CSE Marketing in a Tough Economic Climate

January 22, 2009

In case you haven’t heard, the economy is having a bad hair day. Because of declining consumer spending, all marketing initiatives are being evaluated at many retailers. It’s a sad fact, but marketing on comparison shopping engines can be labor intensive and depending on several factors, expensive. There seems to be a trend of online retailers reacting to these conditions by slashing budgets and in some cases, pulling feeds down completely. While decreasing budgets may be necessary, for most retailers, eliminating the program completely is not the best way forward.

Below are thoughts on what retailers should keep in mind when considering the future of their CSE campaigns. Though there may be other issues facing retailers right now, such as challenges surrounding credit, product sourcing, etc., these comments are intended to be independent of such complexities.

  • Give credit where credit is due: I sometimes hear merchants say “my CSE program isn’t working,” when the reality is usually “only part of my CSE program is working.” Most retailers currently operating on CSEs have some subset of products that are selling consistently. Our experience is that the many products that repeatedly sell on CSEs are very efficient and usually profitable. Even if the total campaign is not achieving your goal, some products probably are. If a Google AdWords program was operating below goal, I doubt many merchants would completely shut it off. They would lower bids and probably remove certain campaigns, adgroups or keywords that are not performing. CSE is no different in this sense. Recognize successes within the campaign and keep them going. It’s an extreme step, but if your business is in crisis mode, removing all products except for this subset of consistent sellers can result in much lower costs while retaining some profitable revenue.
  • Rebuild slowly: If you do take this sort of action, you will probably find that the products that are working are a small piece of your overall product set, which makes it likely that the cost incurred by those items is also a very small part of the total cost of the campaign. Recall from past discussions about the long tail of CSE feeds that in most cases, the majority of cost comes from activity on items that drive no revenue. This means your newly slimmed down CSE campaign may be over-efficient. This is what we often see when we take this approach of cutting out the long tail completely because the majority of the risk and uncertainty is removed. If this is the case, it may be best for your business to take that extra efficiency to help offset some other channel, but many retailers will be able to reinvest in CSE. Do this by re-introducing products/categories into your feeds to try to get the maximum revenue while still operating within the construct of their financial model. The best way to do this is to start slowly and watch to see how the reintroduced products/categories perform.
  • Focus on your strengths: Regardless of economic conditions, most consumers will continue to shop based on value. Price sensitivity will certainly increase, but issues of quality and trust never completely vanish. Therefore, when choosing products/categories for reintroduction into your feeds, it is best to be realistic about your value proposition and how you measure up to your competition. You wouldn’t be in business if you didn’t do something right, so focus on including only products or categories where your value is strong.
  • maximise CSE feature use: Having a strong value proposition is key, but it is not beneficial unless it is clearly communicated. Many CSE marketers overlook the basics, such as completing the CSE merchant account interfaces with accurate payment types and customer service info. These elements can impact your rank and conversion rate. In addition, user reviews become even more important as consumers are less convenience-oriented and more value-oriented, so be sure to participate in these programs whenever possible. Display of shipping costs, tax info, promotional messages and coupon details should be maximised as well. Your goal should be to convey your value to the consumer as clearly as possible before any clicks are made. Providing as much information as you can will help protect, if not increase, your conversion rates and ensure your competition isn’t winning for the wrong reasons.
  • Understand the long term impact of your actions: I can’t emphasize this one enough. What you do today on CSEs has a direct impact on your future ability to drive CSE revenue. Many CSEs have some sort of popularity function that is based on historical activity. This means that if you take your products down for a few weeks or months, getting back to where you were is very difficult, as if you were starting over from scratch. In addition, most CSE review programs require recent feedback in order to display those rating on their site. If you already have a positive merchant rating, keeping your campaign live is the only way to protect it. The bottom line is that if you pull your best products down today, you are seriously risking that revenue stream not just for the time those products are down, but for much longer.

If anyone has specific challenges, please share them and I will do my best to help.