The 'Always On' Approach

Advertising on search is not like buying billboards or TV spots, where the advertiser shouts to a passive population in the hope that they'll take notice. Search allows advertisers to directly target customers who are already interested in their products.

As long as it's profitable to do so, there's no good reason to let any of these customers slip away - yet by treating search as a one-off media buy, with fixed budgets set every quarter, that's exactly what most advertisers are doing. Budgets frequently run out part way through the day, leading retailers to miss out on peak research times in the afternoon and the high conversion after-work period. Worse, seasonal shopping peaks still seem to be taking some retailers by surprise, due in part to increasing user sophistication ensuring that those peaks come earlier and last longer. Because retailers can't always anticipate these changes in user behaviour, seasonal swings can leave them short on budget for the rest of a quarter or force them to reallocate spend.

Right Place, Right Time

Thankfully more and more retailers are waking up to the differences between old media and new, and are switching to a margin-based approach to making sales on search, allowing them to reach out to all their potential customers and exploit the peaks whenever and wherever they occur.

Approaching search on a margin basis is comparable to allowing customers to pay by credit card. Most retailers can justify a cost of around 1.8 per cent per transaction for payments made by Visa or Mastercard, as the additional customer volumes makes it worthwhile, but they may refuse Diner's Club or American Express because the higher transaction charges don't work for their margins. The same cost-per-sale considerations should help retailers decide how to set their margins for search.

Some retailers have already decided that breaking even is an acceptable return, thanks to all the 'hidden' upsides to search that aren't easy to track, including greater brand awareness, the lifetime value of new customers, and the increasing number of customers who research online to make purchases offline.

Making It Work

To make the most of a cost-of-sale strategy there are a few key factors to consider; Being found in all the right places means driving full keyword coverage for all relevant products and services, and targeting users whether they're researching a purchase or ready to buy. It's also worth retailers considering what their brand stands for and bidding on relevant non-product queries, to make sure customers link the brand with its key values.

Supporting a search campaign with content network campaigns - targeting sites with relevant editorial - can be an excellent way of establishing brand associations. Then there's the most important advice of all, which is to keep a close eye on ROI and manage search activity accordingly.

Search is not about shouting to catch passing traffic; it's about keeping your shop open to destination shoppers. Taking a cost-of-sale approach to search means those doors are always open.

Peter Fitzgerald is Industry Leader Retail at Google