CPC Bidding on Comparison Shopping Engines

Most merchants we talk to do not make the effort to bid on comparison shopping engines. The norm appears to be to publish and forget. This may be understandable (though not excusable) on free channels like Google Product Search but it is not wise on the major CPC shopping channels like Shopzilla Bizrate, Pricegrabber, Nextag, Yahoo! Shopping and the like.

Category or product level bidding?

The comparison shopping engines that do allow bidding either allow the merchant to put in a max CPC (or in some cases CPA) bid amount on the CSE shopping category level, product level or both. NexTag allows the merchant to select a fixed price CPC bid. Shopping.com is a comparison shopping site that allows merchants to place bids on the category level only. BizRate / Shopzilla by contrast allow both category and product level bids.

A common sense approach

You can start with a simple strategy that is refined with data from ongoing performance.

• Define a target: Establish a minimum ROI measure of success. Common success metrics are return on ad spend (ROAS: Sales / As Spend), ad spend as a percent of sales (A/S: Ad Spend / Sales), gross profit return on ad spend (GPROAS: Sales - Product Cost / Ad Spend), etc.
• Benchmark performance: Force rank your product listings based on their performance against your success metric.
• Breakeven bidding CPC: Using conversion rate and average order size, determine a bidding ‘break even CPC’ value for each product listing relative to your success metric minimum (threshold) value. Roll up the data into a breakeven CPC for each product category. Breakeven CPC calculations were explained in another post.
• Bid it up!  Bid up to your breakeven CPC in small increments (generally not more than 10 cents) and monitor the results over at least four days.

The listings you can not bid up and have a hope of hitting your minimum ROI threashold (i.e. ones with poor conversion and/or low average order value) you may:

• Exclude the worst performing listings
• Reduce bids to free up money for the ads that drive sustainable sales
• Edit the content and offer of the product listings to improve their natural shopping search engine relevance (CSEO) and conversion rate.

Rinse and repeat weekly

This approach is very simple and should make you money and improve ad spend efficiency right away.

Comments? Let me know your thoughts below. We’d all benefit by a good discussion.