can actually hurt your SEO if you have too many sites, as none of them will end being the "authority site" for your industry, leaving you struggling to get high rankings for competitive keywords. If you are running small, and the market is a bit bigger, better to put all of your focus into one site, and make that site do well.

On the media buying side, if you are maximizing out on one site, having a second one hog the results can potentially be a good value. However, that's risky, as Google frowns on it if you are the same company operating 2 different sites. I have some big clients do it, and it works quite well; however, I'm not sure if they'd be better off just focusing on building an amazing user experience on one site.
Herts, England United Kingdom
Andy
Kudos: 11,619
Joined: Jan 1, 2001
Re: Ask The Expert: Ecommerce Advertising
13 Aug 2014
Thanks for all the answers so far David, you're doing a great job and we appreciate you putting so much effort into it.

I think we are at a stage in this discussion that you get when you learn any complex subject... there's lots of acronyms and formulas buzzing around our heads, it's getting a bit overwhelming, and it seems like we'll never really "get it" when it comes to PPC advertising.

So I'd like to take a couple of steps back and put a scenario to you that I think is common around here. Here's the story:

  • I've been selling on online marketplaces for a few years and I'm pretty good at it.
  • I also have my own store and it gets a little traffic and makes a few sales.
  • I can see that PPC has the potential to bring in traffic but the technical complexity and costs scare the pants off me.
  • I'd consider outsourcing PPC in the future but I want to do it myself first.

  • You've made a couple of good "getting started" points already, so let's say:

  • I've read up on PPC a fair amount, but it hasn't really clicked because I haven't got hands on with it in my own business.
  • I've optimized my site so the traffic it gets converts quite well - I'm ready to get more traffic and scale it up now.

  • So is there any kind of step-by-step approach that I can work through to really learn and be successful with PPC? Or is digesting and applying a weighty book the only option? A lot of people find it hard to learn like that, so some other way into this subject would be valuable.
    Andy Geldman, Web Retailer
    Please follow on Twitter, Facebook, LinkedIn or Google+
    UK United Kingdom
    Jimbob
    Kudos: 28
    Joined: Aug 13, 2014
    Loosing Faith in Adwords. Should I Give Up On It
    13 Aug 2014
    I am loosing confidence as to whether Adwords really can work for me and even though I have seen evidence that one of my competitors is really making it work well for themselves.

    Over the years I have tried several times to setup and manage an Adwords account myself with no joy and only to see money being waster. I had pretty much given up on the possibility of Adwords being worthwhile for my business. That is until I attended a seminar at a commerce retailing expo presented by the owner of an online marketing company who managed the adwords account for one of my competitors. In fact they were using this competitors (with their permission) adwords account matrics in their seminar slide presentation (with the confidential stuff blanked out). It was evidently clear that Adwords was working really well for this commerce retail company.

    Consequently, I signed up to an Adwords training course run by the marketing company who were presenting at the seminar. The training cost me £1600 for two days training and I was assigned a campaign manager who would be on hand to help me setup and fine tune my own Adwords campaign. In fact, this person was also the campaign manager for my competitors, but as we marketed different brands and after both parties signing a NDA’s it was decided there were no conflicts preventing them helping set my campaign up.

    Despite their training and help from someone who had enabled another similar company to make Adwords work for them, I still saw no ROI on my initial £700 campaign budget.

    I don't want to give up on it, but I just can not continue spending money and not see a ROI. Should I give up on Adwords, or is there value in using it and if so what should I do next? Are there 3rd parties who I can outsource the management of running my Adwords campaigns as I have not done very well with it in the past.

    At present I have an Adwords campaign set up, so the hard work has been done. I now just need to make it work for me without wasting more dosh.

    Any help or advice would be appreciated.
    Los Angeles United States
    InternetMarketingDotNet
    Kudos: 215
    Joined: Jul 22, 2014
    Re: Ask The Expert: Ecommerce Advertising
    13 Aug 2014

    Andy wrote:

    Thanks for all the answers so far David, you're doing a great job and we appreciate you putting so much effort into it.

    I think we are at a stage in this discussion that you get when you learn any complex subject... there's lots of acronyms and formulas buzzing around our heads, it's getting a bit overwhelming, and it seems like we'll never really "get it" when it comes to PPC advertising.

    So I'd like to take a couple of steps back and put a scenario to you that I think is common around here. Here's the story:

  • I've been selling on online marketplaces for a few years and I'm pretty good at it.
  • I also have my own store and it gets a little traffic and makes a few sales.
  • I can see that PPC has the potential to bring in traffic but the technical complexity and costs scare the pants off me.
  • I'd consider outsourcing PPC in the future but I want to do it myself first.

  • You've made a couple of good "getting started" points already, so let's say:

  • I've read up on PPC a fair amount, but it hasn't really clicked because I haven't got hands on with it in my own business.
  • I've optimized my site so the traffic it gets converts quite well - I'm ready to get more traffic and scale it up now.

  • So is there any kind of step-by-step approach that I can work through to really learn and be successful with PPC? Or is digesting and applying a weighty book the only option? A lot of people find it hard to learn like that, so some other way into this subject would be valuable.
    Andy, I love the question.

    Unfortunately, PPC is quite complex, there's a steep learning curve. I'd probably recommend that you start with Google Shopping, Amazon Product Ads & Bing Ads. These are your most profitable channels, so you have the highest likelihood of success, even if you don't know the ins and outs of each network.

    Also, I'd recommend that you check out Brad Geddes Certified Knowledge or Market Motive, if you want to invest in learning yourself. The books on this subject are generally out of date, and not as helpful.
    Los Angeles United States
    InternetMarketingDotNet
    Kudos: 215
    Joined: Jul 22, 2014
    Re: Ask The Expert: Ecommerce Advertising
    13 Aug 2014
    @Jimbob

    Sorry to hear about the frustration you have with your PPC campaigns.

    We need to make sure that your website converts well. Oftentimes, that's the difference between success and failure.

    Once that's done, it would probably be a longer conversation on how your Adwords PPC campaign is built.

    Are you comfortable sharing your website URL & your competitors URL?

    - David
    UK United Kingdom
    Jimbob
    Kudos: 28
    Joined: Aug 13, 2014
    Re: Ask The Expert: Ecommerce Advertising
    14 Aug 2014

    InternetMarketingDotNet wrote:

    @Jimbob

    Sorry to hear about the frustration you have with your PPC campaigns.

    We need to make sure that your website converts well. Oftentimes, that's the difference between success and failure.

    Once that's done, it would probably be a longer conversation on how your Adwords PPC campaign is built.

    Are you comfortable sharing your website URL & your competitors URL?

    - David
    Hi David,

    Thanks for the reply and also congratulations on a fab website.

    I am reluctant to post website details on the forum because of services such as Google Alerts etc, but am happy to send them in confidence via a PM.

    Just to give you a quick update on where I am am at with my business and my thoughts on Adwords and moving forward in general.

    We are a small business and up until recently have retailed solely via our own website. However, the Google Panda and Penguin updates thankfully forced us to diversify and go multi channel. Why it took something like Panda and Penguin, and why we never did this before I do not know. Any how, we are now seeing some reassuring results from having done so and are doing business in many of the ways that your excellent article on '18 Tips to Grow Your Ecommerce Business' advocates

    However, despite our recent success I am still not sure if we are in a strong enough position just yet to commit to a concerted Adwords strategy. Also, having read the aforementioned article I have been reflecting on our medium and long term strategy, particularly in relation to tips 5. Hand Over Responsibilities and 10. Play to Your Strengths and also feel that there are other strategies (some listed in the article) to exploit first.

    Nevertheless, as I know our competitors are seeing a good ROI from Adwords it is something I am not willing to let go of yet. I am like 'a dog with a bone'. Thus, whatever short term and medium term strategy we decide to focus on I am convinced that Adwords will, and should be something we look at eventually.

    Therefore, I guess what I am trying to fathom out at present is;

  • Will my website/products convert sufficiently to see a positive ROI from Adwords?
  • Can this be calculated?
  • If the answer is yes and when I am in a position to commit to an Adwords strategy should I try and manage this myself or outsource it as suggested in your article?

  • Cheers
    Los Angeles United States
    InternetMarketingDotNet
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    Joined: Jul 22, 2014
    Re: Ask The Expert: Ecommerce Advertising
    14 Aug 2014
    @Jimbob

    I'd love to take credit for the article - however, it's @Andy's fault, I'm just a guest moderator.

    As far as making Adwords work, thanks for the PM. Your site is actually really nice, so I doubt you're having a conversion rate issue.

    A couple of things you should keep in mind while you tackle the Adwords beast:

    1) AOV - if your competitor is making more revenue per sale, they will be able to outbid you
    2) Stronger brand - often times, if someone is doing lots of advertising, then their conversion rate will be higher simply due to brand recognition.

    I would advocate trying to see if Adwords makes sense for you with the formula I provided above, and don't over-think the competition.

    - David
    Midlothian, VA United States
    Jax Music Supply
    Kudos: 2,361
    Joined: May 25, 2009
    Re: Ask The Expert: Ecommerce Advertising
    15 Aug 2014

    InternetMarketingDotNet wrote:

    ...There's alot more to it than that, but if you are trying the DIY method, then using this strategy should get you 60% of the way there.
    Thanks for your response David. The problem for me (and a lot of others I suspect) is that we are bootstrapping these businesses. We have limited resources AND limited time as most of us run these business with less than 5 people. I spend my days shipping, listing, programming, and doing customer service. I have outsourced some of my simpler bookkeeping and some other pieces. The need exists for some type of bridge between the DIY solution for and a full service solution.

    [Last edited by moderator: Shortened quote — 15 Aug 2014]
    Herts, England United Kingdom
    Andy
    Kudos: 11,619
    Joined: Jan 1, 2001
    Re: Ask The Expert: Ecommerce Advertising
    16 Aug 2014
    The Q&A is now closed!

    From me and the Web Retailer community, thank you David! It's been a real education. Your honest and detailed answers have really got us thinking about the whole world of PPC advertising.

    Replies are now closed but you can still show your appreciation by clicking the blue Like button under any posts that you found helpful.

    Still have questions? For any more questions on advertising (or anything else related to selling online) start a new discussion in the forum. I'm sure David will do his best to answer, but everyone is very welcome to participate.

    If you want to get in touch with David you can send him a PM via his profile on Web Retailer.

    If you have any feedback on this Q&A, or suggestions for the next one, please send me a PM.

    Bye for now,

    Andy
    Andy Geldman, Web Retailer
    Please follow on Twitter, Facebook, LinkedIn or Google+

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