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Price Still Most Important Factor for Retail Success, But Losing Ground

posted on May 21, 2007

Traditionally, the website selling a particular product at the lowest price has a huge advantage over the competition. However, according to a recent study from Shopzilla, that may be changing.

The survey of about 2,000 online shoppers revealed that 49% of shoppers considered the price to be most important factor in making a buying decision. That is down from 59% in 2003.

So what factor is taking the pace of price? The answer may surprise you–18% of shoppers said that customer feedback is the most important factor. Only 7% picked customer feedback in 2003.

As the web becomes more and more dominated by user generated content, it is obvious that customer feedback about companies and products will continue to grow in importance. This trend especially gives hope to small online retailers that cannot compete on price, because smaller companies should normally have an advantage in customer satisfaction.

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Combating Click Fraud

posted on May 18, 2007

By Greg Howlett.

A study conducted by Fair Isaacs has concluded that 10-15% of all advertising dollars spent on PPC search engine campaigns are wasted. 

A similar study from Click Forensics in January supports the Fair Isaac conclusion.  Not surprisingly, Google does not agree, claiming that click fraud accounts for less than 2% of actual advertising billing.

As intelligent as Google may be, it is absolutely impossible for them to detect all click fraud, and there is no question in my mind that this problem is far worse than they will admit.

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Six Elements for Effective Landing Pages

posted on May 14, 2007

By Greg Howlett.

MarketingExperiments just released a new research brief discussing how to make landing pages more successful.  As always, their conclusions are very relevant to online retailers and other companies who are trying to generate an action from their visitors.

A key part of the study involved trying to determine whether long copy or short copy performed better when the desired action was a simple email capture.  As it turns out, the short copy was more successful.

In the past, many studies have shown that long copy is more effective in certain situations.  However, MarketingExperiments believes that there are four factors that should influence your decision about whether to use long or short copy–the cost of what you are selling, the perceived risk, the commitment level, and the motivation.

In other words, if you are selling a high priced product, asking for a lot of personal information, requiring a time commitment, or using logic as your selling strategy, use long copy.  On the other hand, if you are giving away something for free without commitment and selling with emotion, use short copy.

MarketingExperiments identifies six elements that affect the performance of landing pages:

1) Friction – how much work the visitor has to do (this includes the reading)

2) Incentives – extras that are thrown in to sweeten the deal

3) Visitor motivation – how much they want what you have

4) Value proposition – the perception visitors have of you and what you are selling

5) Anxiety – the perceived risk to the visitor

6) Credibility – how well you convey trustworthiness

To increase site conversion, you should focus on these elements.  It is important to understand that few changes will in themselves make dramatic differences.  My company tripled our conversion rate over the past year, but we did it with a huge number of very minor changes.  Even very modest improvements in these six areas can cumulatively add up to a significant increase. 

While studies such as this one provide valuable information to online marketers, they can at best provide useful guidelines to begin your own research.  If you sell online, it is imperative that you develop a platform to do your own research.  The simplest way to do this is to use split A/B testing.  This involves splitting traffic randomly between two pages that are identical except for the factor that is being tested.  A split A/B test will quickly give you answers about how you should be marketing, and is very simple to implement.

Having launched two multi-million dollar online companies, Greg Howlett has been working in the trenches of internet marketing for over eight years.  He currently is the President/CEO of Vitabase, a leading health supplement company, selling hundreds of products under the Vitabase label.

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Four Things to Consider Before Advertising on User-Generated Content Sites

posted on May 7, 2007

By Greg Howlett.

A recent study from BlueLithium suggests that online retailers can find advertising bargains on Web 2.0 sites that feature user generated content.  While this initially seems like good news, there are additional factors that retailers should consider before jumping on the Web 2.0 bandwagon.

The study compared the cost per conversion between three different groups of sites—user generated content (UGC) sites, non-user generated content (non-UGC) sites, and highly authoritative editorial sites.  Both the non-UGC and authoritative sites had significantly higher click through rates and conversion rates than the UGC sites.  However, when factoring in the ad cost, the UGC sites had a lower cost per click and cost per conversion.

So how is this information relevant to your business?  Just as importantly, what information is not found in this study that you need to know before making advertising decisions about Web 2.0 advertising?  Here are a few thoughts.

  1. Trust is an issue on UGC sites.  Not surprisingly, the authoritative sites generated the highest click through and conversion rates, and were followed by the non-UGC sites.  UGC sites were way behind in these two areas.  This is a clear signal that visitors do not hold UGC sites at the same level of trust as other sites.
  2. UGC sites will only remain an advertising bargain as long as their ad rates are lower than rates on non-UGC sites.  Today, the vast majority of UGC sites have few options for selling advertising, but in the future, it is feasible that even small blogs will have the ability to get much higher ad rates.  If that happens, today’s opportunity may disappear.
  3. This study gives no insight on the “social buzz” phenomenon.  Viral marketing, paying for user generated content, and similar strategies were not addressed.  However, most experts believe that these strategies are where the real advertising opportunities exist with Web 2.0 sites.
  4. The easiest way to advertise on UGC sites is AdWords.  However, few advertisers seem to be able to make this work.  In fact, since Google started allowing advertisers to bid differently for AdSense websites, those bids are dropped drastically and many advertisers refuse to bid for placement on those sites at all.  Going directly to UGC sites to buy advertising does result in lower ad rates.  However, because UGC sites tend to be low traffic, putting together a large campaign is normally too time-intensive to be feasible.

If you choose to advertise on UGC sites with traditional advertising units such as banners or text ads, make sure you are getting as good a deal as you think you are.  It is quite possible that cheap ad rates are being offset by a low click through rate or conversion rate.  As with all advertising, good reporting is critical to identifying problems.

On the other hand, using UGC sites to create social buzz for your product line could be very cost effective and could even lead to dramatic results.  In my opinion, this is the better Web 2.0 alternative for most retailers.

Having launched two multi-million dollar online companies, Greg Howlett has been working in the trenches of internet marketing for over eight years.  He currently is the President/CEO of Vitabase, a leading health supplement company, selling hundreds of products under the Vitabase label.