How to Use Pay-Per-Click Ads to Grow Your Business
Twenty years ago, creating traffic for a retail flooring store was done via newspapers, radio, television and Yellow Pages ads. Consumers educated themselves by visiting six or seven retail locations. Today, it’s a completely different ball game. Consumers don’t visit multiple stores to get acquainted with floor covering; they go online. Understanding and reacting to this new and different approach to building traffic is central to life expectancy today in the retail sector.
We had conversations with John Simonson, president of Webstream Dynamics and 5 Star Store Reviews, a number of times over the years, and we felt it important to invite Simonson back to gain guidance in the area of online advertising and data collection. The following are excerpts of a conversation we held with Simonson, however, you can listen to the interview in its entirety in our Podcast section.
TF: How can retailers drive traffic to their stores and collect sufficient data to guide them with their marketing efforts?
Simonson: One of the major plusses of the internet is Google. That’s because they collect a great deal of data. There are a number of ways that this data can be accessed—either through spending money through Google Adwords, or it can be accessed free with different tools Google makes available. Google Adwords, for example, or Google My Business, Google Insights and Google Trends offer ways to view how people are searching, what they are searching for, and overall trends in searches. All of this gives retailers ideas as to what they should be promoting and what they should be talking about on their websites. One of the benefits of being an ecommerce website is that it provides a broad perspective as to what consumers are searching for in flooring.
TF: Give us the basics of pay-per-click advertising.
Simonson: Pay-per-click advertising has different methods today. Through the search engines or other sites that are connected through a search engine called advertising partners, one creates an account in Google Adwords. Then the retailer creates their own ads for Google Today. Then they create a budget, noting the amount to be spent per day or per month. For example, if one enters $30 per day, or $900 per month, the retailer’s text or image ads will show up in Google search, or it could show up on the partner’s site. Then when someone clicks on the ad, the pay-per-click amount—say $2—is deducted from the $30 for that day. When the amount of clicks for a given day reaches $30, the ad will no longer appear. Over the day, they will spread out the exposures—and you can designate certain times of the day for exposure. Also, exposure can be specified geographically. Ads can be paused—a campaign or an ad group can also be paused.
To expand a bit on campaigns, a retailer could set up a hardwood campaign, a laminate campaign and a carpet campaign and they can be further broken out. So for example, a hardwood campaign could be broken down by group with a separate group for each different manufacturer so each can be measured.
In turn, keyword data can be captured, including the words consumers use in searches, the number of times specific ads were seen, or the number of impressions, how many times specific ads were clicked on per specific word or phrase. Data provided includes click-through rates, cost per click and the total cost per search term. This information is provided in graph form.
TF: How extensively are Adwords used in the floor covering business?
Simonson: The dominant ones in the industry are from the big boxes—Home Depot, Lowe’s, Floor & Décor, Lumber Liquidators and Wayfair. Then there are the flooring ecommerce organizations. Some retailers are active. Some come up because some are pushed out as a result of their geographic location.
TF: How are keywords priced?
Simonson: It’s more involved that one might think. For example, if one initiates a search for hardwood flooring, what are they really looking for—how to maintain hardwood flooring, how to install it, or perhaps they are looking to purchase it? They could be looking for certain species of wood flooring products or even products that look like wood. Hardwood flooring is a very broad keyword phrase, and it’s usually used by a consumer at the very start of the buying process, and they are very likely two months away from a purchase. Someone else may be looking for something more specific, say a particular brand, a certain series, or a specific color. They know what they want. They are closer to purchasing and are shopping for price. Based on that, an advertiser can use a very specific word phrase and perhaps pay less or, in some cases, pay more where there is a great deal of competition for a word or a word phrase.
TF: How do big boxes buy words?
Simonson: The big box players have deep pockets, so they can afford to go after hardwood flooring, for example, because their mission is to get the consumer inside the local Home Depot. As a result, they don’t mind doing a very broad word or phrase to make sure their brand is out there and in the mind of consumers.
TF: Is the independent retailer outspent from the get-go?
Simonson: Let’s spin this around and go back to the data, which is extremely important. Home Depot, Lowe’s, and the other major players—and I would expect the major manufacturers in our industry—are all collecting all of this data from a multitude of searches.
It would be my guess that they would take all of this data, analyze it on a national basis to determine the trends in flooring to identify what consumers are looking for and what they are interested in buying. This provides these big players a tremendous advantage because they have their hands on this data, which they analyze to determine what consumers are interested in based on keywords. With this data, they can predict what consumers are interested in, what is becoming less important, and it permits them to get an early reading on trends in the marketplace. It also provides a look into business cycles—when consumers buy and when they do not. The can also see the percentage of searches done via mobile versus desktop. According to numbers that I have seen recently, 54%-55% of searches for flooring are taking place on mobile devices.
TF: If a retailer initiates a pay-per-click ad program, will all this data be available to him?
Simonson: Yes, but only over time, unless the retailer plans to spend large sums of money right off the bat. When one is bidding on a specific brand, say Mohawk carpet or a specific style, like SmartStrand or Anderson hardwood, the retailer will then be able to see the data, depending on the amount of money they are spending. This data reveals how popular any specific brand is. On my end working with retailers—at least at the beginning—I encourage them to start off spend larger amounts which permits them to glean more valuable information.
TF: What is your estimate as to the amount retailers are spending on media today?
Simonson: I see retailers spending—even on digital—but not anywhere close to the level they used to. For example, they were comfortable with the ad salesman from the local newspaper dropping by every week to help get the weekly ad together. Most retailers are just not comfortable with digital advertising, and they really don’t understand all of the opportunities it offers.