Shopzilla has already gone back to standard rates, so this should be a prime location for pushing budget to. On the other side of the coin, some engines are not rolling back rates until January 15th, so throttles should be available if needed.

End of Holiday CPC Rate Card

• Shopzilla December 25
• Gifts.com December 31
• NexTag December 31
• Shopping.com December 31
• PriceGrabber January 15
• Pronto.com January 15

Shopping.com

Shopping continues to be the most innovative in billing, by supporting a value based rate card which fluctuates on the measured value of the traffic source that Shopping is using to drive traffic to the merchant site. The formula is defined by Shopping as the following:

 [Rate Card CPC]    x   [Publisher Quality Score]    =    [Billed CPC]

This formula paired with changing rate card CPCs by category and price level, gives Shopping a continuously variable CPC rate which is both innovative and difficult to pin down sometimes. The rate changes went into effect on May 16th, so it’s already out in the wild. The full rates can be seen at: Shopping Rate Card

Shopzilla

Shopzilla aka Bizrate, was the next domino to fall, announcing rate card changes effective June 1. Shopzilla has been good enough to provide a break down of current and effective CPC rates in June. As with many of the rate card changes on the engines, there is a mix of higher and lower CPC rates being put into place. You can find the complete review here: Shopzilla Rate Card Effective June 1

NexTag

Now the ball really gets rolling. A few days later this month, NexTag announced their rate card changes for June 1. NexTag’s changes are pretty heavy toward increases, but there are some decreases as well. Included in this change is the creation of many new categories, so merchants should be aware of the updates since this likely means a change to the product feed to include the new mappings. The NexTag taxonomy can be found here: NexTag Categories. In the update, NexTag did not including a rate card link, so merchants who are looking for new rates should check in their NexTag administrative tools.

Amazon Product Ads

Amazon followed up a few days later by announcing their rate card changes. The rate card changes have been nicely summed up by Amazon in their announcement. There are 36 categories effected, with 117 other categories left untouched. Of the 36 categories, 32 categories are seeing increases and 4 categories seeing decreases. As with NexTag, the CPC rates are located in the merchant’s admin panel, so there is no public link to provide. Amazon is also consistent on the date for the changes, which is June 1.

Become

Only a day behind Amazon, Become announced their rate card changes only a few days ago. There is no summary, so merchants should review to see what categories have been changed and how this effects overall expenses. The good news is that Become is giving more time than the others, making the changes effective June 15. The rates can be found here: Become Rate Card

Overall, any merchant who has tight controls on ROI, should keep June 1 circled on the calendar. More than likely, things will fluctuate on that day and adjustments may need to be made later on the month once the changes have a chance to yield a new pattern. Fortunately, there is no rate change on Google Product Search.

I won’t spend time echoing the study when instead I suggest reviewing SEOClarity’s .PDF yourself:

SEOClarity: Clarity Insights Google Algorithm Change 2/24/2011

At that time, I thought Google would begin to incorporate image based ads relative to keyword searches, maintain a local search results section, and generally find new ways to market products relative to consumer searches. Well the prediction wasn’t perfect, but it was pretty close.

So, I’m giving a tip of the hat to myself, and wondering what things will look like 3 years from now. After all, it’s always good to take a minute, look down the road traveled, and then look up the road ahead.

What I envisioned Google looking like in the future (circa March 2008):

What Google looks like today (at least for me, when searching for ‘Office Chairs’):

In focusing on consumers, Smarter.com will not only will see changes such as the revamped website, but also in the way they appeal to consumers. By focusing the scope of product listings  to what Smarter sees as high value sellers, Smarter will be better able to present information as well as send consumers where they will likely have a smart shopping experience.Part of this process will be reducing Smarter’s total product count and sellers by February 1st.

From the merchant facing perspective, Smarter will make this happen through a selective program where a merchant will need to be approved to list their products. This means Smarter will make significant cuts in the merchant partners they work with, by as much as three quarters. In focusing on merchants as they will for consumers, Smarter will now offer a CPA program option as well, since the quality of the traffic to high level merchants will convert well. The merchants who do make the cut for Smarter’s new program should see this as a significant win.

Overall, this is an interesting strategy in the face of growing competition from Google and consolidation in the industry. By using a focused merchandising-centric view such as sites like RueLala and BeyondTheRack, Smarter wants to build that same same attraction as a shopping engine. Of course Google does have Boutiques.com, but that’s another story.

Smarter’s Smarter Home Page:

Last year Google was rolling out their private beta of Product Listing Ads, and this year most people are eagerly anticipating the public launch. The program has been taken out of Google Affiliate Network and is being merged into the Google AdWords program. The platform switch should allow much greater control and more intelligent penetration into consumer’s retail based searches. The control will come from better management capability for bidding around both CPC and CPA based options. The search penetration is simply growing steadily.

Google Product Ad Listings: CPA vs. CPC

I was afraid CPA was going away, I admit it. CPA has always been a bit of a mythical animal, rarely spotted in the wild. So many companies have tried to do CPA based retail programs, and to date only Amazon has made it work well. With the transition of PLA to the AdWords platform, there were rumors that the CPA program would give in to CPC only. CPC is good because it potentially allows much cheaper conversions if the product actually sells. Spending $.10 on a click to sell a $100 item is a pretty good investment. However with CPC the security blanket is removed, because a retailer could easily get an avalanche of clicks with no sale at all. This is one area where Google shines because they offer a real option of using CPA or CPC, and variable rates can be set up within the same product catalog. Kudos to Google for striking a balance between merchants who prefer one method over the other.

Product Listing Ads vs. Product Extensions

As a quick note, Google is offering and pushing both programs together, however they really aren’t in the same ballpark. One program gives a retailer prime real estate on the upper right corner of a search result page, and the other gives retails a small ‘+’ icon on the AdWords paid listing which very few people click. One merchant I’ve spoken to said that about .003% of people clicked on the icon needed to expand the Product Extension Ad and clicked on a product. Not exactly great penetration.

Expanding Product Listing Ads

So in budgeting for PLA, things can be difficult to judge. The reason is that PLA is still expanding and being tested constantly. I’ve worked to put together some information to show comparisons of different searches across time, however because Google is constantly testing ads, it’s very difficult to judge what kind of reach the ads have. For example, try searching for “Huffy Bicycle” a few times. Sometimes you get a PLA section, sometimes you don’t. Additionally, since PLA is driven by product selection, the ads will only have as much exposure as the current product selection allows. For example, if no merchant selling widgets is enrolled in PLA, then no ads will show for a widget search. Most ads you find now center around Walmart, Target, Meijer, Kohls, and other large brands.

However, as more merchants are getting on board through the beta program, more ads are surfacing. Google seems to stay away from generic words, so ‘teddy bear’ and ‘toys’ don’t pull any PLA results. A search for ‘bicycle’ currently has one result from Kmart, but then “girls bmx bicycle” gets the full PLA treatment including Product Search based one-box listings.

It seems the Toys category in general is getting much more exposure in time for the holidays. I remember doing some searches about 3 months ago and not finding much. So for budgeting, the best way to see what traffic and sales will be like, is to just launch the program.

Matched Listings

One evolution happening is that more and more are ads are now showing matched listings in the results. Below is a screen shot attached for a search on “red wagon”. In both PLA results the listings are matched between 3 separate merchants on the same item. The behavior of these listings will be very similar to the Buy Box on Amazon. For comparison sake, let’s call this the Buy Link.

In this example, RidingStores.com and Cymax have the primary buy link where most consumers will click. The title and image for the product both go to the primary link to the winning merchant’s site. The competing offers from Kmart, Target, and Diapers.com can only be accessed if the merchant name is clicked on. This creates relatively small coverage where only a small percentage of the ad will lead to the non-winning offers. To make it worse, merchants with a  long store name are essentially penalized. In this example, Home-Improvement-Superstore.com has such a long name, than Google can’t fit the name in the ad. You can only see “Home…” as the merchant name, which could be almost anyone from a consumer’s perspective. As the ads develop, merchants will need to be increasingly competitive to win the primary buy link, and also hope their names are not too long to be identified.

Overall, Product Listing Ads continue to evolve in new directions and will likely grow to include more frequent exposure. The ads will likely develop to include more information including components such as product reviews. Since the market will only grow, merchants not already using this platform should work to get on the band wagon as quickly as possible.

The big buzz centered around Like.com’s impressive image reading technology. Like has pioneered this effort for years, and with their last round of $32M in funding, they were able to build impressive amounts of traffic. To build their business case outside of raw traffic and image search technology, Like also came up with creative strategies around CPC and modified ROI incentivized programs. It seemed like Like was the most likely candidate to break through to the upper esceletion of shopping engines until the Google purchase. The main question is, what happens next?

The obvious answer is that Google covets the image technology that Like developed and is looking to fold this into their technological arsenal. Based on Google’s ambitions at differentiation from Bing, they will likely seek to roll this image technology out to several platforms including perhaps Google Maps for additional location identification, beefed up image search technology for image only results, and possibly even using this as an additional piece of their natural algorithms to better rank pages. From a retailing stand point, it seems like a simple step to bring the image search feature to Google Product Search. Google has put enormous of energy into making Product Search into a premier retail destination and the image functionality could be an important differentiator in the same ways Like was using. The only part is, that the image search feature helped Like, but it wasn’t a game breaker.

So what of Like.com?

I’ve seen mixed signals, and it may be safe to say that no one knows for sure. If this were Vegas, 4 to 1 odds Like.com goes away and is absorbed into Google. When your homepage calls out that you have been acquired, and you scale back your traffic buying, the Magic 8 Ball says that signs to point Like going away. Of course, the 8 ball has been wrong before…

My initial reaction was disappointment, because I had grown fond of Cashback’s Shopping program rolling in increasingly higher sales while still maintaining easy to manage ROI, based on Microsoft’s brilliant adjustable rate commission system. The hope was, that the program would continue to improve and grow in size as there should have been a lot of updates in the program’s maturation including more responsive content processing, better results pages, and the eventual move to Microsoft skimming some of the commission off the top. However, that never happened, and like most people I am looking for ways to replace performance after July 30th, when the shopping program will move to generating free natural traffic which will likely pull down sales significantly.

Now looking back after a few weeks to take it all in, there are several big takeaways from this announcement.

1) Making a commission based program work, is very very difficult.

Amazon makes it look easy, but really, how easy is it? Google has yet to get a successful program into production. Sure, Google Product Ad Listings is commission based for some, but Google is now putting together a CPC component, so how long will a commission based system be available before perhaps a move to the CPC structure is finalized? Personally, I think Google is accustomed to CPC programs, Google Ad Words  users were used to it, and that’s the direction this is going. So, all of this would have left Microsoft as the best and easiest option, not requiring an order integration beyond placing a tracking pixel, which most retail sites have in abundance anyway.

Microsoft’s attempts to bank roll the program for 2 years, ultimately was deemed to be a losing system because not enough traffic was being funneled through on a consistent basis (ie, not the mass adoption needed). It would have been nice, to set up a commission cut that would have justified keeping the program running longer to see what could be done. However, this seems to indicate the main commission based selling platform will continue to be Amazon.

2: Microsoft is great at killing things.

Really, that’s not fair. Any big company which acquires other companies and technologies, will naturally see some not integrate or die off. Take Google, which acquired and killed Dodgeball, the precursor of Dennis Crowley’s Foursquare. However, after pushing Cashback and Kin out the door recently, it does seems there is some momentum loss from the big launch of Bing. So, when looking at Microsoft programs that are not time honored institutions (looking at you Office 2010), it may be best to have a Plan B when planning ahead.

3. Q4 2010 is going to be very different from Q4 2009

Working within many tightly controlled retail calendars, I can say that almost everyone agrees the October through December defines the success of the year. There is such a flurry of sales in this period, that half the year should be devoted to planning it. That means when looking forward to Q4, a few expectations should be understood now:

A: Google and Amazon will be dominant.

The resulting hole in the traffic network which Cashback resided in, will likely most benefit Google and Amazon as both will become default destinations for shopping. Consumers will be plugging in a product search on Google.com, and those shoppers will be led through a network of well tuned Google shopping networks, including moving through Google Product Search, Google Product Ad Listings,  Google AdWords (not really Product Extensions, too few people click through), and Google’s natural results. Within those networks, Amazon will siphon some traffic away, even while increasingly larger numbers of people are starting in the first place, Amazon.com

Amazon’s site structure and ability to feed the right products to the right people, with a site layout and order satisfaction emphasis that ensures happy customers, Amazon continues to set the standard for what comparison engines wanted to be.

B. Consumers will look for discounts, still.

The Cashback program did show that discounts are still very compelling for consumers, it’s just those consumers need something simple instead of waiting 60 days to see if they get their discount. In addition to constructing discounts, retailers should explore any alternative selling technique that offers a discount, from participating in group discount sites like LivingSocial or GroupOn, to offering discount loyalty rewards on social networks like Twitter and Facebook. More and more, it’s clear that online sales are about communicating to people, not just placing an obvious checkout button.

So, 2010 does continue to be interesting in the realignment of online shopping, so I would expect some more key changes by the time October comes around.