It is possible to beat the "big boys" of paid search? You know, the companies spending millions each month on Adwords and adCenter campaigns? Yes, yes it is.
Digital marketing intelligence provider AdGooroo has released a report which shows how major retailers including Target, Toys "R" Us and Victoria's Secret are outperforming Amazon in paid SEM.
While Amazon advertises on millions of keywords and has twice the AdWords spend as the next largest retailer (which happened to be Target), AdGooroo’s research shows that outside of its strongest categories (books and other media) it is not always the dominant player. In fact, retailers with an established brand and specialized or niche offering were able to reap significantly better results than Amazon in SEM.
“We estimate their (Amazon) combined total AdWords spend, including their Zappos subsidiary, was more than $15 million per month in the second half of 2011, with more than 19 million clickthroughs generated in an average month,” said Richard Stokes, founder and CEO of AdGooroo. “Our report shows that even with this impressive spending and results, Amazon is certainly not infallible across the board. The breadth of Amazon’s PPC campaigns is certainly impressive, but when analyzed in categories where it lacks recognition or authority, their SEM efforts fail to live up to some of their most skilled competitors.”
A Formula for SEM Success
According to the report’s findings, retailers wishing to compete with Amazon in paid search should consider a key metric used by the search engines, Revenue Per Thousand Impressions or RPM (RPM = CTR x CPC x 1000). AdGooroo's analysis of the SEM results of Amazon and competing retailers found that paid ad position on U.S. AdWords is highly correlated to the RPM that each competitor delivers to Google, and that the biggest lever for improving RPM is clickthrough rate.
“Search engines are motivated to give preferred positioning to advertisers that generate the most revenue for them, so an advertiser’s best chance of gaining first SERP placement is to offer a higher RPM than competitors who are vying for similar keyword searchers,” explained Stokes. “Retailers should concentrate on improving their clickthrough rate through best practices such as maintaining fresh creative and delivering relevant ads and landing pages. They should also utilize competitive intelligence to better focus their efforts by benchmarking the strengths and weaknesses of their own SEM campaigns compared to their competitors.”