It’s that time of year again. Many of the shopping engines have raised their cost per click (CPC) rates for the holidays. The shopping engines do this to counter increased rates on Google Adwords and Yahoo! Search Marketing and justify the move by saying that conversion rates increase during the holidays. In effect, the shopping engines are saying that merchants still made out like bandits and they have to cover their collective asses.
Shopzilla will increase its CPC rates by 25%. The change takes effect on November 12 and goes through December 31, 2007. Ok, at least Shopzilla moved the increase out to the 12th as opposed to starting November 1.
PriceGrabber increased its CPC rates by 25%. The change took effect on November 1 and goes through January 15, 2008. Ahhh…January 15? Excuse me?
NexTag increased its CPC rates by 25%. The change took effect on November 1 and goes through January 2, 2008. A 25% increase never feels good, but this is the one increase I don’t think merchants are worried about. NexTag continues to drive incredibly qualified traffic.
And then there’s Shopping.com. Not only did they they move the rate increase out to November 15 (as opposed to November 1), but they aren’t doing a blanket increase of 25% across all categories. Incredible. Someone listened!
In some random course in college, I had a professor give a class about generalizations…how dangerous and wrong they often were.
NexTag, Shopzilla, and PriceGrabber are saying that conversion rates increase during the holiday shopping season. But I’m not so sure that this Forklift seller is going to see a huge spike in conversion. Or that people will be adding projection mounts to their holiday wish lists.
NexTag, Shopzilla, and PriceGrabber are saying that CPC rates increase for them during the holiday shopping season. Again, I don’t think that argument holds for across all product categories. Do bids for textbooks on Adwords or YSM really increase 25%?
In other words, while Shopping.com didn’t get it perfect this time around, they get an A for effort, moving forward with a variable rate increase of 10-25% as opposed to a flat increase of 25%. Office equipment rates will only increase 10%. Media (books, movies, videos) rates will only increase 10%. Here’s the complete rundown:
Categories % Increase
Clothing and Accessories 10%
Event Tickets 10%
Flowers and Gifts 25%
Health and Beauty 15%
Home and Garden 20%
Jewelry and Watches 20%
Kids and Family 25%
Magazine and Subscriptions 10%
Musical Instruments & Accessories 25%
Sports and Outdoors 25%
Video Games 25%
As for how SDC decided on the % increases, Alisa and Tomer explained to me: “We’ve done some analysis looking at previous years, looking at deltas in different categories in rate cards from our search partners. As opposed to one size fits all, we’ve done the analysis to figure out what’s needed to cover our costs. And we’ve moved the [rate increase] from November 1 to November 15 to better reflect when that increase kicks in. What we’re trying to do this year is be more sensitive to reflect what we’ve seen in the past. In some categories the keywords [cpc rates] increase more, in some categories the keywords [cpc rates] increase less.”
Sounds so simple. Makes perfect sense. Shopping.com is saying that the rates from their search partners (Google Adwords, YSM, etc.) don’t increase for all categories at a flat rate and therefore they aren’t going to pass along a flat rate increase to their merchants. Because…well…that would be wrong.
Shopping.com is good at buying keywords. The other shopping engines are also good at buying keywords. Some, like NexTag, might even be more efficient. Well, if that’s the case, why are we seeing a flat rate increase on NexTag, PriceGrabber, and Shopzilla?
Shopping.com has admitted that costs don’t increase 25% across the board (based on past data). If that’s true, then the other shopping engines are basically saying ’screw you’ to the merchants.
Ok, there might be a little more to it. Shopping.com in general seems to have a lower conversion rates then the other shopping engines because of poor partner traffic, so maybe they’re making up for that with lower CPC rate increases.
But that still doesn’t excuse the other shopping engines’ actions. They should immediately reconsider their increases for a number of categories. It’s the right thing to do.