Big Business: Paid Search Ads on E-Commerce Websites

A blurring of the lines between digital and shopper marketing with massive profits for retailers.

What's one of the sneaky huge marketing businesses you've probably read least about? Paid search on e-commerce websites.

For the uninitiated, you can buy paid search ads on retailer websites just like you can on Google and Bing. Only in this case, you're paying to have your actual product listing at the top of the SERPS on the very site where the user can buy the item.

Marketers advertising with paid search ads on e-commerce websites have a wide variety of advertising options to choose from. They can use keywords, product or service categories, local targeting, and more to reach the right customer about to purchase something in a category.

The cash is flowing well beyond online native companies into traditional retailers too. Search is a huge business for sites like Walmart, Target, BestBuy, and more. Even the specialist ecom players in niches like auto parts and baby clothes are getting in the game.

Paid search advertising has been around for 15 years or so, but it's just now getting big in e-commerce advertising with specific players like Amazon Sponsored results, Google Shopping ads, Walmart Sponsored Products, and more.

Paying for prominence. Brands already do it in-store.

For many major brands, this isn't that new of a concept. To even get their products on the shelves of the big-box retailers, brands often pay a fee for space. When you think about it, that's not all that different from paid search on the retailer's website.

Unfortunately, it is another marketing tax eating away at the bottom line.

However, it does level the playing field (somewhat) for new, upstart brands. It can be tough for small brands without deep pockets to get afford shelf space in physical stores or get their products out in front of enough buyers to start generating brand recognition.

And let's face it, people click on the top search result because it's easy. The advertising in a given search is so effective that people will often not even look at the other results. This is bad for businesses who are in positions 2-10, or worse, positions 11+ down the page.

Pure margin

And ohhhh baby is it profitable for the retailers.

According to Amazon’s Q2 financial report, the segment that includes Advertising revenue grew 83%.

A brief history.

Every hoop you make your shoppers jump through decreases the likelihood of them ultimately making a purchase. The e-commerce sites know this and invest millions in building out killer search functionality.

Goal #1: Get the shopper to the product they want as easily as possible and get it added to the cart.

Along the way, the e-commerce product teams realized that their search functionality was pretty darn good. How good? Good enough that brands would probably pay to have their products listed above the competition.

Ta-dah! A new revenue stream is born from functionality the retailer already needed to have. Talk about striking gold. Good search sells more stuff and generates its own advertising revenue. Boom!

So what do we know?

If you sell your products through 3rd party retailers, it's time to take advantage of advertising with paid search ads on their websites. Yeah, the last thing you want is another marketing tax. But honestly, your competitors already are chipping away at your sales using this technique.

Let’s agree on some new truths.

Firstly, the landscape itself has changed. Brands now have a chance for another bite at the apple. You might not have succeeded at getting a consumer to click on your search ad for toothpaste. However, the e-commerce site where they landed likely has another chance for you to snag a sale from that consumer.

Unfortunately, you cannot simply shift some of your existing search (Google) budget over to these platforms. So where does the budget come from?

For my money, I would move some of that above-the-line spend over here and start testing right away. One could argue that this last-minute marketing is just as much of a "brand discovery" play as anything else. There's also an argument to be made to move some of the shopper marketing budgets into this kind of search.

Let’s be clear. You need to run smart tests. A lot of tests. Let the data lead you to the appropriate level of investment in this new(ish) channel.

In-store activation for the digital consumer

In our business, silos occur when marketers focus on one particular medium to promote a brand and ignore other marketing efforts that could help them achieve similar results. This is common in advertising agencies as larger clients often have separate budgets for each media outlet they use (television, radio, print).

While this may be effective at creating focus and enabling clean budget management, it can also cause massive waste. Instead, the teams should be merged and working together to achieve the same outcome: selling more stuff regardless of the point of purchase.

A great example would be if your television activations spent millions running ads during NFL games while you had zero in-store signage promoting products that were featured in those commercials or paid search campaigns driving traffic back to them.

We can't afford to be advertising in a vacuum anymore and we need to put our media dollars where they count the most, not just where it's convenient. Consumer behavior changes every year it seems...and so should we!

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