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Managing search ads online is a tricky business. And when it comes time for the holidays, one that can make or break quarterly earnings for etailers. In the case of greeting card maker Tiny Prints, the company decided to pull back on search ads after Thanskgiving, and lost out on business.
According to The New York Times, after brisk sales on Cyber Monday, the company hoped that customers would keep coming after it pulled back on search ads a bit. But they didn't:
“We knew we had made a bad decision,” Mr. Han said. Tiny Prints reversed course, but it took the company, which is privately held, more than a day to recover — a critical amount of time during the heavy shopping season."
The article is interesting because it highlights how difficult search advertising remains, even when deployed by individuals who know the business inside and out. Tiny Prints, for instance, is run by former eBay and Walmart.com veterans.
But in a business that depends on whatever move competitors decide to make at a given moment, search strategy ends up being a real-time business. The online greeting card business depends greatly on search to make its revenue targets and Tiny Prints monitors click through traffic hourly.
During Cyber Monday, the company received twice as many orders as it did a year ago, but they were also on track to overspend on search, meaning that they'd be overspending to get those customers to purchase.
From The Times:
"Early in the holiday season, for example, most people are window-shopping, so few clicks turn into sales. Tiny Prints is forced to pay more than $50 to acquire each customer, leaving little room for profits on an average order. Relying on spreadsheets of buying patterns from previous years, Tiny Prints search marketers make the case to Mr. Han that their cost of acquiring a customer is on track."
Later in the season, Tiny Prints can pay around $35 to win a new customer, but at the same time, competitors may be avidly buying up search terms, making it more expensive to get on Google's first page of search results.
Meanwhile, Tiny Prints spends 90% of its search budget on Google. But all was not lost for the company in the week after Thanksgiving. Tiny Prints' Google search ads drove more than 20% of revenue this season. And Ed Han, the company's CEO gives The Times a good lesson into search marketing:
“Of the eight most important days of the year, we got seven exactly right. On one of the days, by our standards, we fell on our face.”