Major Rate Drops and More at Shopping.com

February 21, 2009

The folks at Shopping.com are doing what they can to make things easier on merchants in this tough economy. Wednesday evening, Tomer Shoval, Director of Sales and Account Management at  Shopping.com, sent to merchants an email detailing significant CPC rate decreases in some categories effective March 1 through May 15. In addition, he outlines some future changes that are very interesting:

  •  A pricing structure that takes into account product price. This is great news for merchants with lower average order values. Current pricing requires very high conversion rates for low price products, which CSEs are often unable to deliver, making it cost prohibitive to advertise low price products. This may also help Shopping.com expand their catalogueueue significantly.
  • Logo pricing tiered by category. This also makes a lot of sense in theory, thought it is unclear at this point what the tiers actually look like. The current  incremental CPC for logo usage is a pretty significant increase at a $0.50 CPC, let alone a $0.20 or $0.25. This change is somewhat amusing to me since several folks here have discussed for years that this type of tiered structure made sense for additional listing features on eBay, Shopping.com’s parent company, but such an approach was never embraced.

I am a strong believer in the old adage, “Never look a gift horse in the mouth.” However, I can’t help but wonder what the motivation is here. We know from eBay’s Q4 earnings call that Shopping.com revenue was down 50%. CFO Bob Swan attributed this to natural search algorithm changes that lowered Shopping.com traffic. All else being equal, lower CPCs would obviously result in even lower revenue from existing merchants. However, these changes indicate to me that merchant retention is a major concern right now. We’ve seen merchants lower budgets and even pause their CSE campaigns completely due to overall cost cutbacks. Shopping.com seems to be sending a message that they are very willing to take actions that result in good ROI, making it very difficult for marketers to pull back on their Shopping.com feeds . Tomer’s team has already made changes over the past year or so that have had positive impacts on traffic quality delivered through their network, but the sagging economy may have already counteracted those efforts to some degree. It is very refreshing in my opinion to see a major provider pull the one lever that others have been unwilling to pull in the past in order to ensure their network delivers value to merchants.

Full email below.

Announcement: Falling CPC Prices!

Shopping.com recognizes the current macroeconomic conditions have increased the cost of doing buisness, thus decreasing profit margins. In return, we are making swift and direct changes to help our merchants effective March 1st!

Take Advantage of The Falling CPC Rates on Shopping.com and Add More SKUs and a Logo Today!

Shopping.com is launching a pricing promotion from March 1st to May 15th which reduces rates in over 200 categories. These categories will see savings as high as 60%!

This pricing promotion includes reduced CPC rates in the following categories and more:

  • Electronics $0.10 – $0.40
  • Computers $0.10 – $0.40
  • Home & Garden $0.05 – $0.10
  • Kids & Family $0.05
  • Jewelry & Watches $0.10 – $0.25

Take advantage of this offer while it lasts (March 1st to May 15th)!

On May 15th, Shopping.com will also be launching its larger plan to better align merchant economics and consumer demand.

LOW-PRICE ITEMS

We will create a tiered pricing structure for some of our leading category CPCs. This will give you the abilty to better align your inventory with the aggressive low-price-focused economy.

VARIABLE RATE LOGO PRICING

We understand that the logo price today can be cost prohibitive. This is an issue that Shopping.com is directly addressing for our merchants by:

  • Decreasing rates on average by 30% and as much as 60% across those categories that experience high Cost of Sales.
  • Tiering our Logo Price Structure by CPC.

These new prices will enable you to add your logo and promote your brand in a more cost-effective way.

Shopping.com cares about its merchants and wants to ensure you have the tools needed to make your business work in this tough economic environment.