Pay Per Click versus Pay Per Performance Marketing

I am back after a 300 mile bike ride from Gettysburg to New York City to raise money for those living with HIV/AIDS.  If you would like to learn more about what I do in in my spare time for philanthropy please CLICK HERE and thank you MerchantAdvantage for sponsoring me in these efforts. 

I hope that in tmy brief absenses you all have clicked on some past posts to help you with your online business.

Okay, now back to business. 

Below are my thoughts on Pay Per Click versus Pay Per Performance marketing using shopping destination sites.  I have posted much of here and encourage you to read it all -- I think it is worth it -- click the link at the end for the rest of it.

So.....you have an online storefront and you have some customers coming to your storefront but you want more. The first thing most online merchants do is jump on the "adword/keyword search" band wagon to get more traffic using search engines such as Google, Yahoo!, Ask.com, LookSmart and others. Not a bad idea, since millions of visitors search these sites everyday looking for help. The only problem with this method of marketing is, as an online merchant selling product, you are in the mix with hundreds of thousands of searches that relate to the "keyword" you purchase that may have nothing to do with the actual product search on the product you are trying to sell. Such examples include the history of your product, articles about a product, etc…To get around this, you can always bid higher for a given "keyword" on these search engines to guarantee you are listed on page one, or better yet, you come up at the very top – if you pay enough.

A more effective, or complimentary marketing method, may be to focus on the search engines that only focus on marketing retail products that online merchants sell and also bring in millions of potential customers each day. These are affectionately known as shopping destination sites and include:

Marketplaces, such as Amazon.com, Shop.com, JellyFish.com, and Underbid.com

Comparison Shopping Engines, such as Pronto.com, PriceRunner.com, PriceGrabber.com, Shopping.com, Smarter.com, Shopzilla.com, Yahoo! Shopping, and over 100 others. For a complete list please CLICK HERE

Mobile Commerce Engines, such as mPoria.com and mShopper.com

Couparison Shopping Engines, such as MyCoupons.com and CouponMountain.com

Product Review Sites, such as PowerReviews.com and Buzzillions.com, and

Hybrid Sites, such as GroupGain.com, NetHaggler.com and other sites, where online shopping occurs but revenue models vary.

These types of sites can be very beneficial to an online merchant, as millions of people come to them everyday looking for products to buy, review, and compare. As with general search engines, these sites do not guarantee sales, but for the most part, when managed correctly, can really help lead potential buyers to your online storefront, which can lead to sales and definitely leads to good branding.

Using Shopping Destination Sites: Choice

Every online merchant should first ask the same question:

Which shopping destination site will lead to the most sales?

While an excellent question, it is nearly impossible to say which of over 100 shopping destination sites might work best for your product catalog and lead to the most sales. Everyone usually tries out Amazon, Yahoo! Shopping, Shopping.com, PriceGrabber.com, and Shopzilla.com as they are the best known and have built trust in the marketplace for the customers buying products and the merchants listing products. But these are not your only choices. And, remember, new shopping destination sites with unique business models are popping up every month which can also lead to new sales and branding opportunities.

There are many shopping destination sites from which to choose, including review sites and COUParison (Coupon Comparison Shopping) sites that can also act as a conduit to possible sales. Thus, MerchantAdvantage encourages every online merchant to test a few sites to find out which marketing channels work best for them and leads to the best return on investment ("ROI").

When testing these sites, the online merchant should clearly understand what they are paying for and how they are being charged for leads from a shopping destination site, i.e. Pay Per Click --commissions on leads or Pay Per Performance, commissions on sales, or some other commission/revenue model.

Pay Per Click ("PPC") Definition and Process Flow

Definition:
PPC is the acronym for Pay Per Click, and, as that implies, a merchant will pay for each consumer that clicks on a merchant's product from a marketing Channel – typically Comparison Shopping Engines and Review sites such as PowerReviews.com or Buzzillions.com. These costs would typically be allocated as marketing fees in the accounting world.

Process Flow:
Comparison Shopping Engines or Review sites typically charge a merchant a nominal fee each time a consumer clicks on a product and then is redirected back to your online storefront whether a purchase occurs, or not.

Pay Per Performance ("PPP") Definition and Process Flow

Definition:
PPP is the acronym for Pay Per Performance. This is synonymous with paying commissions. Payment is only made to the marketing entity when a sale occurs.

Process Flow:
These sites charge fees for products sold based on a percentage of the sale. Sometimes the full sales transaction takes place on their site (Amazon and Underbid), sometimes the sales transaction takes place on their site but payment is processed on your site (Shop.com), and sometimes the full sales transaction takes place on your site (JellyFish.com).

Exceptions to the PPC or PPP Rule:
For the sake of this newsletter, we will not address companies in group 5 or 6 above (Product Review and Hybrid Sites). While they act as shopping destination sites -- and can be very effective to build sales -- their business models are not a traditional PPC or PPP model – which may be a good thing, as they are unique. These companies and business models will be addressed in future newsletters.

Pros and Cons of PPC and PPP

Obviously, pros and cons are different based on your perspective, your needs,and your goals. But there are a few pros and cons that should at least be considered when discussing PPP and PPC.

<<<to read complete entry, it is beefy and I think will help, please CLICK HERE -- no obligations when you click through, it just reads and looks better at this destination -  PROMISE! >>> 

-- Chip

Comments

[Gerri Bryce]

One small but significant issue is the fees in trying to get listed to these shopping directories. Some marketplaces charge a fee while others don't. Merchants must decide how much they would invest in getting listed - plus they would have to either manually input product feeds or buy software for automatic product feeds.