Why SMB Retailers Don’t Do Search

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Retail, or online shopping, is an integral part of Google and Bing’s success in PPC. Amazon and eBay are probably the best-known and most ever-present retailers in PPC, but countless others are selling millions of dollars of products via PPC every day. I got my start in search doing in-house PPC for an ecommerce site.

Despite all the activity by huge online retailers, a study released by BIA Kelsey shows that SMB retailers “only spend about $700 annually on paid search.”

$700 annually is nothing in the search world. Why aren’t these SMBs taking advantage of PPC, one of the most effective direct marketing channels out there?

Retail search is hard.

A few years ago, PPC was less complicated. You picked keywords, wrote ad copy, set your bids, and you were off and running. Nowadays, there is more competition in paid search, and limited inventory. There are only so many impressions for “Nike running shoes,” and hundreds of retailers selling them. It takes time, attention, and know-how to be successful in retail PPC.

Website optimization has gone to the next level, too. Tools like Unbounce and Optimizely have made it easy and inexpensive for even novice website owners to run multivariate tests. Ecommerce tools like Magento and Shopify have streamlined the back end of ecommerce, including shopping cart software. While these tools have made some tasks easier, they’ve also leveled the playing field – making small businesses that don’t use these tools look unprofessional.

And anyone who’s ever tried to set up a Google Shopping feed can tell you that feed setup alone is enough to make even seasoned PPC pros give up. Google Shopping is a powerful tool for ecommerce vendors, but it requires different skills and optimization tactics than traditional keyword PPC. It’s nearly impossible for a small mom-and-pop store owner to master both Shopping and keyword search, and SMBs can’t afford to hire agencies to do this for them.

Retail search is time-consuming to manage.

Let’s take 2 examples. If you’re a small hair salon with a website, chances are you have one conversion: booking an appointment. You might bid on keywords that describe the various services you offer in the salon, but those will stay relatively static over time, and the goal is to drive appointments. PPC for this type of small business is straightforward.

Now, let’s say you’re a small women’s clothing retailer. Even though you only sell to women, you probably have multiple items available for sale. And each item comes in different sizes, styles, and colors. You don’t just have women’s sweaters: you have women’s cotton cardigans in sizes 2-16 and a variety of colors; women’s crewneck wool sweaters in sizes 2-18 in navy, gray, and green; women’s cashmere sleeveless sweaters in sizes 2-16 in 5 colors, etc. You probably also sell pants, skirts, blouses, blazers, shoes, and accessories – each in a variety of styles, colors, and sizes. It’s easy to see how running PPC for even a focused small business like this would quickly become a full-time job.

So what do small retailers do for marketing? According to the study, most SMBs in the retail space spend their money on social media.

Social Seems Easier

If you’re a small retailer, you may have an hour a day to spend on marketing (and that’s if you’re lucky). What are you going to do with that hour? Are you going to do keyword research, write ad copy, review bids, set up a shopping feed, look at search query reports, and create reporting dashboards? Or are you going to write a few Facebook posts and schedule them for publication?

Social media, especially Facebook, feels familiar to most people these days. Even our grandparents are on Facebook. For retailers, it’s easy to talk about a product or promotion, add a link, and call it a day – after all, you’re probably in Facebook anyway checking your personal feed. What better way to tell people about your business than by posting photos and links on Facebook?

Even Facebook Ads seem easier than search PPC – and SMB retailers spend 11.2% of their budget on Facebook ads, compared to 2.7% on paid search.

Facebook ads can be targeted locally. While search ads can, too, search ads feel more complicated. And Facebook ads can be targeted by interest. The small women’s clothing retailer in our earlier example can easily run Facebook ads targeting women ages 25-45, within a 20 mile radius of their store, who like fashion, are professionals, etc. For Facebook ads, you just describe your target customer and set that as targeting. No keywords, bids, or other “hard” stuff to worry about.

Still, less than 30% of SMB retailers are using Facebook ads. Most of them are just doing organic Facebook posts. And who sees those? Current customers and a few of their friends, maybe?

SMB Retailers Focused on Current Customers

According to the study, “retail SMBs are more invested in customer lists than SMBs in other verticals”. Marketing to current customers, especially in retail consumable goods, is smart. It’s easier to woo a returning customer than to acquire a new one. SMB retailers are also using mobile marketing such as mobile coupons and text messages.

It’s great to see that SMBs are taking advantage of mobile marketing, and paying attention to current customers. Many larger businesses could learn from them.

But there needs to be a balance between marketing to current customers and acquiring the customers in the first place. Search is probably one of the most efficient ways to attract new customers – but only if you know what you’re doing. The knowledge gap is why most retailers don’t use search.

Editor’s Note: This post originally appeared on The SEM Post on July 16, 2015.

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Comments

  1. I once had a meeting with a coffee shop owner. He imported coffee beans from Italy and sold bags of these as well as cups of coffee in his shop.

    He also sold bags of beans through a website. And in exchange for free coffee, a bagel and a chocolate muffin I was talking with him about whether or not he could use AdWords to grow his online sales.

    He could – people search for this kind of thing all the time and I’m pretty sure there is commercial intent. But the main issue was how quickly would it be possible to grow sales without causing cash flow problems for the business.

    Slow growth was worse than no growth because it would mean an increasingly large amount of time would be needed for packing and posting the orders. At a slow growth rate the coffee shop owner would not be able to afford to hire someone to do this so there just wasn’t enough time in the day.

    A fast growth rate would mean he could bring someone in to do the packing and posting. But I couldn’t guarantee a fast growth rate (and I’m not sure anyone could).

    I think this little story demonstrates another problem with small business marketing – growth comes in jumps for them rather than being a linear process. For them to increase capacity by 15% might involve increasing a load of other things by 50% (i.e. they might have to hire another person) which is kind of complicated. Bigger companies don’t need to worry about this

    • Melissa Mackey says:

      So eloquently put, Richard. I’ve worked with many clients over the years who had us stop PPC because they were getting too many sales/orders. It sounds dumb at first – isn’t that a good problem to have?!? – but when you put it the way you did, it’s clear why it’s a real problem for small businesses. Agencies deal with the same thing, really – we staff for a certain number of clients and amount of work, but if we get a couple big new clients, suddenly everyone is overworked. But there is hesitation to hire more staff in case another client quits or the scope of work changes (which it always does) and then risk being overstaffed. The life of small business owners…

  2. From personal experience, I agree with most of this. If your product can be purchased online from a major retailer site, or if your product price/margins are low, then it’s going to be tough to play in this space. And I’ve seen examples of people doing better on social (FB and Pinterest especially).

    That being said, there are cases, even for the SMB to have a successful PPC retail campaign. Maybe more on the PLA side than the keyword side, but if your niche or in a space without a major online giant in your sector, you can succeed if done correctly. It’s definitely in the minority, but it can work

    One other scenario is for a local shop. Let’s say you are a furniture store and your products can be bought on Wayfair. It’s going to be tough to compete nationally, but on a local scale you can do well as some items people want to see and feel in person – a dining room set, a sectional sofa. If you are targeting a radius or local geo, the campaign ads can be geared to get them into the store, especially on the mobile ads and the landing pages. Not saying it’s easy, but if agile, it can work

    • Melissa Mackey says:

      Great points Mark! As we discussed on my other SMB post, if done intelligently, SMB paid search works, even for retailers. I think many are scared off because they don’t understand it, whereas Facebook and social they understand because they use those channels personally. But you’re right, it definitely can work for the right businesses!

    • This might be my own love of ecommerce weighing in, but I prefer an SMB ecom client to an SMB lead gen client. I *tend* (YMMV) to see naturally higher CPCs with services than I do with products. Thus, a $750/month goes significantly further with $1.25 CPCs than it does for $3.50 CPCs. Also, beacuse retail tends to have a higher number of conversions than lead gen, there is much more data to actually make decisions with in the account.

      It *definitely* depends heavily on the client, product, margins, traffic potential, and competition. I’ve also run a successful lead gen account on $350 month (though I think that’s RARE) so I don’t think it’s impossible. Just that I personally prefer Ecom SMB clients because more conv data, and generally lower CPCs.

      • Melissa Mackey says:

        Also ecommerce has other easy-to-measure metrics like sales revenue that usually doesn’t exist for lead gen. It’s easy to bid to profit for ecomm, nearly impossible for lead gen. And you’re right, a small budget goes a lot further for ecomm with the lower CPCs. We don’t have any lead gen clients paying even $3.50/click, it’s more like $5-10 minimum.

        • Also, frankly, if they’re only chucking $700 a year ($58/month) it’s no wonder they’re not “seeing the results” they want! Just can’t dip your toe in the water in search anymore.

  3. I have to say I’m surprised to hear those stats about social ad adoption. Just a few years ago the conversation was asking if anyone was seeing profit on social or a waste of time and money.

    • Melissa Mackey says:

      Yeah I was surprised too. Again, I think it’s the familiarity issue more than profitability – although I could be wrong. I will say that Facebook, in particular, has really improved their ad product over the past couple years. It’s easy to use and the objectives work very well, even for small businesses.

  4. The hair salon example in your post is a classical case of an SMB retailer with perishable inventory. Like Hotel Tonight does for hotel rooms, other realtime customer acquisition apps help many businesses in this category to match customer flow with spare capacity in near realtime. So the conversion event is slowly moving away from appointment to an actual walk in that 30-40 minutes after the customer taps a button on a mobile app. I happen to be an investor in one such app called Ressy, which started with restaurants last year and is now expanding to spas, salons, etc., in India. Hooked is a similar app in USA. Because they come with no fixed costs – they take a percentage of the actual transaction value if and when the transaction happens – and zero complexity, they seem to be gathering traction as an alternative marketing channel for SMBs in the perishable inventory category.

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