It is assumed by most online advertisers that a sale for a particular item is the direct result of an ad they created for that item. If a user buys jewelry online, it has to be because of an ad he or she clicked on for jewelry, right?

Well, not necessarily.

Research shows there is a high amount of sales generated from unrelated ads. In fact, a leading web analytics firm found that over 44% of online conversions are unrelated to the initial search term.

Think about that for a minute. Nearly half of online consumers end up purchasing something they did not initially search for. So how can an advertiser expect to have a successful campaign if they do not know where nearly half of their sales are coming from?

Problems That Stem From Unrelated Search

In addition to the fact that nearly half of online sales come from unrelated search terms, ClearSaleing has found that online advertisers spend an average of 30% of their online budget on ad waste, or ads that do not generate a profit. If you can’t track the exact path a consumer used to make a purchase on your site, you can’t effectively allocate your PPC budget to the right sources, campaigns and keywords. This allocation problem is further magnified by the inability to understand the complex direct and indirect keyword-to-sale relationships that exist on most Internet retailer sites. The inability to track and analyze which keywords are actually responsible for a particular product sale not only leads to bad allocation decisions, it also results in missing important cross-sell opportunities.

The Solution to This Problem

Figuring out how online consumers navigate their way to a purchase is crucial for any Internet retailer. Having the ability to determine a user’s specific route from the original search to the ultimate purchase (and even subsequent purchases) is paramount and allows a company to understand from where their sales originate. Companies can then use this customer navigation intelligence to optimize these complex search/purchase relationships and ultimately to maximize the return and profitability of their online PPC campaigns.

What’s needed to accomplish this is technology that allows Internet retailers to track and analyze the sales and profits generated from specific keywords, advertising sources and campaigns, coupled with the ability to track which specific products were purchased as a result of which campaigns and keywords. For example, having the knowledge that 20% of women’s accessory site’s jewelry sales and 35% of its total profits were generated by customers actually searching for handbags (vs. jewelry) represents enormous value for the Internet retailer. With that and much more supporting information in hand, the eTailer would:

• Increase their nominal investment in “women’s handbags”to purchase the maximum available clicks;
• Explore an email or other cross-sell campaign between handbag and jewelry customers to increase the lifetime value of those customers;
• Reduce their investment in “jewelry”as a key word as it has a high CPC and low conversion rate, resulting in only moderately profitable sales.

Technology is the Answer

Companies such as ClearSaleing provide the requisite tracking, analysis and optimization technology for online companies to navigate these complex waters and maximize their profitability. With technology taking care of the tracking and reporting, companies no longer have to spend the excruciating time trying to determine, often unsuccessfully, how they generated their sales. Having this information allows a company to understand their customers buying patterns and behaviors and efficiently reach that targeted audience on a consistent basis, producing more profit in the end. With the appropriate technology, Internet retailers are able understand the value of keywords, direct or indirect, based on the only metric that matters – PROFIT.

This entry was posted on Sunday, March 11th, 2007 at 10:19 pm and is filed under All Blogs, PPC. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.