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
Cars 10%
Clothing and Accessories 10%
Computers 10%
Electronics 20%
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%
Media 10%
Miscellaneous 10%
Musical Instruments & Accessories 25%
Office 10%
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.

Ok, it seems to be in a test phase so you might not see it yourself, but Shopzilla dramatically increased the size of the search box on its site and completely removed the staid browsing experience on those pages.

New…

Old…

Shopzilla owns the URL www.shoppingsearch.com (what I originally wanted to call this blog), so it’s nice to see the company is coming to grips with an identity it knew about years ago.

More on Shopzilla in a bit. The company lost its recently hired CMO, Rysa Pinter, a couple weeks back so I caught up with Bill Glass earlier this week. Will write up the post very soon.

Haven’t seen the ad(s) yet, but Shopzilla/Scripps got a bunch of press touting the commercial(s).

Scripps (owner of Shopzilla) has taken a beating recently as the company claims click costs are too much for Shopzilla to handle. Scripps has therefore said it would concentrate on brand building and driving free traffic. One strategy seems to be link building. And I mean a TON of link building.

For those of you who aren’t familiar with search engine optimization (SEO), one factor that goes into rankings on Google and Yahoo! is the number and quality of inbound links. If your site has a lot of links from high quality (traffic, relevance) sites, that’s good. Not a lot of links, not so good.

Well, seems that Scripps has discovered this SEO tactic and has put links to Shopzilla, BizRate, and uSwitch on most of its media properties. Here are some examples:

From Redding.com:

From Newsnet5.com:

So this is what they mean by free traffic.

You can find these links on most of Scripps’ newspaper (20 listed on this page) and broadcast television (10 listed on this page) sites. These links are in addition to the various modules of Shopzilla content that were already in place on most Scripps properties.

Very smart move on the surface. Whether there should be some sort of disclosure that Scripps is the parent company of both the newspaper/tv station + Shopzilla is not really bugging me.

What does make me a little uncomfortable, though, is the lack of relevance and value to the average Joe reading a newspaper site like Boulder’s Daily Camera.

After reading Looking for the warning signs in kids, do parents really need to ‘Comparison Shop for Digital Cameras and Appliances at Shopzilla& BizRate’?

Highlights from the press release:

“Revenue at the company’s interactive media division, including Internet search businesses Shopzilla and uSwitch, rose during the first quarter of 2007, but segment profit for the division was down because of changing business conditions, strategic investments the company is making to improve the consumer experience and competitive position at both businesses, and costs related to a transition in leadership at Shopzilla. On a pro forma basis, as if the company had owned uSwitch since Jan. 1, 2006, Scripps Interactive Media revenue was down 8.7 percent during the quarter.”

“Interactive Media revenue was $62.9 million for the first quarter compared with $58.6 million in the first quarter 2006. On a pro forma basis, as if the company had owned uSwitch for the full year 2006, Scripps Interactive Media revenue was down 8.7 percent. The segment loss at Interactive Media was $400,000 compared with $13.9 million in segment profit in the first quarter 2006. Costs related to the leadership transition at Shopzilla reduced segment profit by about $5 million. The company also invested $10 million during the quarter to build brand awareness for uSwitch in the U.K.”

“Scripps Interactive Media, which includes Shopzilla and uSwitch, is expected to generate segment profit of about $5 million in the second quarter. The company’s outlook for the second quarter and balance of the year assumes no improvement in market conditions experienced by both businesses in the first quarter. For the full year, interactive media segment profit is expected to be between $30 million and $40 million.”

The bigger they are the harder they fall?
–Q4 2006 Earnings Call
–Q2 2006 Earnings
–Q1 2006 Earnings
–A look at 2005

I’ve been thinking about this post for a couple days, and I’ll add more in a separate post soon, but considering that the news just hit the wires, I wanted to let you know that Farhad Mohit and John Phelps have announced that they are leaving Shopzilla.

Here’s the press release announcing the departures and the naming of Bill Glass as the new president.

PS. Thanks to everyone who broke the news to me over the last week…just didn’t want to post anything prior to the official release.

Update: Sorry about the disappearing post. Ran into problems with Flickr so went over to Photobucket, but that ended up messing up the WP formatting…went back to Flickr.

Shopzilla is the only shopping comparison engine to truly take advantage of email newsletters. Must be an incredible $$$ maker for Shopzilla.

Impressive that they put this together less than 24hrs after the Golden Globe awards were announced.

Just in case you thought I was picking on Shopping.com the other day, I also took a closer look at Shopzilla’s numbers through Scripps’ earnings call.

Q2 2005 revenue of $29.5 million and earnings of $7.6 million.
Q3 2005 revenue of $32.5 $35.2 million and earnings of $7.3 million.

I like the 19% increase in revenue, but why did earnings decrease 4% quarter to quarter? As Shopzilla is now part of a larger entity, I didn’t get the kind of answer I was looking for.

According to Farhad Mohit, Founder and Chief Product Officer, “at this stage in the game where gaining marketshare is most important, we are very very pleased with the topline revenue growth that we are experiencing and take that as a sign that we are helping more and more consumers and sending an increasing number of quality leads to our retail partners.”

WSJ Article – “Shopzilla’s revenue more than doubled over year ago-levels, to $35.2 million, and its segment profit jumped to $7.3 million from $1.2 million a year earlier.”

MarketWatch – “Revenue [for Scripps] rose 19% to $595 million, bolstered by continued growth Scripps’ cable networks and Shopzilla, the online comparison shopping service it acquired in June. Excluding Shopzilla, revenue rose 15%.”

AP – “Shopzilla’s revenue more than doubled year-over-year and profit increased about six-fold, Scripps’ CEO Kenneth Lowe said. The number of unique visitors to Shopzilla also was up sharply during the quarter. The deal to purchase Shopzilla in June initially raised concern among some investors worried over intense competition in online comparison shopping. But Lowe said at the time that the 126-year-old company has prospered by embracing each new era in media technology.”

Official EW Scripps Release – “At Shopzilla, we’re seeing plenty of evidence that a rapidly growing number of online shoppers are discovering the utility of this very powerful, online product search and price comparison service.”

I went through account setup & feed submission for a number of comparison engines today. In all cases, I uploaded my feed through the account center interface. Here are a couple notes for Shopping.com and Shopzilla…

Shopping.com: Kudos on accepting Excel files rather than just .txt files (I know this is a minor point, but every little thing makes a difference). A note of advice… send out a welcome email to all new merchants. Maybe this only happens when my products go live, but when every other shopping comparison engine sends out a welcome email immediately, not having one from you is a little disconcerting. Also, once I set up the account and submitted my feed, the Merchant Account Center (MAC) said: “Not Live – Registration Complete”. How about explaining what that means…I assume it means that you’re reveiwing my account before making it live, but who knows? Finally, this could just be an error with the MAC (which I know is in BETA), but once I logged out of my new account, I couldn’t log in again…and because I didn’t get that welcome email from you, I now have no way to contact you.
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