Marketing Proprietary Product Online

Proprietary brands and products have become the end-all and be-all for retailers in recent years. Brand aggregators have been struggling with margin squeeze since Amazon polluted their pool. And so more and more retailers are working on proprietary goods that seemingly don’t have any price pressure problems (say that three times fast).

But proprietary goods have their own set of marketing issues that tend to squeeze margin; namely, how do you drive demand for your own brands? The margins are great, but 70% of $0 is still $0. And if you create a proprietary brand there is one thing you need to remember upfront: *no one is searching for your brand*.

The nice thing about branded goods is that they already have built in demand. Paid search works great, SEO works great, social works … well, it is social. Remember, these sales are just collecting demand for the product that already exists. In other words, it’s easy (relatively).

Building demand for a product is a very different endeavor than collecting demand. And it requires different marketing than most ecommerce retailers. It requires brand marketing that creates demand. The creative is different, the channels are different and the execution is different. Once demand is created, you can turn on paid search and collect the demand as you see fit.

To start you need to have proprietary merchandise that is better in some way, shape or form for your target market. Creatively you need a campaign with a big, simple idea. And you’ll have to invest far more in the marketing, but hopefully far less in the promotional game to get the sales.

You will likely have to go offline to drive the demand. Here’s where old school catalogers missed the boat: catalogs do a great job of creating demand. But only if you’re featuring and highlighting your brands. Direct mail works. TV is the absolute superstar of brand building, but is expensive – start with radio, paying those with your core audience to mention your product. And focus on selling your new branded goods to your current customers and visitors above all else. Don’t half-ass it.

Building demand online for proprietary product is tough. Banner ads are an expensive way to build demand (bots don’t buy things). PLA’s are an opportunity, if you’re willing to investment spend.  Amazon can work, but only if you push it: a Lightning deal, invest in Amazon CPC’s on the few categories where you still can, or sell goods direct to Amazon and let them market it (questionable strategy for brand building). Everything else results in a very slow process of building a brand.

I recommend you commit to a significant investment in branded advertising that includes a strong offline component: TV, Direct Mail, Radio, etc. Advertising is like exercise, it needs to be consistent and sustained over time to be effective. You can’t measure it like a direct response marketer would or you’ll never make the investment necessary to create your own brand.

Long-term, the payoff is huge. Moving a large portion of sales to high margin proprietary brands would transform most companies. Start with the product, but no matter how great it is you can’t market it the same way you do your national branded goods.

The Dirty Little Secret about PLA’s

It’s no secret that PLA’s are rewriting the rules of paid search. For years we had it pretty easy: focus on the keywords, the ad text and the landing page. You had very clear ways to develop your program and kick the crap out of your competitors. PLA’s have changed that drastically.

PLA’s give Google a way to compete with Amazon’s growing dominance in product searches. Amazon claims over 50% of product searches. My guess is that they aren’t that high, but they are growing fast. So Google needed to do something and PLA’s were the answer.

From what I’m seeing, when PLA’s are added to a search term you can expect about 30% drop in your traditional paid search clicks. Typically this is because of a drop in CTR, but it’s also due to a loss of position in search. I haven’t seen the same drop in organic clicks, probably because organic isn’t quite measurable as a click-through rate (clicks keep growing, but so do searches). Consumers can now shop directly from the search results page and save the time spent clicking through and price shop. Speaking as a consumer, I love it.

And Google loves it. CPC’s are significantly higher on PLA’s vs a paid search term on the same ad. And if you talk to Google, you should boost your CPC even more for higher impression share. For obvious reasons Google reps act like the only way to improve PLA performance is to increase impressions, which mays paying a higher CPC to show up more often. And PLA’s are still a black box (paid search is getting there, too, with the changes to keyword information, but that’s another story). PLA’s are also much more effective on mobile than paid search ever was.

What’s not to love?

Well, here’s the dirty little secret about PLA’s that Google dare not mention: they are price-driven. Let me repeat: to get a high CTR on PLA’s you need to have a low price. Amazon built this model and Google’s PLA’s are making the most of Bezos’ idea. Google PLA’s are all about your price. This is even more true for Bing PLA’s, which don’t show the brand, just the price.

Long-term this is a tough play for ecommerce sites. Ad costs are definitely going up and anyone not selling unique product is having to cut their price (unique, proprietary products have their own issues). This margin-killing, just like Amazon was. For Google, it’s great. They found a way to make serious money on mobile and increase the number of paid clicks on the page. A Google search page for a product often doesn’t have one organic term above the fold anymore.

The future of PLA’s will get even more interesting. Google is now pulling in local store data (“available 0.7 miles away”) in mobile, which translates to more advertisers and higher CPC’s. I also believe we’ll see more and more PLA’s on the page. The most I’ve seen so far is eight and I think that will quickly become the standard. PLA’s on very specific product searches now show just a listing of stores and prices where it can be bought (this isn’t completely rolled out yet), which looks extremely Amazon-like. Finally, PLA’s will soon incorporate overlay’s where you can boost your bid 10% for attractive searchers, for example. This isn’t the death of traditional paid search, but definitely a step in that direction.

For most non-proprietary retailers, your PLA sales should be in the 25-35% range of your total non-brand search account. And I would guess by holiday 2014 that will be well over 50% and approaching 75%.

The next phase of traditional ecommerce retailing will be pricing strategy. The big guys are already there, but with new tools and products on the market, I’ll think we’ll all be changing price on a frequent basis within the next year. We’re moving to the airline system of pricing where nothing has a single price. And Google PLA’s are now the driving force behind it.

Developing a Mobile Site vs Outsourcing

I get it: your developers are already hammered with the main site. Telling them to do more might mean finding new developers; we know that’s all but impossible these days. Going to responsive design seems like a ton of work. And these third party companies offer you the option of going mobile without lifting a finger. Should you just outsource?

In the past it made some sense. Mobile was a small piece of the puzzle and never really drove a ton of sales. But now it’s different. Google estimates that 35% of all searches start on mobile. If you include tablet as part of the “mobile experience” (you shouldn’t), you would be pushing over 50% of your traffic to these sub-sites while you focus on the “main” site with a dwindling amount of viewers.

Here’s the hard truth: we’re almost all behind the eight ball on mobile. Scraping vendors will do a crappy job unless you never update your website. It’s time to bite the bullet and get an internal mobile site that allows you to start tracking sales across browsers. Your main site should handle tablet (be sure to optimize for these users over desktop) and the mobile site should only handle phones. My suggestion is to hire outside developers if needed, but get it up on the same platform as your main site. It’s quickly becoming way too important to outsource.

Most should go with responsive design. It’s not ideal: in a perfect world you should serve up different experiences to mobile users (who have very different reasons for being on your site). Make sure you can look at the analytics separately no matter what. But get it up soon: the world is moving to mobile extremely fast now and we all have to figure out what that means to our business.

In general, mobile sites sell a much higher proportion of best sellers, since you can only focus on a few key products in the mobile experience. Allowing a shared cart so that consumers can move from mobile to your live site is extremely important: customers don’t want to type in a ton of stuff on their mobile device. Mobile sites also tend to take a higher proportion of PayPal and Google Checkout orders.

It’s too late to push this off. You need to be on mobile now.

Restaurants vs. Mobile

Chefs, apparently, couldn’t give less of a crap that you’re trying to read their menu while driving fifteen miles an hour over the speed limit in the general direction of their restaurant. So they build a branding, inspiring monstrosity that puts the menu in flash or some other beautifully useless format.

 

WTH? I’m guessing that three-quarters of visits to restaurants are on a mobile device. The reason Open Table is taking all of your reservations is because they are the only reasonable way to read your menu from a mobile device. I’m not visiting because I want to understand the look and feel of your restaurant. I’m there to see the menu and (assuming it isn’t too fru-fru) book a last minute reservation. Two basic needs. Now hit your favorite restaurant site and see how easy that is.

 

Note to chefs: the future is mobile. Time to start focusing on the mobile site and thinking of the desktop site as a secondary concern. Design for the iphone and make sure it works on a PC running IE. Done.

 

But make sure the food is good first. A good mobile site can’t fix that.

Why Blog? Why Now?

Over the years I’ve had a handful of blogs. Perhaps my favorite was a TooMuchTheory.com, a long form blog I cowrote with a friend on whatever struck our fancy.  But it’s been a while.

 

Life is funny. It tends to kick us in the ass just when we’re ready to relax for five minutes. And through constant change, I haven’t had as much time to devote to writing as I would have liked. I’m not the best writer (clearly), but I do enjoy putting thoughts on paper. And a blog holds me to that. It waits. It expects. And it helps keep me from procrastinating.

 

So I’m well aware that it’s 2014 and I’m starting a new blog. Seems like I missed the boat by a good decade. But I’m not blogging for money. I’m not blogging for fame. I’m just blogging because I want to say some things and I’d prefer to commit them to ink (or pixels, as it were).

 

So I hope you enjoy this. And I hope I have something to say after the first handful of articles. Thanks for reading.