CSE Bid Management & The Decline of the Rate Card

Traditional rate cards, which establish bid floors for products based on their price and/or category, have been accepted as a necessary burden in the comparison shopping engine (CSE) space for a long time. They pose a challenge for CSE campaign management because they do not allow advertisers to bid products to their true value. In this context, bidding to the “true value” means being able to submit what we’ve determined to be the ideal bid based on observed sales-per-click and the client’s ad-spend-to-sales goal. Instead, strict rate cards force the retailer to choose between two less-than-ideal scenarios: 1)      Remove products from the feed that could be efficient at a bid below the rate card, or 2)      Bid products above their ideal CPC value to keep them active and run the risk of program inefficiencies. In recent years, Pricegrabber and the eBay Commerce Network have moved away from the traditional rate card system, allowing advertisers to submit bids of any amount for their products. The setup on each engine is slightly different but the idea is the same: let advertisers bid each product based on its predicted value.

Flexible Bidding is Key

Even though products with bids below the rate card receive less exposure, the benefit of sending all products to these engines is significant. We are huge supporters of this functionality and applaud its similarity to what Google offers advertisers with Product Listing Ads. While the success of Product Listing Ads is largely due to Google’s massive traffic volume and its product serving algorithm, part of it is likely driven by the fact that advertisers don’t need to pick and choose which products are pushed through the feed. Account managers send 100% of products, smartly segment those products using custom labels, product types, etc., and assign bids that work for each grouping. Our ability to apply more sophisticated bidding is a key driver of continued year-over-year spend share growth for the eBay Commerce Network and PriceGrabber. The graph below highlights that, in Q1, RKG’s spend share increased by several points for these CSEs while the engines with concrete bid floors saw decreases.

Connexity also moved away from the traditional setup to a Single Rate Smart Pricing model with a minimum bid of $4.00 for all products. In theory, retailers should never pay $4.00 per click but will see CPCs fluctuate with demand. In practice we see average CPCs on Connexity that are among the highest of any CSE, even when the entire feed is bid at the minimum $4.

This often forces us to remove significant numbers of products from the campaign that cannot perform efficiently with such expensive clicks. Having to remove products from the feed entirely is detrimental for all parties involved. On the advertiser’s side it means fewer opportunities to capture demand on queries that are relevant to their product offering. The engines themselves are missing out on revenue when advertisers can’t afford to keep 100% of their products active in each feed. Lastly, consumers on the CSEs and their partner sites end up with fewer products and/or stores to choose from for any given query.

Conclusion

In 2015, we would like to see all engines migrate to bidding models like those established by Pricegrabber, eBay Commerce Network, Google Shopping, and Bing Product Ads. The benefit of empowering retailers to bid all products smartly far outweighs the cost of forfeiting a guaranteed minimum cost-per-click. Allowing bids below the rate card adds no additional work for more hands-off account managers, but can have a major impact for those able and eager to apply greater sophistication to their CSE bid management.