Price Points by Omnia Retail
15.08.2023
Sustainability in 2023: What brands and retailers can learn
There is something to be said about a brand or retailer and their respective leaders wanting to improve their impact on the planet. As we’ve known and seen for the last five decades, it would be easy and mostly...
There is something to be said about a brand or retailer and their respective leaders wanting to improve their impact on the planet. As we’ve known and seen for the last five decades, it would be easy and mostly inconspicuous for a brand to simply continue the production, manufacturing and distribution tactics that are harmful to the environment. Up until recently, choosing sustainable operations within a business has been viewed as optional or as lacking demand from consumers. Today, that is no longer in question. Brands and retailers that prioritise sustainability experience growth and loyalty from consumers, especially those in e-commerce. Online shopping produces up to 4x less carbon dioxide emissions than traditional store shopping, according to Dr Helen Buldeo Rai, a researcher at the Université Gustave Eiffel in Paris. As we discuss the growth potential of brands with products that make environmental, social and governance (ESG) claims, we take a look at which economic powers are leading the charge against environmental damage and what technologies brands and retailers can start looking into to lower their carbon footprint. In addition, we also ask, are consumers translating their eco-conscious sentiments into credible spending behaviour? Let’s jump into one of retail’s largest shadows: Sustainability. The EU is mobilising against fast fashion in 2023 The world’s largest fast fashion giants like H&M, Zara and Shein have been dealt a striking punch to the profit gut in June, as the EU parliament voted to tackle excessive production and consumption practices within the clothing industry, affecting how these brands have been operating for decades. Low production costs, high carbon footprints, questionable working conditions and greenwashing scandals have become part of the fabric of the fast fashion industry while revenue soars and environmental and social responsibility goals go unmet. European governments voted to create stricter rules and recommendations, including targets that are legally binding and quantifiable, as well as a total ban on the destruction of unsold textiles, which are often burnt. Due to the low-quality nature of fast fashion clothing, consumers in the EU are throwing away 5.8 million tonnes of textiles every year. On average, these clothes are only worn 7-8 times before being added to landfills. Source: Statista (Study conducted in 2020, released in 2023) According to the EU Parliament, the environmental representatives of the member states “request to ensure that production processes become less energy- and water-intensive, avoid the use and release of harmful substances, and reduce material and consumption footprints”. These recommendations will support new regulations presented by the EU Commission in 2022. This comes after a similar crackdown in March which targeted greenwashing and will focus on increasing surveillance of and penalties on brands that inflate or outright lie about their sustainability efforts. According to the EU Commission, this new legal threshold will save up to seven million tonnes of CO₂ emissions over 15 years. How are other economic powerhouses leaning into sustainability efforts within retail and e-commerce? American lawmakers have also been busy drawing up legislation to take on environmental, social and governance (ESG) efforts within retail and e-commerce. In 2022, the FABRIC Act (Fashioning Accountability and Building Real Institutional Change Act) was drafted and, among the new rules and regulations that brands and retailers would have to abide by, one of the incentivisations is a 30% tax reduction to return garment-making back to US soil to reduce excessive air travel and international shipping. Furthermore, The Fashion Sustainability and Accountability Act will require large fashion brands, including luxury ones like Prada and Armani, to declare their environmental and social practices and impact. This includes being transparent about their carbon emissions, supply chain systems, and their treatment of employees. This moves the onus onto the companies to be responsible for their impact on the planet, instead of the consumer. Speaking of consumers, how are US shoppers reacting to and engaging in eco-friendly behaviour? A study by GWI surveying approximately 21,000 Americans found that 39% of people want brands to be socially responsible and a further 37% want brands to reduce their environmental impact. In addition, 35% said a dismal environmental track record and false sustainability claims would deter consumers from shopping from a brand. Moreover, and since the US and Russia are the top two countries for greenhouse gas emissions per person per year, it is pleasing to see that consumers are making more eco-friendly decisions regarding their purchases: Drones and electric cars are the last mile’s biggest hope for a greener delivery system One of the worst contributors to carbon emissions within the e-commerce spiderweb is delivery to the consumer, whether that’s groceries, clothing or takeout. Often referred to as the “last mile” - similar to the last stretch of a long race - it is expensive, time-consuming and, more often than not, harmful to the environment. Brands and retailers have had to keep up with consumer demands which have swiftly moved from two-day delivery to 60-minute delivery, especially within the food category. This has, however, affected efforts to curb carbon emissions. How do e-commerce leaders balance the need for meeting consumer demands and the increasing pressure to improve their environmental and social impact? It may feel like a scene out of Blade Runner 2049, but home delivery via drones is becoming more and more popular. In 2021, approximately half a million drone deliveries were taking place worldwide, which increased to 1.5 million in 2022. In addition, the drone delivery package market is estimated to be valued at $555 million by 2030, with a growth rate of 49% between 2022 - 2030. “Drones could become an important part of the delivery supply chain. Companies will be much more likely to reach their emissions goals if they do not have to deliver a one-pound burrito with a two-ton vehicle,” says Rob Riedel, a partner at McKinsey. Source: McKinsey Drone Delivery Tracker and Forecast In Europe, drone technology for delivery is being developed by Airbus in the Netherlands and DHL in Germany. US companies like Boeing, FedEx and Alphabet (Google’s parent company) are also leading the way. Despite the excitement around the possibility of replacing traditional vans with drones, the industry will have to calculate how to make each individual drone delivery more cost-effective. Currently, one delivery of a small package within 8 km by a normal van emits 6.4 kg of carbon dioxide and costs €11, including labour and energy. With a drone, under the same conditions, a delivery emits 1 kg of CO₂ but costs €12.60. Labour takes up the majority of this cost as the current format is that only one drone delivery can be operated by one person versus hundreds of packages being delivered by a driver in a van. Currently, electric cars pose the greatest chance of the last mile drastically lowering their carbon emissions, as one driver can deliver multiple packages, keeping labour and energy costs low. Delivery by an electric car including five packages travelling within 8 km emits 0.14 kg of CO₂ and costs €1.50. Brands and retailers within e-commerce committed to tackling their environmental footprint should start strategising a future where drones and/or electric cars are a part of their delivery strategy. At the current growth rate (49% between 2022 - 2030), drone deliveries, amongst other eco-friendly delivery methods, could become integral to e-commerce’s supply chain methods over the next few decades. Are consumers acting on their statements about eco-conscious spending? In May 2023, McKinsey and NielsenIQ released one of their most extensive studies that analysed five years’ worth of direct-to-consumer sales data in the US, covering 600,000 unique products across 44,000 brands within 32 CPG (consumer packaged goods) categories including food, drinks, personal care and household items. Considering that consumer spending contributes two-thirds to the US GDP, analysing how sustainability-related claims on product packaging affect spending and consumer behaviour for the near and distant future is paramount to whether e-commerce and retail leaders may or may not invest more in sustainability. The study, which examined the performance of products that made ESG claims in competition with products that did not, found that US shoppers are overwhelmingly making the shift to more sustainable purchasing decisions: Products with ESG claims accounted for 56% of the total sales growth during the five-year period of the study (2017 - mid-2022). In particular, products with ESG claims experienced a 28% increase in cumulative growth versus 20% for products with no sustainability or social responsibility claims. Visualising, with this raw data, how US shoppers are translating sentiment into sales shows that consumers are actioning their beliefs around sustainable shopping practices. Within CPG categories, however, sales growth among products with sustainability-related statements is not even. For example, more consumers are spending on hair care products with ESG claims than on baby formula products with similar claims. This may be because new parents are wary of environmental claims such as “plant-based” or “vegan” and may opt to trust products that are more traditional. Hair care products account for approximately 45% of the retail sales among products with ESG statements, while baby formula only contributes roughly 5%. Nevertheless, critics may say that it is only the most prominent and wealthiest brands that can afford to implement environmental and social changes to their products and packaging, but the data proves different: In 59% of the categories, the smallest brands with sustainability claims had more growth than brands who did not. It was similar for large brands, where 50% of the categories saw products with ESG-related claims experience more growth than those without. If this data is anything to go by, it suggests that the retail and e-commerce sectors can begin to shift their thinking on sustainability: It is no longer a half-ignored checkbox on a list that curtsies to the planet in a moral dilemma, but a profitable, strategic and centred part that is integral to a brand’s ethos and practices. The time is now for brands and retailers to get on board A global survey conducted by McKinsey across 90 countries asked employees in several industries, including retail and e-commerce, how the company they work for is addressing ESG issues. Regarding the reasons why ESG is being tackled, 51% of respondents who work in retail and CPG said that it is because the company sees it “as a growth opportunity”, while 40% said it is to meet consumer expectations. Both of these reasons give hope to the notion that mindsets around sustainability are changing for the better, whether it is to seek growth or to retain eco-conscious customers. In 2023 and beyond, brands and retailers may continue to feel the effects of Covid-retailed supply chain issues, inflation, and energy disruptions. In addition to this, they will have to keep up with consumer demands and spending habits regarding their environmental and social responsibility stance. As the data has shown, more and more consumers are consistently choosing products with ESG-related claims, resulting in larger growth in comparison to brands that have no sustainability claims. Whether a brand or retailer offers one or hundreds of categories of products, the effort to improve its environmental impact must be genuine, consistent, tracked and quantifiable.
22.06.2023
How do brands become and stay relevant?
Are there any brands you used to love as a kid that are no longer around? What about brands that have lasted from before your childhood until the present day? Looking at the differences between these long-established...
Are there any brands you used to love as a kid that are no longer around? What about brands that have lasted from before your childhood until the present day? Looking at the differences between these long-established brands and the ones that didn’t last can offer valuable insight for today’s brands: How do you become and stay relevant long into the future? What is the difference between Nokia or Blackberry, who were extremely popular in the early 2000s in the mobile telecommunications category but couldn’t evolve to keep up with the market, and Apple or Samsung, who are the current market leaders to this day? In this article, Omnia identifies some key lessons to be learned from established brands that have stayed relevant over time, as well as highlighting some real-world success stories. Lessons from established brands that have managed to stay relevant 1) Be intentional about your pricing and discount strategy Different brands will approach pricing in different ways, as they should – each one is different. Think of a luxury brand selling high-end clothing: Customers go to this brand with high expectations of quality and status. They also know in advance that they will pay a high price for those goods, and likely don’t expect many discounts. With a low-cost brand that targets more price-sensitive consumers, however, price is the main decision factor, and discounts may be expected more often. Both of these strategies are valid; what the most long-lasting brands have in common is that they are intentional about their pricing and discount strategy. Brands have to consider questions such as: If you offer discounts, how will discounting impact our brand image? Will our customers see us as a discount brand? How will this impact our margins? Is it a viable long-term strategy? What else can we do to ensure our perceived value isn’t tarnished, for example, better service or impressive packaging? If you don’t offer discounts, how can we promote our products without discounting? Should we offer loyalty programmes or find another way to capture data? Should we offer special services to differentiate from other brands? There’s no right answer, although it’s worth mentioning that many brands who choose not to discount can stay relevant and offer value to customers through other promotions like BOGO, free shipping, money-back guarantees, bundling and more. Let’s look at two examples of long-lasting, established brands that have managed to hold onto their reputations in the market – even with different discount strategies. Dyson A household appliances company founded in the UK in 1991, Dyson started by making vacuum cleaners and has grown its product assortment to include hair dryers, air purifiers, bladeless fans and more. The company and its founder, Sir James Dyson, are known for their technological innovation of everyday household products. Dyson heavily leverages brand loyalty and the company’s reputation for high-quality products, which enables them to charge higher prices. While the company does offer D2C discounts on its website, the customer base is willing to pay the premium price point upfront because they know the product will last. Dyson vacuum cleaners, for example, can cost over $700, making it the most expensive vacuum on the market. Ortlieb On the other side, German bike wear brand Ortlieb is well-known in the market for never giving discounts. Because this is an intentional strategy, the company has used it to maintain a strong brand image, along with other benefits like a five-year guarantee, waterproof products and German manufacturing. 2) Remember the product life cycle Successful brands have a deep understanding of their own product assortment and where each offering is in its product life cycle, or PLC. When brands strategically align pricing with each stage of the PLC, they avoid endangering revenue from retail partners and instead price alongside the market. A brand’s pricing strategy over the course of the PLC may look like this: Different groups of products can then be priced according to their stage in the cycle. For example, the maximum discounts set by the brand will likely rise over time and be highest during the decline stage, as the brand sells off product to make room for new assortments. The PLC can also guide distribution strategy. Many brands may want to sell older products through retailers and keep the newest collections on their own D2C channels, enabling the brand to focus on those new product lines. 3) Be careful about competition with your retailer network Many successful brands use a combination of D2C sales and retail partnerships, whether they started with traditional retail strategies and added D2C or vice versa. This is an effective strategy to diversify sales and reach new customers, but it’s important to mitigate the risk of competing with your retail network. There are a number of factors to consider here. One way to avoid competition is by differentiating product assortments between D2C channels and retail. Research from McKinsey shows that brands who get their product assortment right achieve higher sales, better margins, more loyal customers and leaner operations. One example of this is speaker company Sonos, which launched a retail partnership with IKEA in 2019. Sonos developed a line of connected speakers just for IKEA that blended into the home environment: One as a lamp and one as a small bookshelf. The product line is only offered at IKEA, and while it maintains some core benefits of Sonos – high-quality sound and the ability to control through an app – it is differentiated from core D2C offerings, lessening the risk of competition. Sonos VP of brand and marketing Pete Pedersen said this about the partnership: “The best partnerships are always those rooted in respect, admiration and complementary skill sets. IKEA has been a terrific partner and we couldn’t be happier with the collaboration. Together we’ve pushed boundaries on form factors, materials, packaging and go to market strategies. IKEA’s massive global presence has also helped bring Sonos into many new territories where we might not have otherwise been.” It’s also crucial to be cautious and avoid competing on price. Successful brands don’t undercut their own distributors and resellers. For example, if a brand drops a price on any of its products in D2C channels, its retailers will probably follow. Instead, brands that stay relevant aim to keep a good balance; staying up to date and matching prices in the market, but also avoiding sending prices “to the moon”. Dynamic pricing software is key to automatically adjust pricing across channels based on predefined pricing strategies and rules. 4) Build a brand image that reaches different generations To stay relevant as a brand, companies have to build a brand image that resonates and lasts. This means not only building up a culture and community around the brand through marketing, but also ensuring that the younger generations, who will become top spenders soon, continue to find the brand interesting. If a brand relies on the first generation of buyers it has, even if it was highly successful with those buyers, then eventually its customer base will age out and there will be no one left to replace those sales. What kinds of marketing tactics can build up a relevant brand identity that reaches younger generations? Let’s look at Gen Z specifically as an example. This set of buyers expects brands first and foremost to act and market based on their values. Nearly half of Gen Zers say that a brand “appearing trustworthy and transparent” motivates whether they engage or not. Language, acronyms and jokes that are relatable in the present moment are also important, although pushing too hard on this can feel inauthentic or even cringe-worthy. Other marketing tactics that work for Gen Z: Influencer marketing, funny or entertaining campaigns and TikTok videos. Fenty Beauty, Rihanna’s beauty brand, is a great example of building a consistent brand image that grows with its customers and reaches younger generations. Fenty ran a campaign to find a model for a 2023 campaign and asked customers to submit their own content using the hashtag #TheNextFentyFace. This turned every customer who posted into a micro-influencer, while also building up Fenty’s own image as a brand for everybody. 5) Use the right technology Of course, to remain relevant, brands must keep up with current technology and evolve the customer experience over time. Some older brands have a hard time adapting to changing times and technologies, but those are typically the ones that don’t last. Established, relevant brands use technology to build best-in-class online and omnichannel experiences: Personalisation: Utilise technology to gather customer data and preferences, enabling personalised shopping experiences. Implement recommendation engines that suggest relevant products based on customer behaviour, purchase history and demographic information. Mobile optimisation: With the increasing use of mobile devices for online shopping, it's crucial for e-commerce brands to have a mobile-friendly website and dedicated mobile apps. Optimise the user experience for mobile devices to ensure seamless navigation, quick loading times, and easy checkout. Artificial Intelligence (AI): This is especially top of mind in 2023 with the rise of ChatGTP and other large language models. Brands can leverage AI to automate and enhance various aspects of the e-commerce business. Use chatbots or virtual assistants to provide instant customer support, automate customer service inquiries and offer personalised recommendations. AI can also be used for inventory management, demand forecasting and dynamic pricing. Social Commerce: Leverage social media platforms to drive sales and engage with customers. Use technology to enable social shopping features, such as "buy" buttons or in-app checkout options, allowing customers to make purchases directly from social media platforms. Data Analytics: Brands that stay relevant capitalise on all customer data available to them, gaining insights into shopping patterns, preferences and trends. Use advanced analytics tools to optimise marketing campaigns, personalise offers and identify new opportunities for growth. It’s crucial to stay updated on the latest technological advancements, industry trends and available tools. Any brand not paying attention to these may find itself quickly irrelevant. Maintaining customer trust = maintaining relevance as a brand At its core, brand relevance is about winning and maintaining the trust and loyalty of customers over time. To do this, a company must build up its brand reputation and network of retail partners, intentionally choose its pricing and assortment strategies, utilise the right technology and continue to offer clear value to the customer. Do all of this while staying true to your mission, values and who you are as a brand, and you might just be the established brand we’re all using as a success story 10 years from now.
24.05.2022
Pricing as the new commander for financial growth
Figuring out a price for your product or service is not dissimilar to walking on a tightrope. On the one hand, you could purposefully overprice your product to increase profits and place your product as high-end,...
Figuring out a price for your product or service is not dissimilar to walking on a tightrope. On the one hand, you could purposefully overprice your product to increase profits and place your product as high-end, however, you may be placing the price too high, which would alienate you from the market. On the other hand, you could lower your price to make more sales, but this may result in slow profit growth and a cheaper reputation in the market. As said above, it’s a complex and technical tightrope that can sometimes result in many wasted hours spent on pricing updates and ultimately failed products and businesses. Out of all the P’s that make up the skeleton of a successful brand or retailer (product, place, promotion and price), pricing has become more and more vital to that success. Before the internet and e-commerce radically changed the way people shop, retailers could comfortably rely on this formula for financial growth. However, as e-commerce takes over physical stores and traditional shopping methods and habits, it is the pricing element of the four P’s that is showing brands the way to increased profits and scalable growth. Omnia looks at pricing as the new commander of the 4 P’s and why a particular pricing strategy - Dynamic Pricing - should be the top choice for brands and retailers. Price: The new leader of the 4 P’s Small but significant price changes have shown to be the most useful in achieving financial growth. According to a study conducted by McKinsey & Company, pricing improvements can significantly impact margins in a positive way, ranging from 2.5% to 9%, depending on the type of product and company. For omnichannel retailers, the boost was 3%. The study also found that it was pricing improvements over a reduction in fixed or variable costs that resulted in larger margin profits. This data can give brands and retailers hope that the fears or obstacles associated with price improvements, such as the risk of a competitor’s response or the risk of customers choosing not to buy, can be overcome. Despite this, many brands and retailers are still not prepared in making pricing improvements a central factor for margin boosts in the future. Going forward, only 6% of the study said that they were “very prepared” to capture the pricing opportunity and 55% said they were “somewhat prepared”. So, if brands and retailers are struggling to focus this vital element, what can they do to prioritise pricing while simultaneously learning, growing and profiting? Dynamic pricing as a solution For the average brand or retailer, both off and online, it is difficult to teach or learn dynamic pricing without a professional SaaS (software as a service) company doing the teaching and implementing. Unlike marketing, management or sales, it isn’t exactly a subject learnt at school or at any tertiary institution and there is very little reading material on it. This may explain why retailers have largely been so slow in prioritising pricing as a solution to boost profits. Dynamic pricing, as opposed to other pricing strategies, uses multiple prices for a product at various times, which are all dependent on market trends, supply and demand, a competitor’s prices, customer behaviour and internal company costs and even seasonal or weather changes. These numerous price changes are not chosen at random - in fact, it’s quite the opposite. Direct data scraping from competitors paired with third-party data from customers makes up an advanced and information-packed strategy to automate price changes, prioritise time within the business, and increase profits. How our pricing software is executed at Omnia Retail Although Omnia’s pricing software is at the helm of our unique enterprise offering, it is also our customer success division that comes part-in-parcel that sets us apart from other providers. Implementing our dynamic pricing software isn’t a rushed job that ends with our technical team leaving you, never to be seen again. In fact, we spend approximately 68 hours spread over 8-12 weeks teaching and applying our software, sharing knowledge with your team members and getting all the necessary parts of the machine well-oiled. Our customer success approach is divided into two parts: Preparation and action. “Preparation”, which amounts to approximately 20% of the process, involves the Omnia team and the client coming to share knowledge and vital information. This includes reading shared content from Omnia including the onboarding playbook and process deck; a technical setup guide; providing us with the needed information such as product lists; and any info that came from competitor direct scraping. “Action” takes up 80% of the process and involves a more hands-on approach in getting the ball rolling. It involves processes such as defining the various roles within the project and involving all members from the technical to the creative. Other processes include portal setup, data mapping, goal planning, implementing pricing strategies, education on the software and raw data, technical management, reporting and more. Thereafter, the client goes live and their relationship with Omnia continues as they may need it. Case study: Automating and optimizing pricing for Plein.nl Plein, a Dutch online marketplace for a range of toiletries, beauty, baby, and pet products, sells their stock via their own website and on other marketplaces such as Bol.com and Amazon. The Plein team needed a pricing solution to automate and optimize their prices on their website as well as on the products being sold on marketplaces, all of which have different rules and regulations. Multiple pricing strategies were needed for both their website and third-party sites that needed to run efficiently and parallel to one another. Plein’s goal is to become the number one online marketplace for personal care, and more so, their aim is to be viewed as the least expensive option in the Netherlands. With all this in mind, Omnia took on the exciting challenge ahead. Today, Plein uses Omnia’s products to receive market insights, automate its pricing strategies and to automatically calculate change prices across the market. Using both Dynamic Pricing and Price Watch, Plein was able to receive pricing data from their competitors to better inform themselves, and all pricing across multiple platforms became automated, meaning hours spent doing manual updates was spent elsewhere. We also provided insights into the tradeoff between Plein’s margins and sales. The leaders of retail pricing solutions across Europe Price optimization has a large impact on whether profits grow or not and whether retailers can thrive. For customers, it is also vital that they receive a competitive price for a product and are not swindled. The best way to balance oneself on this slim beam is to employ the smarts of dynamic pricing.
07.08.2020
Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed)
Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. But how do you access the full power of pricing? The key is to...
Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. But how do you access the full power of pricing? The key is to understand the psychology that goes into a pricing strategy, and this article is a perfect place to start. To continue our series of articles about different pricing strategies, in this article we’ll discuss what psychological pricing is, how it works, and what you need to build a great psychological pricing strategy. What is psychological pricing? Psychological pricing is the practice of using the power of psychology to push consumers to spend. It’s a joint effort of pricing, marketing, and sales to build an attractive offer that captures consumer attention and makes a product so desirable the shopper can’t wait another day to buy it. Psychological pricing techniques are nothing new, and clever vendors have used these strategies throughout history to influence consumer behavior for quite some time. Before price tags, store clerks had to learn the art of haggling to create deals that were mutually beneficial for customers and the store, and since price tags emerged, marketers have leveraged the power of price to achieve the same results. However, just because psychological pricing strategies are ubiquitous doesn’t mean they are unimportant. In fact, they’re so important and foundational to pricing, marketing, and sales that you should have a deep understanding of how these strategies work. Why does psychological pricing work? To understand why psychological pricing works, we need a quick lesson in marketing and pricing psychology. Take a look at Maslow’s hierarchy of needs, which is a theory of how humans prioritize different things in their lives. At the bottom of the pyramid are physiological needs — you know, the things we as humans truly need for continued survival. These include food, water, shelter, rest, oxygen...et cetera. Above the physiological needs are safety needs. In other words, once you have the basics of survival covered, humans become more concerned about their general safety and security. After worrying about safety and security, the theory states that humans care about belonging and community. We want to build friendships, experience love, and the “gezelligheid” that comes from being around other people. After community, people begin caring more about themselves and their aspirations. The next tier above belonging is “Esteem” and the very last tier (the one at the tip of the pyramid) is “Self-Actualization.” Chances are you know all of this already, especially if you work in e-commerce marketing. Maslow’s hierarchy is a foundational element of modern marketing theory...so why am I bringing it up? When you, your pricing team, sales team, and marketing teams want to create a psychological pricing strategy, you should refer back to Maslow’s hierarchy to serve as guidance for the strategy. As you’ll see shortly, this framework gives you the freedom to be creative in your strategy, while also making sure it is effective. Related: Price: The Most Important P in the Marketing Mix So the answer to why psychological pricing works is because these strategies are based on a deep understanding of what drives people, not just customers. To even get started, marketing teams, pricing teams, and sales teams need to have a deep understanding of what drives people, not just customers. Related: How Will the Coronavirus Affect Retail? Examples of psychological pricing strategies Psychological pricing strategies are everywhere, and are employed by some of the top global companies like Amazon, Hershey, Motorola, Apple, and Costco. In this section we’ll highlight a few examples of psychological pricing tactics, many of which we’ve already written about extensively on Omnia’s site. 1. Value based pricing Value based pricing is a “basic” pricing strategy, but it’s one of the hardest to pull together because it requires an excellent understanding of the market and a lot of self-reflection. In a value based pricing strategy, you use your price as a way to control consumer understanding of your product. Do you want to be seen as a luxury brand? Then you probably should have a luxury price. Do you want to come off as the best value-for-money option on the market? Well, your price should reflect that. Value based pricing requires a lot of research into your target market, competitive landscape, and business goals. That means a lot of cooperation across departments, but that cooperation is a great way to build a more cohesive strategy. Learn more about value based pricing in this article: What is a Value Based Pricing Strategy? 2. Odd even pricing Odd even pricing is a psychological pricing tactic that uses the power of number psychology to drive consumers to action. The odds and the evens refer to the numbers in a price: “odd” retail prices feature mostly odd numbers (like €7.99), whereas “even” prices feature mostly even numbers (like €8.00). Most often we see prices that end in odd numbers, but even prices have their own power. Odd even pricing can be used strategically in several different ways, whether it’s to offer strategic discounts or just create a price that is memorable. Below is an example of how Uniqlo does exactly that — the company is discounting a shirt that originally cost €24.90 (a mostly “even” price) down to €7.90 (a more “odd” price). We wrote an entire 1,000-word article that goes deeper into odd even pricing so we won’t go into too much detail, but check out: How Odd Even Pricing Helps You Utilize the Power of Psychology. 3. Charm pricing Charm pricing is very similar to odd-even pricing. In a charm pricing strategy, companies use prices as a way to elicit an emotional response in consumers and drive them to action. Some of the most notable examples of charm pricing can be seen in late-night infomercials. These pricing strategies are notable for their specificity, exceptional bundling strategies, and, often, their delivery. Learn more about charm pricing in our article: What is Charm Pricing? Psychological pricing is everywhere If you pay attention, you’ll see examples of psychological pricing in marketing everywhere. Once you start looking, these examples are impossible to ignore. Browse through sports stores, look at real estate listings, even check the barcode on the books on your shelf. Even alcohol companies and gas stations employ charm pricing or odd even pricing to pull in more customers. Psychological pricing advantages and disadvantages Psychological pricing strategies are extremely advantageous, but are also hard to set up. Here are a few of the pros and cons for these techniques. Advantages of psychological pricing Get a better understanding of the playing field: When you aim to use a psychological pricing strategy, you need to do a lot of research into who your competitors are, what strategies they are using, and what your target audience thinks of those pricing strategies. This research gives you tons of insights that you can use across the organization. More organizational alignment: A psychological pricing strategy should never be carried out by an isolated pricing team. Instead, these strategies require serious cross-department commitments and communications. More strategic: With a psychological pricing strategy, you can actually be proactive in your strategy. Rather than just trying to maximize profits or break even, you can consider things like public perception of your products, competitor comparisons, and more. Disadvantages of psychological pricing Complex: Psychological pricing strategies are complex. They require a lot of cross-organizational cooperation and insights. This makes them hard to set up and stick to. Time consuming: Because psychological pricing strategies require in-depth research, they can be time consuming to set up. If you invest in software (like Pricewatch or Dynamic Pricing) the job becomes easier, but it still takes a lot of energy. Final thoughts The term “psychological pricing” can cover any number of pricing strategies, several of which we’ve covered in this article. But there are no limits — in all honesty, any pricing strategy that uses consumer ideas about product value is inherently psychological, so feel free to be creative. What is most important though is internal alignment. Psychological pricing strategies work best when they align with marketing and sales to ensure a cohesive experience for the user across your webshop.
30.06.2020
How Odd Even Pricing Helps You Utilize the Power of Psychology
As a continuation of our series on different pricing strategies and pricing methods, in this post we'll take a deeper look at Odd Even pricing. This pricing strategy looks at the psychological effect that numbers have...
As a continuation of our series on different pricing strategies and pricing methods, in this post we'll take a deeper look at Odd Even pricing. This pricing strategy looks at the psychological effect that numbers have on the human brain, then uses that power to shape price perception. Curious about the other strategies in this pricing series? Scroll to the bottom of the post to find links to other strategy-related posts. What is odd even pricing? Odd-even pricing refers to a pricing method that’s similar to charm pricing. It's a form of psychological pricing that uses underlying human motivations to drive consumers to action. It’s the strategy of odd-even pricing utilizes a psychological appeal of the numbers that are displayed in a price. What is odd pricing The “odd” in odd pricing refers to the odd number at the end of a price. Odd prices typically use endings like €0.99 or €0.95 to signal specificity. What is even pricing Even prices are the exact opposite: they end in an even number or zero. An example of an even price would be €20 or €1.50. Odd even pricing examples You don’t need to look far to find great examples of odd number pricing. But some of the best are found in late-night infomercials. The charm of these commercials is in their delivery of course, and the packaging and bundling is expert. But one of the (many) elements that make these commercials so effective is the use of odd pricing. The pricing scheme is presented along with strategic bundling and classic scarcity tactics to create an incredibly convincing reason to call now and order these products. Even pricing examples are nowhere near as prevalent as odd prices. And that notion is confirmed by some odd-even pricing statistics. When you look at odd even pricing statistics, it’s easy to see that even pricing has long been overshadowed by odd pricing. According to a 1997 study, the most common ending numbers for a price were 9 and 5. These two numbers accounted for a whopping 90% of the prices they analyzed. Just the 9-ending alone dominated 60% of the data set! It’s no wonder that even prices feel underutilized — they are rare to find! Related: How Will the Coronavirus Affect Retail? Psychological pricing advantages and disadvantages Does odd even pricing work? The answer is a resounding yes. The effects of odd even pricing more psychological than tangible. Even though there’s no real difference between €19.99 and €20.00, the two prices feel very different. However, psychological pricing does have its advantages and disadvantages. The biggest pro of odd even pricing is the amount of control it gives you over your brand and price perception. When you understand how different numbers “feel” to consumers, you’ll be able to build a better marketing mix (which includes pricing) that is strategic. You can use the power that these deeply-held feelings have to subtly influence the way people look at your products. However, this power behind psychological prices is also the biggest con for odd even pricing. The feelings that different numbers give consumers are deeply-rooted; it will be hard for any company to break these molds. If you don’t understand how an odd even pricing strategy works, you may accidentally harm your brand. How to build an odd even pricing strategy So we’ve covered the basics of odd even pricing and the pros and cons of each method, but how do you actually use odd and even prices to your advantage? Here are some starting ideas. Use even prices, but give odd discounts If you want your offer to feel like a discount, a great strategy is to present the product at an even price, then offer an odd-priced discount. An example of this may be discounting a €16 shirt down to €14.99. You can also mix this with a high runner strategy to optimize for the most popular products on the market. Related: Everything You Need to Know about the ROPO Effect Create memorable prices Consumers are used to prices that end in 9’s and 5’s, so much so that these prices have lost their “sticking” power. If you want your price to stand out, try advertising it at a less-frequently used odd price. For example, instead of pricing a lamp at €25.99, try selling it at €23.99. This number will leap off the page to shoppers and you’ll be able to capture their attention. Want to take it a step further? Try advertising at an even price that really stands out. When you make your price seem precise, consumers believe they are getting the most up-to-date price on the market. Luxury brands and odd even pricing If you’re a luxury retailer, you may want to consider using even prices rather than odd prices, especially on new items that gain a lot of attention and boost your brand perception. Since odd prices are so popular, consumers often equate these psychological numbers with sales. Because of this, many luxury retailers eschew odd prices and choose to go with more "whole" even prices. So, to conclude, what are the best numbers to use for pricing? When choosing between even ended pricing versus odd ended pricing, the answer is disappointingly simple: it depends on your commercial objective and goals. Odd-even pricing is considered to be a rather effective approach to pricing, but you will only reap the benefits of this strategy if you align it to your commercial ambitions. If you want to be seen as a luxury retailer, chances are you will want to use even prices. These rounded numbers give a sense of “wholeness” to the price. However, for most retailers an odd pricing strategy makes the most sense. Consumers are so used to odd numbers that even numbers may feel too expensive, depending on your category. In the end, do some research on your competitors to see what they do, then decide if their pricing aligns with your goals. Curious to learn about other pricing strategies or interested in our Amazon guide series? Check out some of our other articles below: What is Value Based Pricing?: A full overview of how price and consumer perception work together. What is Charm Pricing?: A short introduction to a fun pricing method. What is Penetration Pricing?: A guide on how to get noticed when first entering a new market. What is Bundle Pricing?: Learn more about the benefits of a bundle pricing strategy. What is Cost Plus Pricing?: In this article, we’ll cover cost-plus pricing and show you when it makes sense to use this strategy. What is Price Skimming?: Learn how price skimming can help you facilitate a higher return on early investments. What is Map Pricing?: Find out why MAP pricing is so important to many retailers. Here’s What You Need to Know About Psychological Pricing (Plus 3 Strategies to Help You Succeed): Modern day pricing is so much more than a numbers game. When thought about correctly, it’s a powerful way to build your brand and drive more profits. How to Build a Pricing Strategy: A complete guide on how to build a pricing strategy from Omnia partner Johan Maessen, owner of Commercieel Verbeteren. The Strategies Behind Amazon's Success: Learn how Amazon became 'the place' to buy products online. The Complete Guide To Selling on Amazon: In this guide we answer some of the top questions we hear about Amazon and give helpful hints on how to succeed on the platform. How Does Amazon's Search Algorithm Work: Find out how Amazon connects their shoppers with relevant products as quickly as possible. Price, The Most Important P in the Marketing Mix: In this article we'll look at the relevance of the 7 P’s in today’s online marketing context.
31.01.2019
3 Ways Retailers Can Prepare For Valentine's Day
It’s almost February, which means the first major retail holiday in many countries is just a few short weeks away. Valentine’s Day, which dates all the way back to Roman traditions, is a holiday devoted to love,...
It’s almost February, which means the first major retail holiday in many countries is just a few short weeks away. Valentine’s Day, which dates all the way back to Roman traditions, is a holiday devoted to love, experiences, and gifts. The holiday is changing rapidly though, and if you’re wondering how to change your retail business with it, you’re not alone. How can retailers prepare for Valentine’s Day 2019? This year, the key is to focus heavily on customer experiences — both in your store and offline. In this post, we’ll give you 3 practical tips on how you can prepare for the holiday. Consumer Valentine’s Day trends Many consumers are tired of the over-commercialization of Valentine’s Day. In a 2018 survey, 77% of UK consumers said they thought the holiday was too focused on consumerism. When paired with changing social structures, many consumers feel that the holiday is outdated in some ways. However, that won’t stop consumers from spending. The same survey found that even though consumers felt Valentine’s was an artificial holiday, UK spending for the holiday in 2018 was up 3.2 points compared to 2017. The same was true in the US, and this year alone the National Retail Federation expects Americans to spend over $20 billion on the holiday. 3 ways retailers can get ahead on Valentine’s Day These two opposing forces (changing consumer attitudes but overall increased spending) means there is a lot of opportunity in Valentine’s Day. There is a growing shift toward experiences and personalization in Valentine’s shopping, as well as an overall broadening of the market. So how can retailers get behind these trends? Here are our top 3 tips to get ready for Valentine’s. 1. Think omnichannel experiences As a retailer, this shift toward experiences should trigger “omnichannel” in your mind. Instead of simply selling to consumers, create an experience they can buy into — one that extends beyond their screen and into the real world. One way to create these experiences is to partner with other companies that complement your assortment. If you’re a jewelry retailer, for example, you could partner with a local restaurant to include a complimentary 3-course Valentine’s Day dinner with each purchase. Want to know more about building a better omnichannel strategy? Check out our recent blog to find out how to win at omnichannel retail. 2. Expand beyond romantic gifts It’s true that Valentine’s Day has traditionally been about romance, but this has shifted in recent years. A great example? A 2015 report found that over 21% of Americans planned to buy Valentine’s Day gifts for their pets. And while they were only planning to spend an average of $5 on their animal, that added up to over $700 million in additional sales. There is also the growing trend for women to buy “Galentine’s Day” gifts for friends, and many retailers have noticed an uptick in the number of self-care purchases that people make for themselves for the holiday. Consumers now see Valentine’s as a day to celebrate love of all types, which means you now have multiple audience primed to spend. Embrace this and adjust your marketing and advertising accordingly. The easiest way to manage this is with an intelligent marketing automation software that can follow the market, then adjust your bids on Google Shopping and other channels automatically as opportunities arise. 3. Know which products are popular To properly prepare for Valentine’s Day, you should plan your marketing ahead of time. This means knowing which products are going to be most popular is crucial. Historically, categories like jewelry, flowers, candy, and clothing have performed exceedingly well on the holiday, and these trends are expected to remain stable in 2019. If you haven’t started campaigns yet though, there’s no need to worry. Most people procrastinate on their Valentine’s shopping. As many as 32% of consumers purchase gifts the same week as the holiday, and the number of online searches for Valentine’s-related terms peaks on February 12th! While there is still time to prepare profitable strategies, the small shopping window means that the process of managing prices and marketing will take a heavy toll on your staff. Like on Black Friday, tracking and adjusting your prices manually in the few days before Valentine’s Day is a waste of time. Many teams devote huge amounts of energy to chasing competitor prices, adjusting your own prices, then updating your marketing to reflect this new pricing. When prices change multiple times a day, this becomes a full-time job for many people on your staff. You can use automation software to give your team hours of their time back: time which they can then focus on strategy. A pricing insights software like Pricewatch is the easiest way to get started, and it delivers an up-to-date report of your competition’s prices multiple times throughout the day. Your team then just needs to update the prices according your strategy. Automation can save even more time with dynamic pricing, which can automatically adjust the prices for you based on predetermined business rules. Your team just needs to monitor the changes — not enter them manually. Final thoughts Whether you want to experiment with a new omnichannel strategy, collaborate with local partners, market your new feline fashion line, or more, use Valentine’s Day as a chance to try something new. However, it’s important to think carefully about what the customer wants, then build tailored, personalized experiences to drive sales. However, none of these creative pursuits are possible if your team is wasting time manually tracking and adjusting your Valentine’s marketing and pricing. That’s why you need automation tools to liberate your team so they build the experiences that consumers are actively seeking. Interested in automation tools? Don’t wait. Get in touch today to set up a free demo of Pricewatch before Valentine’s Day, and see for yourself what’s possible when you aren’t chasing competitor prices. Click the button below to get started.
04.10.2018
5 Ways to Measure the ROPO Effect
In the retail market there is an increasing amount of attention around the so-called ROPO effect, or the Research Online Purchase Offline effect. This is not strange when you understand more than half of the offline...
In the retail market there is an increasing amount of attention around the so-called ROPO effect, or the Research Online Purchase Offline effect. This is not strange when you understand more than half of the offline sales are preceded by an online point of contact: according to Accenture, 88% of orientation processes leading to a physicial sale involve at least one online point of contact. An omnichannel retailer, therefore, needs to have good estimate of the ROPO effect in order to engage in effective bid management, and more. Learn how to measure the ROPO effect and how to take action in this infographic.
20.09.2018
Improve Your Buying, Supply Chain, and Marketing with Pricing Insights
As a retailer, the only way to reach your full potential is to apply data-driven pricing. Otherwise you’ll be paying too much for your products, holding too much stock and wasting money on marketing. Using three...
As a retailer, the only way to reach your full potential is to apply data-driven pricing. Otherwise you’ll be paying too much for your products, holding too much stock and wasting money on marketing. Using three examples we can illustrate how pricing software can give different departments the insights they need to take the right decisions.Many companies (particularly the bigger ones) have a silo mentality when it comes to pricing, procurement, supply chain and marketing. Although pricing is a crucial factor in optimising profit, departments rarely share pricing data and insights. 1. Buying: conduct data-driven negotiation with suppliers In many retail organisations the buyers negotiate with suppliers once or twice a year. Traditionally buyers have tried to obtain a small percentage discount on purchase prices for full ranges. Using pricing software creates room for improvement in two areas. In the absence of pricing insights, a buyer will attempt to obtain the highest possible discount percentage, but will be unable to explain why such a discount should be given. Pricing data can be used as a trump card: the buyer can base the proposed discount percentage or amount per product on the lowest price in the market. Rather than sitting down with suppliers once or twice a year, the procurement department can align the frequency of negotiations more closely with daily or weekly changes in market prices. Pricing software can provide the buyer with a daily or weekly report on all products whose minimum price in the market is below the zero-margin price. This report can then be used as the basis for data-driven negotiations with suppliers. 2. Supply chain: estimate sales more accurately In the absence of data, most retailers and their buyers don’t take the price position of a product into account when deciding how much of it they want to stock. With pricing software reports that provide insights into the price position of each product, your buyers will be able to make more accurate estimates of the number of products that will be sold. For instance, such a report may show that you’ll need to negotiate on a better purchase price before buying new stock. 3. Marketing: only advertise for competitive products It may seem strange, but at most major retailers there’s no communication between the marketing department and the pricing department. As a result consumers may see adverts in which your products are more expensive than your competitors’ products. This results in lower conversion rates and negative price perception. Pricing software allows you to take pricing data into account in offers on Google Shopping. For instance, you can exclude products for campaigns where the price is more than 20 percent higher than a competitor’s average price. Another smart option is the possibility to reduce the offer when the price position in Google Shopping is higher than number 5. Conclusion Unless you’ve got a monopoly, you need pricing insights to make effective procurement, supply chain and marketing decisions. In practice, however, retailers’ departments rarely (if ever) exchange sufficient pricing data. Pricing software fills in this gap. It means that departments are no longer dependent on each other for information – they always have all the relevant pricing data on hand. Omnia Retail helps retailers and brands automate and optimize their pricing. Pricewatch gives you a 360° view of the entire pricing landscape. Dynamic Pricing automates your pricing for individual products. Want to find out more? Ask for a demo and try Omnia for two weeks free of charge.
07.08.2018
Boost Sales by Incorporating Weather Changes into Your Pricing and Marketing Decisions
The effect of the weather on retail sales cannot be underestimated. The recent spell of hot weather in the UK and most of Europe has certainly had an impact on retail performance across various sectors. However, several...
The effect of the weather on retail sales cannot be underestimated. The recent spell of hot weather in the UK and most of Europe has certainly had an impact on retail performance across various sectors. However, several marketing departments still poorly utilize links between marketing decisions and the weather. Understanding these links would give them a framework to take the weather changes into account, and thus potentially increase sales and profits. Omnia's algorithm includes input from a weather API in calculating optimal price and CPC bids so can easily incorporate weather changes into their pricing and marketing decisions. This blog describes examples of how incorporating the weather forecast in your commercial strategy can boost both your sales, as well as your profits. Increase Google Shopping bids for weather-sensitive products For some product groups, there is a correlation between weather changes and sales probability. As the probability of conversion depends on the temperature, a retailer wants to take advantage by adjusting Google shopping bids dynamically, based on the weather. Manually, it isn’t possible to do this for your complete assortment. Therefore, Omnia offers you the possibility to incorporate this automatically into your bid calculation. Read more: The Ultimate Guide to Dynamic Pricing The example below shows that you can increase bids when the weather forecast shows that the temperature will exceed XX degrees. Based on experience, we all know that when the temperature increases, consumers will, for example, start searching for air conditioners and are more likely to buy (e.g. higher probability of conversion). As a retailer, you can take advantage of this by using a business rule that increases your Google Shopping bid for this product group. Another case in which weather data could be valuable is as winter approaches. When the temperature decreases, and chance of frost starts to increase, search volume for ice skates will increase. The weather API allows you to not only adjust your bids and prices based on temperature, but also on for example chance of frost or snow. Increase prices for weather-sensitive products Weather data could also help to boost profits when it is incorporated to a retailer’s pricing strategy. Several retailers did not anticipate the recent spell of hot weather and as a result they run out of their inventory of for example air conditioners. Whenever there’s limited supply available, a retailer may want to optimize profit by using a combination of weather data and their inventory. In this scenario, a business rule could be: If: ‘# Stock months = (inventory / # units sold last 28 days) < 2’ And: ‘Temperature in 2 days is greater than 25 degrees‘ And: ‘Product group is equal to air conditioners’ Then: Take XX% margin This business rule ensures you won’t price too competitive when it’s not needed and optimize profits when demand exceeds supply. Concluding Weather can affect the sales of certain products. Omnia makes it easy for every retailer to boost profits by automatically adjust prices and cpc bids for weather-sensitive products. Are you interested to learn more about what Omnia’s software could offer for your company? Request more information or a demo here or give us a call at +31 (0) 85 047 92 40.
31.07.2018
Negative Search Term Automation for Google Shopping with Omnia
A while back, we introduced the 5-level Google Shopping structure. This structure is perfectly adapted to the major differences in performance between generic and specific search terms, as Lupko clearly explained in his...
A while back, we introduced the 5-level Google Shopping structure. This structure is perfectly adapted to the major differences in performance between generic and specific search terms, as Lupko clearly explained in his blog post. This structure gets the most out of various search terms. It also takes just a few hours to setup, requires little maintenance and can be fully automated. Until now, negative search term lists could not be automated. Thanks to a smart combination of Google Adwords scripts, Omnia data and Google Sheets, this aspect can now be automated as well. In this blog post, we will deal with the way negative search term lists have been automated, and how it applies to the 5-level structure. Background To understand how the negative search terms can be automated, some background knowledge about the 5-level structure is needed - especially about the dynamic created between the five campaigns through an intelligent combination of the campaign priorities with the negative search word lists. Below is an overview of the 5-level structure and its various facets. If this information is new to you, it may be a good idea to read the blog post about the 5-level structure first. The 5-level structure is well-adapted to the difference in performance between the various types of search terms, and it requires very little maintenance. One needs to devote just a few hours to organise the structure, after which every aspect is fully automated. Ad groups: ad groups are created automatically based on the retailer’s category and brand structure (or the choice for another cross section), and can be paused or activated if the categories and/or brands in the selection change. Products: within the ad groups, the products are automatically added and paused/activated on an hourly basis, depending on the inventory. Bids: the CPC bids are calculated per product based on factors such as product margins, online product conversion rates, and the effect on shop sales (the ROPO effect). These bids are evaluated on an hourly basis, and adjusted if one of the parameters changes. Top X: the most popular products per category and/or brand are identified automatically based on historic sales data in Omnia, such as most profit or most page views in the past 4 weeks. These popular products are then added to the campaigns for generic terms (ex.: ‘LED televisions’), so that these generic terms automatically display the most popular products. The only aspect that has not been automated until now, were the negative search term lists. Maintaining these lists is very time-consuming, which makes it impossible to manually classify every search term. Now, thanks to a smart combination of Google Adwords scripts, Omnia data and Google Sheets, the negative search term lists have been automated as well. Maintaining the lists now requires much less time, and the various search terms are distributed better over the 5 campaigns, which further increases performance. Let us now elaborate on the structure in greater detail. The structure: automatic data analyses in Google Sheets, based on Adwords and Omnia data To identify the various types of search terms, a smart combination of Google Adwords scripts, Omnia data and Google Sheets is used. The results of the search term analyses are then automatically pushed to several negative search term lists in Adwords. These lists in Adwords have two functions: Negative search terms to split the traffic into different traffic types Negative search terms to (temporarily) exclude bad-performing search terms We will deal with both functions in greater detail below. Negative search terms to split search traffic into different traffic type In the 5-level structure, the search traffic is split into five different campaigns, which can be divided into two main groups: Specific terms: Product terms: all search terms related to a single specific product (ex.: ‘Samsung UE40KU6400’) This lets you know exactly which product should be displayed. Brand terms: all search terms containing a brand (ex.: ‘Samsung 40 inch LED television’). This lets you know that only products from that specific brand should be displayed. Other terms: all other unspecified terms (ex.: ‘40 inch LED television’). Generic terms: Category terms: All search terms for which an entire category may be relevant (ex.: ‘LED television’). Many products may be relevant for this term, but using the Top-X function, only the most popular products in the category will automatically be displayed. Category and Brand terms: All search terms in which the combination of category and brand may be relevant (ex.: ‘Samsung LED television’). Many products may be relevant for this term, but using the Top-X function, only the most popular products in the category and brand will automatically be displayed. The division into 5 levels can be generated automatically by maintaining only three different negative search term lists. The three types of lists that we use are: Brand terms Product terms Generic terms These lists are maintained automatically using three corresponding scripts, which are dealt with below. Brand term script The brand script is the easiest of the three. The ‘brand terms’ list should consist of a list of all brands that are added as ‘phrase’ negative. This can be achieved easily by constantly exporting all brands from Omnia and adding the new brands to the negative search term list. Adwords will then recognise whether a brand is included in each search term. For example, the brand Samsung can be added as the phrase ‘Samsung’, and all search terms that contain a brand will be recognised, regardless of the position of the brand in the search term: ex.: ‘Samsung 40 inch TV’ or ‘Black LED TV Samsung’. Product terms script The product terms structure is a bit more complicated. In this method, all search terms are exported to Google Sheets by means of an Adwords script. In Google Sheets, these search terms are then cut into pieces, and each piece is analysed separately. The script recognises the word type for each piece. This can be a text, brand or product number (MPN), an EAN, dimension, specification, or number. If the search term contains an MPN or a specific combination of words, then it is identified as a product term and automatically added to the ‘product terms’ list. Search term Text analysis Product term Samsung led television Brand + text + text No Samsung UE40KU6400 Brand + MPN Yes 40 inch LED television Spec + spec + text + text No Sonos sound system Brand + text No Sonos play 1 Brand + text + number Yes The types of words or word combinations can be adjusted per client. This makes it possible to adjust the product term recognition precisely to your branch. For car tyre sellers, for example, it is important to recognise whether the search term includes the tyre size. A tyre size always includes a certain standard alphanumeric combination. The product term definition could then be: Brand + number + tyre size. Search term Brand + text + tyre size + tyre size Yes Pirelli cinturato 215 55r17 Brand + text + text No Pirelli tyre 18 inch Brand + text + spec No Generic terms script In this method, the search terms are also copied to a Google Sheet by means of a script. There, the search terms are compared to the brand and category tree for the product on which they are displayed. If all of the words in the search term correspond to the words present in the brand and category tree, then it is identified as a category term. Search term Brand Category tree Generic term Samsung led television Samsung Audiovisual > Televisions > Led Yes Samsung UE40KU6400 Samsung Audiovisual > Televisions > Led No 40 inch LED television Samsung Audiovisual > Televisions > Led No Sonos sound system Sonos Audiovisual > Sound systems > speakers Yes Sonos play 1 Sonos Audiovisual > Sound systems > speakers No The three scripts above split the traffic into five campaigns, allowing for targeted bids corresponding to the type of traffic. With clearer differentiation between more specific terms, such as ‘Samsung UE40KU6400’, and more generic terms, such as ‘Samsung television’, the return on ad spend (ROAS) of the campaign will increase. As a result, higher bids will be profitable, and more traffic can be generated, resulting in more revenue. However, some search terms still will not perform well. You can (temporarily) exclude them from the 5-level structure. We will deal with this topic in the next section. Negative search terms to (temporarily) exclude bad-performing search terms Despite the neat division into five campaigns, some search terms still will not perform well, for example because of a very low click-through rate (CTR). Another scenario could be that visitors click on a product but do not complete a purchase. You want to exclude both situations. A low CTR is bad for your quality score in Google Shopping, and is a sign that your advertisement probably is not relevant for the specific search term. A low conversion rate will probably be unprofitable, as it requires too many clicks - and therefore higher costs - to result in a purchase. These terms can be excluded by using a bad-performing search term script, and they can eventually be reactivated using a ‘retry’ script. Bad-performing search terms Based on the ROAS and traffic targets, the retailer can determine which search terms should be excluded from the 5-level campaigns. The retailer is free to determine these criteria, and the limits can be set for example as follows: Displays > 200, and CTR is less than 1% Clicks > 100, and conversion is less than 1% Search terms that meet these limits will automatically be added to the ‘bad-performing’ negative search terms list, and excluded. Retry script Neither a low conversion rate nor a low CTR need necessarily be permanent. For example, a product may have temporarily been out-priced, with the result that the clicks and conversions for the related search term during that period went to the competitor. Once the product is priced competitively again, then the same search term may finally become profitable. It is therefore crucial that search terms which could potentially be interesting in the future are not permanently discarded. This ‘retry’ option is often overlooked, causing traffic to be gradually squeezed out and putting pressure on the revenue. With Target ROAS strategies, you frequently see that all of the traffic that does not meet the target is switched off, with the result that the revenue will also start to drop off as well over time. For the ‘retry’, Omnia uses a 6th campaign; the ‘bad-performing’ campaign. This campaign serves all of the search terms that are not profitable in the other campaigns. This is done for a low bid, so that the retailer can see if search terms can become profitable again with lower costs. If the terms then reach above a certain threshold, they are removed from the ‘bad-performing’ negative search term list and displayed for a full bid. First results We ran a pilot with the scripts at various customers and the results have been impressive. The scripts continuously analyse all the search terms and keep improving the traffic split based upon their performance. This makes the Google Shopping campaigns more effective and over the first 2 months both the daily revenue and ROAS have increased by respectively 66% and 39%. Conclusion The 5-level structure gets the most out of the various search terms, and with the automation of the negative search term lists, the last remaining aspect is now fully automated. This is a self-maintaining mechanism, in which the search terms and their performance are constantly evaluated. The scripts for the ‘brand terms’, ‘product terms’, and ‘generic terms’ ensure the proper division by traffic type. This makes it possible to make more targeted bids, which in turn makes it possible to realise higher ROAS and/or revenue targets. The scripts for bad-performing search terms improve the ROAS for the remaining search terms, which in turn allows for higher bids and increases the traffic for the terms even further. The Retry script prevents traffic from gradually decreasing by reactivating potentially interesting search terms. The entire structure is constantly balancing on the edge of profitability, which allows you to always get the most out of the search traffic.
22.06.2018
Half the Money you Spend on Google Shopping is Wasted; Omnia Shows you Which Half
John Wanamaker (1838-1922) - marketing pioneer - famously coined the phrase: “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” Surely, you must be thinking this phrase is...
John Wanamaker (1838-1922) - marketing pioneer - famously coined the phrase: “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” Surely, you must be thinking this phrase is outdated. Today’s marketers can track just about anything with cookie data, attribution models, and Google Analytics. With those vastly improved analytical capabilities, you would expect marketing budgets to be mostly spent where it makes a positive return. Not quite. Especially on Google Shopping, many of our new and prospective clients are not beating the 50% effectiveness hurdle. Not having insights and tools beyond AdWords has made Google Shopping management a gamble for them. With the ever-growing importance of Google Shopping as an acquisition channel, gaining control is vital in maximizing profitability. After several years of working at the intersection of pricing, marketing, and technology, we've learned a few things about how to maximize profitability on Google Shopping. In this post, we'll cover our top 3 tips that have doubled the effectiveness of Google Shopping for our customers. 1. Increase profit by looking beyond AdWords ROAS To make a profit, you need enough margin to carry the marketing cost. Let’s say you pay 50 cents per click. If you need 40 clicks to get a conversion (conversion rate of 2.5%), your marketing cost per sold product is €20 (€0.50*40). If your margin on this particular product is €15, you'll lose €5 for every sold product. When using AdWords to manage your shopping campaigns, you are probably trying to maintain profitability by using a ROAS (Return On Ad Spend) target. The goal here is to maximize sales as long as the ROAS is above or at the target. If the average margin percentage over all products is 20%, the ROAS needs to be at least 5 (100/20). You might even use Google’s Target ROAS or Goal Optimized. They both automate bids based on AdWords ROAS. This might seem desirable, but there is a catch. The problem with this approach is that you are treating all products as though they have the same margin. Take the example below. Both products are at the minimum ROAS of 5, and should thus be profitable. Accounting for the actual product margins, however, shows that Product A incurred a loss of €50. So, no matter how much you spend on these products, Product A will always result in a loss of profit. This doesn't necessarily have to be a bad thing. In fact, it could be a strategic move to incur a loss on Product A. But if Product A is a popular product at a competitive price (which is a likely case, considering the low margin), it could take over the majority of the marketing budget. This means more of your marketing budget would go to a product that loses money, and less could go to a product that is more profitable for your business. Of course, knowing the difference in margin between these products would prompt bid change by any marketer. However, doing this manually and daily for all products is not feasible. Having the right data - accurate, complete and real-time margins - for all products, and incorporating this in your bids automatically, therefore, presents an enormous improvement opportunity. 2. Move marketing spend to the most valuable search terms Let’s say you are a coffee machine dealer. Two people cross your shop. One is interested in ‘espresso machine’. You don’t know if he’s in a buying process or just looking for information. The other is interested in ‘Philips 3100 EP3550/00’. In this case, you know he is interested in buying the exact model you have in stock. Who is worth more to your shop? Naturally, you would put in more effort for ‘Philips 3100 EP3550/00’. With Google Shopping ads. But you are likely paying more for ‘espresso machine’. Without an ‘intent-segmented campaign structure’ (more on that later), you will have no way of knowing, nor will you be able to change it. With Google’s Text Ads, you bid specifically on keywords. With Google Shopping Ads you bid on products. You have no direct control over who sees the ads and to which consumers the marketing spend goes. This means that the majority of your budget could go to broad ‘espresso machine’ type traffic, while it is the undervalued specific ‘Philips 3100 EP3550/00’ traffic that actually brings in the conversions. More often than not, this is exactly the case. Take the example of an anonymized client’s old Google Shopping results below. The graphic above shows a breakdown of the client’s Google Shopping results by search term (what people who clicked the ad searched for), before using Omnia. The cost and revenue are shown by search term specificity (Type). More than 50% of the cost goes to Generic search terms. However, they only bring in 11% the revenue. With a meager ROAS of 1.8 (€5,600/€3,000), it looks like they are losing money in this area. On the other end, only 9% of the budget goes to Product terms, yet they make up 50% of the revenue. Here, an astounding ROAS of 44.93 is realized (€24,600/€550). Anyone can see it makes sense to spend more on Product terms and less on Generic terms. The problem, again, is that marketers do not have the required data/tools. First you need a system to automatically recognize and classify search terms, and second, you need a campaign structure to adjust your bids for each search term type. When both are in place, tremendous performance improvements are made. 3. Include the number 1 factor in online marketing: pricing It might sound incredible, but the current price of a product is not always used as an input for marketing decisions. It makes sense when you place yourself in the marketer’s shoes. As a marketer, one of your tasks is adjusting bids (max. CPC’s) for products on Google Shopping. You see the performance of Product X below, for the last 7 days. The solid conversion rate of 5.1% prompts you to increase its bid. The underlying assumption is that the conversion rate is constant. You expect the past average conversion rate to be indicative of its future performance. In fact, it is necessary in order to make decisions based on the data provided in Google AdWords Still, it can be very costly. When you factor in pricing insights you can see that a product’s conversion rate depends a lot on its pricing. Especially on its Price Position (1 = the cheapest price in the market, 2 = second cheapest, etc). Take a look at Product X’s performance by day this time, including its Price Position. Over the previous seven days, the product’s price position changed multiple times. It went from 3 to 6, to 1 (cheapest in the market), back to 3. These changes can be due to the subject company changing the price of X, but it does not have to be. It could also be because the company’s competitor’s price changed, while the price of X stayed the same. Clearly, we are dealing with a ‘price elastic’ product here. Its volume is sensitive to price changes, as most high traffic products are. It sells like hotcakes at position 1 (15% conversion rate), barely sells at position 3 (2%), and doesn’t sell at all at price position 6. See the changes and accompanying conversion rates again in the graph below. Basing your bids on the average 5.1% conversion rate, therefore, makes you lose money on all price positions. You are overspending and throwing away budget at price position 3 and 6, while you are underspending and losing conversions at price position 1. Having access to competitor pricing data is therefore tremendously valuable. It allows you to attach conversion rates to pricing, so you know what is expected at the current price (position). Conclusion Don't let Google Shopping (bid) management be like gambling. Make sure you have the right data and tools to know where your budget is wasted, and adjust your bids accordingly.
28.05.2018
Unlocking the Pricing Data Potential: Make Better Buying and Marketing Decisions
Well-managed companies recognize the critical role pricing plays in driving performance. A foundation (e.g. organization’s structure) that underpins excellence in pricing is key to realizing its full potential. However,...
Well-managed companies recognize the critical role pricing plays in driving performance. A foundation (e.g. organization’s structure) that underpins excellence in pricing is key to realizing its full potential. However, large corporates usually have teams that work separately on topics such as pricing, buying, marketing, and supply chain. Based on Omnia’s experience there is a missing link between those teams that could add a lot of value when fully exploited. Since the marketing and supply chain department usually do not have access to pricing data, they might advertise and purchase different products than they would do if they would have access. This blog explores three examples how Omnia could facilitate the bridge between those teams, thereby enabling them to make better, data-driven decisions and realize pricing data’s full potential. 1. Pricing & Buying In a lot of organizations buyers will have supplier negotiations once or twice a year. Traditionally, a buyer would aim for a few percent purchase price improvement on the complete assortment they offer. With the increased frequency of price changes and price transparency, this traditional set-up of the buying process has two cons: 1. The purchase price improvement % or amount a. Traditional situation: without access to pricing data, a buyer would aim for the highest % as possible b. Ideal situation: data-driven % or amount per product based on lowest price in the market instead of a random number 2. Frequency a. Traditional situation: negotiations once or twice a year b. Ideal situation: frequency of negotiations in line with pricing dynamics of the market (e.g. daily or weekly) In Omnia, both cons can be solved quite easily by setting up a report. This report contains all products for which the minimum price in the market is below your zero margin price (e.g. you’re not able to match that price due to your purchase price), can be sent daily or weekly to the buyer’s e-mail (or directly to the supplier) and this can be used to start data-driven negotiations with suppliers. 2. Pricing & Supply chain We typically see that most retailers do not take price position per product into consideration when deciding what and how many products to stock. This is not because they not want to, but due to lack of data. Usually, first, a buyer decides what products to buy. At that moment it would be helpful to know your price position per product (e.g. will it be competitive), as it enables supply chain to give a more accurate estimate of how many products you will approximately sell. In Omnia, you can easily set-up a report that shows price position per product, which can be used as additional input for supply chain. This report can, for example, show an alert that advises negotiating a better purchase price before you take it on stock. Once you have a product on stock, it might happen that competitors decrease their price and you’re not competitive anymore. In Omnia, you can set-up a report that shows products with a lot of views but low conversion, which might be due to the price position. This report can be used by: Buyers; to get compensation for those products Supply chain; so they won’t order those products until the buyers managed to get compensation 3. Pricing & Marketing In large corporates, we typically see that the marketing department, who decides what products to advertise and what advertising budget will be allocated per product, do not communicate with the pricing department, who know the margin and the price position of those products. Without access to price position data, marketers might spend advertising money to show they are outpriced versus competition. Those ads obviously result in low conversion rates and negative price perception. In order to avoid this Omnia enables clients to incorporate pricing data in bid calculation, thereby enabling them to for example exclude products to marketing channels for which their price is more than 20% above the competitor average price or decrease the bid when price position is greater than position 5. Read this blog to learn more about the added value of using pricing data as structured input for online marketing decisions. To conclude Every business that offers branded products, offered by more than one retailer, needs pricing input for both buying as well as marketing decisions. Therefore, there should be communication (e.g. share data insights) between the people who are responsible for pricing, buying, marketing, and supply chain in an organization. By sharing those pricing insights on a frequent basis, the pricing data potential could be fully exploited by using it as structured input for buying, supply chain, and marketing decisions. Omnia enables retailers to automate this communication process through the set-up of reports and built-in features to use price position in bid calculations for marketing campaigns. In case you’d like to learn more about what Omnia’s software could offer for you, request more information or a demo here or give us a call at +31 (0) 85 047 92 40.
14.03.2018
Price: The Most Important P in the Marketing Mix
This article was last updated on June 2nd, 2020 In school, we learn that there are 7 Ps in the marketing mix: product, place, people, process, physical evidence, promotion, and price. Traditionally, each of these P’s...
This article was last updated on June 2nd, 2020 In school, we learn that there are 7 Ps in the marketing mix: product, place, people, process, physical evidence, promotion, and price. Traditionally, each of these P’s has been an important way to differentiate your company from the competition. Whether it was the quality of your product or the location of your store, these P’s served as sign posts telling your customers why they should buy from you. But do each of these P’s still hold up in the 21st century? The short answer is yes, but the importance of each is changing. Today’s retail market differs vastly from the 1990s and the 2000s, and the internet has fundamentally changed the retail sector. Consumers now have the power to comparison shop instantly. The rise of online shopping also eliminates the need for physical stores and opens up competition to the entire internet, not just the physical locations nearby. These changes have a huge impact on the way shops should manage their marketing — and which P’s they should pay attention to in the marketing mix. As the internet has levelled the online playing field, one P has emerged as the clear focus for most consumers: Price. In fact, price is so important, McKinsey found that just a 1% improvement in pricing raises profits by 6%. That's more influential than a 1.0% reduction in variable costs (which increased profits by 3.8%) or a 1% reduction in fixed costs (which yielded a 1.1% increase in profits). In this blog post, I’ll explain how price became the most important factor in the marketing mix, and how shops can use pricing data to increase their marketing ROI. Click here to download your free copy of Why Pricing and Marketing Go Hand-in-Hand The 7 P’s in 2018 Let’s look at the relevance of the 7 P’s in today’s online marketing context: Product is less of a differentiator to consumers as shops broaden their assortment and more shops offer the same products Place is less of a differentiator as consumers order from their computer or phone People are less of a differentiator as there is no interaction with people online Process is less of a differentiator as most shops offer 24 hour home delivery Physical evidence, or store quality, is less of a differentiator as the web shop becomes the most important “store.” The quality of the web shop is equally important, but it is easier to maintain Promotion, or online marketing itself, is more important as the number of marketing channels has increased Price is a bigger differentiator as prices are transparent and easily comparable As you can see, the internet has made all but two of the 7 P’s less important: Pricing and Promotion. How a person finds your product online, and how much the displayed price is, are the most crucial checkpoints for shops to make a sale online. Considering this, it might seem like Pricing and Promotion share equal importance in the marketing mix. But the reality is that Pricing stands far above Promotion because Pricing controls Promotion. In fact, pricing is the single most important factor to consider while managing your online marketing product ads on platforms like Google Shopping. How pricing and marketing work together To show how important pricing is to marketing, let‘s look at a real-life example of the relationship between the two. In the graph below, you can see two metrics over the course of two months: a shop’s pricing and the number of units sold. The line graphs represent the price and the bar chart at the bottom shows the number of units sold. As you can see, this store applies two different pricing strategies in this period: A margin-focused strategy from the beginning of July to the 24th, where the shop is priced higher than the market average. An aggressive strategy from the beginning of August until the end of the data where the shop is priced lower than its competition. Looking at the number of units sold during this period, it’s obvious the aggressive pricing strategy resulted in more sales. All other conditions staying the same, the simple change in price led to a dramatic change in sales. It’s important to note that more sales do not necessarily lead to more bottom-line margin. Although there might be a high volume of sales, the prices (and margins, as a result) might be lower. But you can use this information strategically to decrease prices on select items and draw traffic to your website. How pricing affects marketing Now that we’ve shown the importance of pricing in today’s marketing mix, let’s dive deeper and examine their interactions. There are two ways pricing influences marketing performance: budget and efficiency. The following graphic illustrates the relationship between the two silos: In this illustration you can see two things: 1. Pricing strategy determines the marketing budget The price of a product online determines how much margin that product will make, a portion of which can be used for marketing. If the product has high margins, marketers have more money to market a product. However, if a product has lower margins, there is less money for a marketing strategy. 2. Pricing strategy affects the marketing effectiveness When you are priced lower than your competitors, the chance customers will click on your ad and buy your product increases. These higher click-through rates (CTR) and conversion rates are signs of healthy, effective marketing campaigns. So if a higher price creates a bigger marketing budget, but a lower price increases the effectiveness of your campaigns, there is a clear challenge. How do you find the right price that it optimal for both your marketing budget and efficiency? This question gets more complicated when you consider that this balance is different for every single product on the market. That’s because consumers value items differently and respond accordingly to price changes. This is called the price elasticity, and it is a phenomenon that shops need to consider in their pricing strategies to optimize margins. For example, an increased price for a popular TV will most likely lead to a significant decrease in CTR and conversion rate but an increased price for a TV wall mount (often sold along with the TV) may have negligible effects on click through and conversion rates. You can use this information to pair items together strategically and maximize profits. As a result, you will need to adjust your marketing bids with each price change. Each time you — or one of your competitors — changes the selling price of a product, the CTR and conversion rate will also change for that specific product. But doing this manually is nearly impossible, which is why you need to find an integrated way of managing pricing and marketing. What's the secret behind the ROPO effect? It's critical for omnichannel retailers to understand the "Research Online, Purchase Offline" effect. Click below to read the blog about this crucial metric (and learn how to measure its influence). Marketing vs Promotion There’s no way to properly plan how to market a product without eventually discussing promotion. Preliminary research helps bring a product to a new market, yet the process necessitates subsequent implementation. Discussing and planning promotion helps further define a marketing plan and marketing mix strategy. Customising marketing mix elements creates a unique marketing model for each product. What is the Marketing Mix? The marketing mix consists of a number of factors under the control of a brand that influences customers to buy products. Some use the term, “marketing mix” interchangeably with the P’s of marketing. The P’s have evolved over the years, growing in number. The 7 P’s of marketing builds upon the traditional 4 P’s of marketing, product, place, price, and promotion. Let’s further explore “place” in context as to provide a 4 P’s of marketing example. Twitter is a popular social media platform. And, though it’s not a physical place, it serves as an example of a place to study, find, and build rapport with customers. Identifying places where a brand focuses energy and resources is among the elements of a marketing plan. For, it may be more successful and profitable for one brand to focus energies on Twitter while a competitor uses another platform or decides to neglect social media altogether to meet its marketing goals. Marketing mix variables should be defined per product; a strategy for selling smartphones is independent from one associated with canned fruit. However, methods, marketing channels, and messages may overlap. Similarly, a retail mix should differ from a marketing plan for wholesale goods. A product mix analysis helps differentiate and customise individual marketing plans for each product. Some companies refer to sales history while others analyse the performance of competitors before developing a marketing plan and promotional strategies. 3 methods of pricing and marketing integration So, now that we’ve established the impact of pricing on marketing, let’s discuss how to take advantage of this phenomenon. Typically, shops use one of the following three methods of integrating their pricing and marketing information: 1. No access to pricing data for marketing management: Although pricing is the #1 factor impacting online marketing results, it is still rarely used as input for marketing management. Without pricing context, it’s hard to evaluate the performance of online marketing campaigns. Let’s take another look at the earlier graph of historical pricing data. The online marketing department will probably be satisfied with the performance in the periods of aggressive pricing strategy, but wonder why conversion rates dropped during the margin-focused periods. If they had access to pricing data, they’d be able to understand why these changes occurred: during the aggressive pricing periods, there were more clicks on the product because the price was low, but during the margin-focused periods the online marketing was less effective because of a higher price. They‘d be able to use that input in future marketing campaigns and prevent wasted ad spend on out-priced products. 2. Pricing information as fixed input for marketing: If you manage your pricing and marketing strategies separately, you can still use the pricing data as fixed input for the marketing department. In the above examples of margin-focused and aggressive pricing strategies, the historical data shows how this product reacts to price changes. With this information, the marketing team can change bids to match new price levels, which will increase your ROIs. For example, if the price ratio (which is your price vs. your competitor’s prices) changes, the marketing team can proactively change bids marketing to match the expected performance at the new pricing level. But this strategy isn’t foolproof. Marketing can only work with the pricing information they’re provided, a data set which requires a significant amount of work to find. 3. Integrated management of dynamic pricing & marketing. When you fully integrate your marketing with Dynamic Pricing, the data becomes powerful. At this point pricing is not just a fixed input for marketing. Instead, the selling price itself is also adjustable. With this dynamic input, you can find the perfect balance between pricing, marketing budget, and marketing efficiency. This ensures marketing is effective, but also creates enough margin to ensure a healthy marketing budget. So, is this the full answer to pricing and marketing integration? Unfortunately, it isn’t. The above example is a simplified situation, and it doesn’t fully cover all the intricacies of the relationship between pricing and marketing. To uncover that answer, we need to go one level deeper. It will get a little murky at first, but all becomes clear soon. The full interaction between pricing and marketing performance The combination of your marketing budget per product (the CPA) and the marketing effectiveness predict which CPC bid is still profitable to sell a single product. However, it does not yet predict the amount of traffic you expect to generate for a specific product over a given period. Without that traffic information, you can’t predict the overall bottom-line results your marketing campaigns will generate. In terms of overall turnover and profit of the online campaign, you are still in the dark. Adding traffic information illuminates this information and gives you a better decision-making framework to use. Below, we've added 3 different traffic KPIs to the model: Cost-per-click (CPC): the amount you are willing to pay for one click. The higher the CPC, the higher the chance is that Google Shopping (for example) will display your ad Impressions: the number of times your ads are displayed Clicks: the number of times a customer clicks on the ad and visits your website Now that this information is available, let’s go through it from the left to right in five steps and examine the interactions: The pricing level determines the maximum marketing budget per product (max CPA) and predicts the conversion rate of that product at that specific pricing level The combined conversion rate and maximum CPA roughly determine the maximum profitable CPC. If you have a CPA of €10 and a conversion rate of 5%, you are willing to pay up to €0,50 per click (a max CPC of €0,50) The maximum CPC determines how many impressions you can buy The impressions and the click-through rate determine how many clicks you can generate. It’s important to remember that the display price also affects the CTR. The clicks, together with the conversion rate and pricing level, lead to the overall bottom-line performance. Finding the right balance between all these parameters is an enormous challenge. Conclusion When you integrate your pricing data with your online marketing strategy, you can find the perfect balance between price, marketing budget, and marketing efficiency. The pricing insights, combined with a number of other KPIs and metrics give marketers the information they need to make smarter marketing choices and bids. That‘s why, out of all the 7 P’s, pricing has the largest impact on online marketing. But many online marketing management teams still don’t recognize the power of pricing data or use it to its full potential. And for those who do recognize the possibilities, there isn’t an easy way to execute the strategy manually.
18.01.2018
How Blue Mango Interactive used Omnia to Win the Dutch Search Award
If you are a current user of Omnia, you know that pricing and marketing are two sides of the same coin. If a product is priced is too low, it cannot carry the marketing cost needed to sell - indicating the need to...
If you are a current user of Omnia, you know that pricing and marketing are two sides of the same coin. If a product is priced is too low, it cannot carry the marketing cost needed to sell - indicating the need to incorporate marketing cost in pricing. Additionally, the price of a product is one of the most important factors impacting its online marketing performance. As you can see, pricing and marketing influence each other greatly, which is why we build the first tool in the market that can manage both. But, even if you are a current Omnia user, do you know all ways in which pricing intelligence can bring your marketing performance to new heights? This article will showcase three cutting edge methods of online marketing management using competitor pricing, one of which recently earned - online marketing agency - Blue Mango Interactive a Dutch Search Award. Using competitor pricing to increase the effectiveness of text ads The great thing about having a flexible tool with a lot of possibilities, is that it becomes a breeding ground for cutting edge marketing and pricing strategies. Our customers and their marketing agencies frequently come up with ideas we have not thought of before. As was the case with Blue Mango Interactive, who increased the CTR (Click Through Ratio) and Conversion ratio, for the text ads of their client Saniweb. They were able to do this by using real time competitor pricing data from Omnia to decide how to configure ad content. This innovative approach recently won them a Dutch Search Award. Most serious retailers use some type of feed manager to create text ads and populate them dynamically with high engagement elements such as price. Blue Mango Interactive knew that to beat the competition they had to go one step further and incorporate also competitor pricing intelligence. How they did it In Omnia, you have the possibility to create custom feeds based on any internal data or external data you want. In this case, Saniweb used real time competitor pricing data to optimize their feed content. Blue Mango Interactive used this data to check whether the current selling pricing is higher, equal to, or lower than the minimum market price. The output is a feed, XML or CSV, showing for each product of Saniweb whether they are below, at, or above the minimum price. The Omnia output was then supplied to a tool that can automatically create and edit AdWords text advertisements. This tool decided for each product whether to highlight USPs or the product’s price. If the product was not outpriced by a competitor, the selling price was dynamically inserted in the title. If this was not the case, the ad would highlight USPs such as assembly services. The results? A substantial increase in performance when they did not show the prices for ‘outpriced’ products: CTR +71%, Conversion Rate +14%, and a lower Cost per Acquisition -20% and CPC -10%. Required Omnia modules: Pricewatch Feedmanager Bonus method 1: In Google Shopping, capitalize on buying stage elasticity and price ratio As you might know, Omnia incorporates price elasticity in the Dynamic Pricing module. This means that, rather than always having the lowest price in the market, always following specific competitors or always having X margin, Omnia tells you exactly how the product should be priced based on the variable cost, current competitor pricing, and the price elasticity of the product. You can learn more about this value based pricing method in this article. You might also be aware that we are using a 5-level Google Shopping structure to effectively adjust bids based on the specificity of the used search query. Read more about the 5-level structure in this blog post. The structure consists of the following 5 levels. The first three levels serve all products on the long tail queries: Product terms campaign Search query example: “Samsung UE40KU6400” Brand terms campaign Search query example: “Samsung 40 inch television” Other terms campaign Search query example: “Widescreen TV 100cm” The last two levels serve only the top performing product on the short tail queries: Category terms campaign Search query example: “Led TV” Brand and Category terms campaign Search query example: “Samsung led TV” Such a campaign structure allows for higher bids based on the specificity of the query and makes sure that you are showing the most relevant products on the short tail queries. Now, the interesting thing is that, sometimes a product does not do as well as expected in the most specific queries campaign, the “Product terms campaign”. Why is this? Products not doing well in the Product terms campaign is usually due to it having a high ‘current selling price’ compared to the market average. We call this a high price ratio. Someone searching for a specific product using specific search queries knows what she wants AND will be exposed to competitor pricing for the exact same products. Therefore, Product terms queries are highly elastic: a small increase in price leads to a big decrease in volume. Accordingly, you should lower your Google Shopping bid when the price ratio - your price compared to the market average - of a product is high. Omnia allows you to do just that. Required Omnia modules: Pricewatch Feed manager Dynamic Marketing Bonus method 2: Using competitor pricing to gain a more positive public perception As a retailer, you are probably using comparison engines to advertise the products. Most of the time, clicks coming from these comparison engines convert well. This is because people will only click if your priced competitively , which translates into a high conversion rate . But did you ever think of the non-monetary consequences of being listed with a price that is too high? In the example above, Coolblue has a price position of 6. This means that there are 5 retailers offering the product for a cheaper price. The result is that Coolblue will not get many clicks. “Who cares? Since they are not getting clicks, it is also not costing them anything”. A logical, but potentially dangerous conclusion. The idea of Coolblue being more expensive is still printed in the mind of the consumer. If it happens too often, with too many products, the consumer - either consciously or subconsciously - develops the idea that shopping at Coolblue is expensive. To safeguard your image regarding price competitiveness, you should exclude all products from the feeds to comparison engines with a price position that is too high. With Omnia, you will be able to do so. Required Omnia modules: Pricewatch Feedmanager Do you want to know more about how Omnia can bring your business to the next level? Request a free demo or contact us via info@omniaretail.com or call +31 (0) 35 699 02 22.
27.10.2017
Tips & Tricks - Easily Analyze Marketing and Pricing in Omnia
Due to complete price transparency in online comparison shopping engines and marketing channels such as Google Shopping, consumers can directly compare prices between competing retailers. It’s even possible to sort by...
Due to complete price transparency in online comparison shopping engines and marketing channels such as Google Shopping, consumers can directly compare prices between competing retailers. It’s even possible to sort by price! In such a situation, it becomes very hard to convert the products which are relatively expensive compared to competitors. As a retailer, you can ask yourself why spend marketing budget on products which are outpriced if it’s so clearly visible for consumers? As such, pricing has become the most important factor in determining online marketing variables such as views, conversions and eventually return on ad spend. It is crucial in online marketing to take into account what the pricing situation is for your product, by answering important questions. For example: Which products get the most views and what is my pricing situation for those products? Where am I the cheapest in the market and how is my conversion there? These questions are not possible to answer via standard tools such as Google Analytics & AdWords. With Omnia, you can answer these questions and much more. A unique and powerful feature of Omnia is the combined automation of marketing and pricing. Moreover, it also offers valuable insights in these two fields via the Reports functionality. With this functionality you can set up a data extract of the current situation at the product level. With these insights you can re-evaluate your current pricing & marketing strategy to get better results. In order to analyze pricing & marketing in a fast and easy way via Omnia, you need three things: Omnia Dynamic Pricing Google Analytics Connected Google Analytics with Omnia Consult the set-up guide or ask our customer service on how to set this up. After you're set up you can get started and create a valuable report in minutes with five steps: Step one: set up the necessary variables in “Mapping” You can copy paste the following mapping / calculation (2nd column) including the brackets [brackets] into your mapping. Also see the screenshot as an example. EXPORT FIELDS MAPPING/CALCULATION EXPLANATION OMNIUNIQUEID ID Product ID within Omnia EAN [EAN] EAN / productcode which matches with competitors Top_category [Top Level Category] Category level Brand [Brand] Selling_price [Selling Price] Current price PriceRatio [Selling Price] / [Average price competitor(s)] Price ratio: your price divided by the average price in the market Minimum_market_price [Minimum Price of Competitors] Distance_to_minimum [Selling Price] – [Minimum Price of Competitors] Distance between your price and the minimum (lowest) in the market Views_L4W [# of UPV PDP last 4 weeks] Unique pageviews of last 4 weeks Total_sold_L4W [# Omni-channel Unit(s) sold last 4 weeks] Total amount sold in last 4 weeks Conversion_Perc [# Omni-channel Unit(s) sold last 4 weeks] / [# of UPV PDP last 4 weeks] Conversion rate (%) If possible, you can also take online sales instead of omni-channel sales. We recommend you include at least these variables. It is always possible to add others if you like & the data is in Omnia. For instance, if you want to analyze a low-level category, add that to the report. Step two: Add a filter to exclude products without competition As products with no competition have no price ratio or minimum price in the market, be sure to filter these products from the report by excluding them from the report. A product has no competition when the price ratio is equal to zero (because Omnia is unable to compute a market average) You can choose to include only the category and/or brand of your interest. This decreases the amount of products in your report and makes it easier to analyze. As in the example below, the report will only include Brands named “Omnia”. Step three: Sort your data on the interested variable The Top-X functionality allows you to sort and mark/take the “Top” products based on a variable and in a group. For example: only take the top 3 highest selling (sorting variable) products for every brand (grouping variable). If you take only the top 3, this works like a filter: the total number of products will be limited to a maximum of 3 per brand, making the report smaller. You can use this functionality in three ways: Sort and take (filter) or mark the “top” products per group Sort and mark the “top” products per group Only sort the products based on the sorting variable The difference between the 3rd and the first two is that in the 3rd way you sort on a number of products which is larger than the largest group or assortment (for example 100.000 products per group): thus you include every product in a group and effectively only sort the products based on the sorting and grouping variable. For this report, it might be handy to sort on the amount of views per category: from highest to lowest (descending). This way, you can analyze which products in a category have the most pageviews and directly compare it with the conversion rate and pricing situation (e.g. priceratio & distance to the lowest price in the market). Certain products might have lots of views but are priced too high compared to competitors. You can reconsider your pricing strategy based on this information. Step four: set-up the export In this step, you can set-up the export of the report, for example: have it emailed to you every Tuesday at 9AM. We recommend you to set up the CSV settings according to your Excel settings. So check which kind of decimal separator your Excel uses (comma or dot) and how fields are quoted and delimited. This way, the file will instantly open in Excel and be ready for analysis. Standard English uses a comma decimal separator and semicolon field delimiter with no quotes around values (see screenshots). Tip: You can always click “Run Now” and download the file in the “Preview” screen to get a fresh report. Analysis: This is what your Excel file will look like, I have colored some products which might be of interest and formatted the conversion percentage to show percentages. Green rows show products which seem to be doing well: high number of views and high conversion rate, while the pricing does not seem be extreme, meaning there are no extreme values of the priceratio. It might be a certain brand or model which is popular and you could discuss whether to increase the price for that, depending on the market. Try to find a common link between products that are getting good metrics and evaluate the strategy. Red rows show products where action or at least further investigation is needed: there are a good number of views (>300) but the conversion rate is relatively low or even zero. For instance, the first red row is a relatively cheap product with a price ratio of 0.86 (i.e. 14% cheaper than market average), but it does not convert well. Could the content of the product page be insufficient? Is the product targeted well in the marketing campaigns? Was the price lowered very recently? Are my main competitors cheaper? For the other two red rows: the product is priced at the minimum of the market (distance to minimum is zero) and there are no conversions. It indicates something is wrong and further investigation is needed. This simple report shows that by combining dynamic pricing and marketing with automated reports you could choose to only focus on “problem” cases. This saves you time, which you can spend in pro-actively changing your strategy instead of reacting only to market changes. Closing remarks This example report shows how you can combine pricing and marketing data in one report to give you valuable insights for your strategy. As the Omnia reporting functionality is very flexible, you can always add data, create formulas, add new filters or different Top-X groups to your reports. This helps you to zoom in on problematic products instead of your full assortment at once. If you have any questions regarding this topic, don’t hesitate to reach out to customer service.
09.08.2017
5 Ways To Measure ROPO Effect [INFOGRAPHIC]
In the retail market there is an increasing amount of attention around the so-called ROPO effect, or the Research Online Purchase Offline effect. This is not odd when you understand more than half of the offline sales...
In the retail market there is an increasing amount of attention around the so-called ROPO effect, or the Research Online Purchase Offline effect. This is not odd when you understand more than half of the offline sales are preceded by an online point of contact. An omnichannel retailer, therefore, needs to have good estimate of the ROPO effect in order to engage in effective bid management, and more. Learn how to measure the ROPO effect and what to do with this information in our new infographic. Links on the bottom of the page. Links: https://developers.google.com/analytics/devguides/collection/analyticsjs/events https://support.google.com/adwords/answer/6100636?hl=en https://www.facebook.com/business/help/176164682883378?locale=en_US https://support.google.com/adwords/answer/2998031?hl=en https://www.accenture.com/us-en/retail-research-2015-consumer-research
12.07.2017
Will the EU Limit Google Shopping? Use this 5-Level Campaign Structure to Maximize Your Traffic Share
Google Shopping has been thriving over the few last years and on average retailers are already spending over 50% of their paid search budget on shopping. The EU's recent verdict will cause some changes to Google...
Google Shopping has been thriving over the few last years and on average retailers are already spending over 50% of their paid search budget on shopping. The EU's recent verdict will cause some changes to Google Shopping in the EU. How this will exactly effect the consumer and the retailers is still unclear. However, given Google Shopping's current market share, they are most likely to remain, by far, the most dominant party. The pie may become slightly smaller in the short term, forcing retailers to fight harder for their traffic share. Having a solid campaign structure to deal with the challenges of Google Shopping is crucial in maintaining and growing one's traffic share. Lets dive a little bit deeper into the challenges of Google Shopping and the campaign structure available to deal with these challenges. Challenges of Google Shopping One of the main benefits of Google Shopping is that it is easy to set up and that products are automatically shown on relevant keywords. Therefore, it is very easy to generate relevant traffic with Google Shopping. However, this also has a major disadvantage. Namely, it is not the retailer who determines which keywords a product will be displayed for – like in traditional AdWords text campaigns – but Google itself. Google decides this mainly on the product content delivered to the Google Merchant center by the retailer, but also on general knowledge about the product. Not being in control of which products are displayed on which keywords creates two challenges: Challenge 1: How do you increase bids for more specific keywords? Some search queries are more specific than others. For more specific queries, it is clearer what customers are looking for and chances are higher that you show will the right products. This will result in higher click though rates (CTRs), that in turn will lead to better quality scores in Google Shopping and eventually a better ROAS. In addition, more specific queries are used further down the customer journey, where chances on conversions are higher. Both are good reasons to bid higher on more specific keywords. Challenge 2: How do you control which products are displayed for broad keywords? Google just decides which product to show based on a combination of the relevancy and the CPC bids. How can you, as a retailer, make sure that your best-selling products are shown for broad keywords? And preferably those products that are also profitable to sell. Both challenges can be managed by combining the campaign priorities and filters with negative keywords lists. The 3-level Google Shopping structure It’s quite common to use a 3-level Google Shopping structure to cope with the first challenge of increasing bids for specific keywords. Step 1) Split campaigns To solve the first challenge – increasing bids for more specific keywords – you need to split the traffic into 3 campaigns, thereby making keywords more accurate: Product terms - all terms that contain a product name: e.g. Samsung UE40KU6400. Brand terms - all terms that contain a brand name: e.g. Samsung 40-inch television or Samsung Led TV. Other terms - all terms that do not contain a brand or product name: e.g 40-inch television or LED TV. In the product terms campaign, we now exactly which product to show: a Samsung UE40KU6400. In the Brand terms campaign, we know at least what brand to show: a Samsung. In the other terms campaign, it is now always clear which product to show. Step 2) Add Priorities and Negative lists To split the campaign in these three traffic groups, you need to use the priority settings in the Google Shopping campaigns. There are three choices: high, medium and low priority. These priorities decide determine which campaign Google first tries to serve a keyword. If you got three campaigns with the same product (no filters), priorities by itself will not do much. Google will serve all keywords to the campaign with the highest priority: in this case, the Other terms campaign. But once you start combining the priorities with negative keywords/keyword lists it becomes interesting. Two types of negative keywords lists need to be created: Brand terms - containing all brand names: e.g. Samsung or LG. Product terms - containing all product related terms: e.g. UE40KU6400 or Sonos play 1 Adding these negative keyword lists to the Other terms and Brand terms campaigns will suddenly provide an interesting dynamic between the three campaigns. Let’s take 3 keywords as an example: “LED television”, “Samsung LED television” and “Samsung UE40KU6400”. Google Shopping first tries to serve all 3 keywords to the campaign with the highest priority: the “Other terms” campaign. The “LED television” keyword can be served, but the other two contain the brand term Samsung, which are on the brand terms negative lists. These keywords cannot be served to that campaign and will continue to the campaign with a medium priority: the “Brand terms” campaign. The “Samsung LED television” keyword can be served on that campaign, but the “Samsung UE40KU6400” contains the product term UE40KU6400, which is on the product terms negative list. This keyword will continue to the “Product terms” campaign, to which it can be served. Step 3) Optimize CPC bids With this structure, the traffic is automatically split into 3 campaigns based on the accuracy of the keywords. The bids of the campaigns can be optimized separately, allowing you to bid higher on more specific, more valuable, keywords. Splitting traffic on keywords types is necessary to increase the performance of the campaign, but will also make it more difficult to manually manage it. Google Shopping should already be managed at the product level and splitting the keywords types complicates this even further. It is, therefore, crucial to think more strategic and to translate these strategies into rules and then automate them. Disadvantages of the 3-level structure The 3-level structure solved the first challenge, but does not solve the second challenge: how to control which products are displayed for broad keywords. The Other and Brand terms campaigns contain both rather specific search terms (“40-inch LED television”) and broad terms (“LED television”). Broad terms generate lots of traffic, but are often not profitable as it is hard to control which products to show. There are 3 possible ways to make these products profitable within this 3-level structure, but all three solutions have their downsides: Solution 1: Lower CPC bids, so the broad terms are profitable. Missing lots of traffic: low impression share on broad terms. Bids too low for other more valuable, specific terms. Solution 2: Add the broad terms to negative lists. Missing all traffic on broad terms Solution 3: Filter only popular products into Brand and Other terms campaign. Much lower number of impressions, as products in campaigns do not match all keywords. These problems can only be resolved by extending the 3-level structure to a 5-level structure. I would, therefore, like to introduce a 5-level structure to be fully in control of the keywords and get the most out of Google Shopping. The 5-level Google Shopping structure Step 4) Splitting the campaigns even further In the 5-level structure, the broad keywords are moved into two separate campaigns in which they can be managed separately, allowing you to have control over these keywords and providing the opportunity to resolve the problems that are present in the 3-level structure. These two campaigns will focus on the following broad keywords: Brand & Category Terms - terms like Samsung television or Sonos sound system. Category Terms - terms like television and sound system. Step 5) Adding Priorities and Negative keyword lists: To make sure that the broad keywords are served on these campaigns, an extra negative list must be created and added to the campaigns with the 3-level structure: Broad terms - containing all broad terms: e.g. [Samsung television] and [Sound system] etc. (note that this must be an exact negative keyword: [keyword]) Broad terms are now served to the broad “Brand and Category Terms” and “Category Terms” campaigns. Adding the right priorities and the already existing “brand terms” and “product terms” negative lists, will, in a similar way as for the 3-level structure, make sure that the “Samsung television” keyword is served to the “Brand & Category Terms” campaign and the “Television” keyword is served to the “Category Term” campaign. Note that you will also need to add the product terms list as a negative list to the broad campaigns, as the product terms campaign has a lower priority. The broad terms are now divided properly over the two extra campaigns, but we have not yet solved the second challenge: How to control which products are displayed for broad keywords. Step 6) Adding smart filters: The second challenge can be solved by adding smart filters to the campaigns, so that only products present in the “broad terms campaigns” are those that you want displayed for the broad terms In Omnia, we have created the Top-X functionality to support this. The Top-X functionality consists of 2 parts: Grouping the products Selecting Top-X products within that group, based on a customizable popularity formula: The product groups must be chosen in such a way that it best suits the broad keywords corresponding to the additional campaigns: Brand & Category Terms campaign -> Group by Category & Brand combination Category Terms campaign -> Group by Category Now that you have grouped the products, you need to select the top products for each of those groups based on a popularity score. In Omnia, you can use all fields and historical data to create a popularity score that best suits your targets. A few examples of commonly used popularity scores are: Absolute max profit in the last 4 weeks Formula = [# Unit(s) sold Online last 4 weeks] * [margin] Most PDP page views in last 4 weeks Formula = [# of UPV PDP last 4 weeks] Weighted online vs Store units sold Formula = [# Unit(s) sold Online last 4 weeks]^2 * [# Unit(s) sold Store last 4 weeks] Only price competitive products, sorted on turnover in the last 4 weeks Formula = If ([Price Ratio] < 1, [# Unit(s) sold Online last 4 weeks] * [Selling Price], 0) Where [Price Ratio] = [Selling Price Retailer] / [Average price competitor(s)] Based on these popularity scores you can mark the Top X (e.g Top 2 or Top 5) products for each group by assigning them a label. In the AdWords Google Shopping campaign settings, you can filter on these labels and select only the most popular products per Category in the Category Terms campaign and the most popular products per Brand & Category combination in the Brand & Category Terms campaign. The product groups and popularity scores are continuously updated by Omnia, providing a Top-X list that is always up-to-date. You are now in control of which products are shown for broad keywords! Step 7) Optimizing CPC bids Being in control of the broad keywords gives you the opportunity to manage the CPC bids of these products. Because you are only showing popular products, chances are higher that you are showing a relevant product to the customer. This will increase your CTR and consequently the ROAS of the campaign. Higher ROAS means that you can increase the CPC bids and gain larger impression shares on these high volume broad keywords. Also, the broad keywords are now separated from the Brand Terms and Other Terms campaigns, solving the problems of the 3-level structure. This will allow you to increase the bids on terms like “40-inch Samsung television” or “40-inch grey LED television”. Gaining maximum impression share on these products. Benefits of the 5-level structure Let's recap the main benefits of the 5-level structure: Bid higher on more specific, more valuable, keywords. Optimizing traffic on those terms. Full control over which products are shown for broad keywords to push the products that serve your business targets. Popular products are shown for broad keywords. Increasing the CTR and ROAS and allowing you to increase CPC bids to gain impression share and consequently increase your revenue. Broad keywords are now separated from the Brand terms and Other terms campaigns, allowing you to increase bids on these campaigns and maximize this impression share. In addition, this can all be automated with Omnia: Automatic ad-group creation based upon values in the feed: e.g. brand and category combination CPC bids updated hourly on product level for each campaign corresponding to the performance of each of the 5-level campaigns. Smart filters by using the Top-X functionalities: product groups and popularity scores are continuously updated by Omnia, providing a Top-X list that is always up-to-date and saves a lot of manual work. Initial negative keyword lists can be created by using the content of the feeds. Tips Try using negative lists, instead of negative keywords within a campaign. These lists can and must be used by multiple campaigns, so choosing proper lists will save lots of time and will let you keep the overview. Use “Phrase” negatives for product and brand terms, so that you don’t have to add every search term that contains “Samsung” as a negative. Use [exact] match for broad keywords. Broad Modified Match is not available as a negative keyword. Choose your Top-list groups so that the top products cover the whole spectrum of broad keywords. When you select only the top performers of the whole assortment, chances are great that products only match a portion of the search volume: e.g. when you only select televisions in the Top-list, products will not show for a broad keyword like “wall-mount”. So you will at least want your best performing wall-mount to be in the Top-list. Use the shared budget option for the AdWords campaigns. For this structure it is necessary to make sure the keywords are always shown in the right campaign. When the budgets are separate, you risk the “Other Terms” campaign will run out of budget. This will cause the other terms to be served on the brand or product terms campaigns, where CPC bids are much higher. For more information about the 5-level Google Shopping structure or guidance on how to implement this structure, please contact us via info@omniaretail.com or call +31 (0) 35 699 02 22. Or log directly into the console to get started: login.omniaretail.com.
28.02.2017
Get the Most Out of Facebook Dynamic Ads with Omnia Dynamic Marketing
The world’s largest social network keeps expanding. With over a billion monthly active users, Facebook provides great marketing potential for any business. Because the platform is well aware of this fact, it is...
The world’s largest social network keeps expanding. With over a billion monthly active users, Facebook provides great marketing potential for any business. Because the platform is well aware of this fact, it is constantly adding new opportunities for businesses trying to expand their reach. It now seamlessly blends advertisements with generic content, adds social proof and stimulates sharing and liking. Facebook also allows retailers to use their immense data sets to create audiences based on interests, marital status, income, and many other factors. Most of all, it has the best performing mobile ad format. In Q4 of 2016, the company reported that 80% of its total ad revenue came from mobile advertising. Consistently, the platform has been able to offer marketers high CTR (Click Through Rate) and returns. This is because, "traditional" mobile advertising – in the form of banners – is generally seen as obtrusive, and most clicks are actually by accident rather than intentional. In contrast, the ads on Facebook are seemingly integrated in the user experience. Often it does not even occur to us that we are looking at advertisement, it's just another post in our newsfeed that we are seeing. If it is interesting, we engage, if not, we just scroll down. That is the power of Facebook mobile advertising. For retailers, the dynamic product advertisement is especially relevant. They become even more powerful when combined with a remarketing audience, which will be the focus of this article. Besides the possibility to export your products to Facebook with Omnia, you also get the most out of the campaigns, by using the unique features Omnia has to offer. Automated remarketing using Facebook Dynamic Advertising Remarketing means trying to engage those people who have visited your webshop, looked at products -maybe even added some products to the cart- but did not finalize the purchase. Out of all potential audiences to show your ads to, this group will have the highest probability to convert into buyers. This translates into a high ROAS (Return On Advertisement Spend), making it one of the first places to spend your marketing budget. By using Facebook remarketing, you can specifically show the products that the person has shown interest in. Consequently, the CTR of the advertisement will increase significantly. The end result is a dynamically tailored product ad -such as the one shown below-, whose content and target audience is chosen with maximum ROAS in mind. It is also possible to intelligently expand the audience using the "look-a-like" feature in Facebook. With this feature, Facebook looks at all characteristics of the people in the remarketing audience, and finds other similar people on Facebook. Use this feature to expand the reach of your ads, while maintaining the benefits of a high ROAS target group. For more information on Dynamic Advertising on Facebook, see the video below. Five steps to implementation 1. Make a company Facebook page and sign-up for Facebook Business Manager In order to start advertising on Facebook, you need to have (1) a personal Facebook account, (2) a company Facebook page and (3) access to Facebook Business Manager. The last step is done by signing up at business.facebook.com. In the Business Manager, you can manage the company page, create ads, and set up the Facebook pixel. This brings us to the next step. 2. Give Facebook customer data To set up a remarketing campaign, you have to supply Facebook with data about your webshop’s visitors, so target audiences can be created automatically. Therefore, it is necessary to implement the Facebook pixel. The best way to do this is by using a data layer that can be used to make Facebook tags in Google Tag Manager, which in combination makes up the Facebook pixel. The pixel needs to contain your unique Pixel ID, which can be found in the Facebook Business Manager. 3. Create a Facebook channel in Omnia Next, you must provide Facebook with a product feed. This is done by creating a Facebook channel in Omnia. Under Marketing > Channels, simply create a new channel with the Facebook template. All mapping will be done automatically for you – just add the tags and you are done! Of course, if you wish to the edit the mapping, you have the ability to do so. 4. Connect Omnia in Facebook Business Manager Now that a live feed has been created in Omnia, it can be connected toFacebook. This is done in Facebook Business Manager, in the Product Catalogs section. 5. Create the advertisement The last step is actually creating the advertisement in Facebook Business Manager. Since the products are inserted dynamically, you only have to create one advertisement! To do this, choose the product catalog sales ad under conversion. The rest should be fairly straight forward. Congratulations! You have now created your first Facebook Dynamic Ad remarketing campaign. Tips from the Omnia marketing and pricing consultancy team At Omnia Retail, we are constantly working on improving the capabilities of our software. As a result, our extensive features allow for the creation of advanced strategies in order to get the most out of the Facebook advertisements. Our team of experts here at Omnia have come up with three options for omnichannel profit maximization, listed below. Tip 1: Only advertise competitively priced products In the Facebook channel in Omnia, you can add filters which exclude certain products based on the supplied rules. The rules can be made using data from your feed, but also from pricing data. This is very useful, since the conversion rate on products with a competitive price in market will be higher than the conversion rate of products that are out-priced. Indeed, the webshop visitor may have actually decided not to buy the product he/she looked at, because it did not have a good price in the first place. Money spend on showing advertisements highlighting the same product is money wasted. To prevent this from happening, create a filter based on a pricing variable such as ‘price ratio’, ie. Your price divided by the market average. An example of such a rule could be: If Price ratio > 1.1, then exclude product. This means: if the product has a price higher than 10% above the market average, I do not want to show it in my Facebook campaign. Tip 2: Strategically include only top products based on bottom line margin Let’s say you have decided to create a product catalog campaign not based on remarketing, but on a wider audience. Which products would you show in this case? Certainly there are better options than randomly showing products. Well, there is. With Omnia’s Top-X functionality you can automatically only show the top products according to a certain parameter. We recommended a Top-X such as the following: Top 3 products per category based on bottom line margin (or volume * product margin). Tip 3: Optimize advertisements for omnichannel profit If you have a webshop in addition to physical stores, you can strategically show products to increase both online and offline sales. First, create a Facebook channel in Omnia for each physical store, using a filter to only include products that are in stock in that specific store. Second, connect the feeds in Facebook Business Manager. Third, create an advertisement for each store, using the remarketing audience (generated by the pixel) but only targeting people near that store. You also have the option to add a custom first slide, which shows either the store’s location on a map or a photo of the storefront. The end result is a highly tailored local remarketing advertisement, showing the products that people near that store location have seen on the webshop, and are actually in stock in there! This is a very effective type of adverstising for products that people predominantly search online but buy offline (such as a home cinema set of 1000+ euro). Are you excited to get started with Facebook advertising through Omnia? Do you want more insights? Be sure to contact us at info@omniaretail.com or call +31 (0)35 699 02 22.
10.03.2016
Important Update: Google Tightens their Requirements for EAN / GTIN Codes
We would like to inform you of an important update by Google concerning the Global Trade Item Number (GTIN) requirements, and show you how you can utilize Omnia to give your products the appropriate GTIN format. In 2015...
We would like to inform you of an important update by Google concerning the Global Trade Item Number (GTIN) requirements, and show you how you can utilize Omnia to give your products the appropriate GTIN format. In 2015 Google made GTINs obligatory for the products of 50 specified brands. From now until May 16th 2016, it is mandatory for advertisers to supply the correct GTINs and the corresponding brand for all new products for which a GTIN code has been assigned by the manufacturer. What is a GTIN? A GTIN makes a product identifiable anywhere in the world. Plainly speaking, the GTIN is the barcode of a commercial product. In Europe it is popularly known as the European Article Number (EAN) or the International Standard Book Number (ISBN) for books. If there is a GTIN available it will be shown below to the barcode on the package. The length of the GTIN depends on the product type and where the product is sold. For Europe, the EAN (in Europe/GTIN-13) is a 13-digit number underneath the barcode. Why this change? Providing GTINs is essential for Google to recognize your product and supply their users with the most accurate and complete information. If Google knows exactly what you are selling, then they can help you improve the performance of your advertisements by adding valuable information and showing the ads in a relevant way. In addition, it allows Google to match different retailers' offers for the same product. This result is better visibility, improved targeting and more ads being setups. Therefore, you should add GTINs for all of your products in the feed. If there is no GTIN for a product in the feed, it is denied and will not show up in Google Shopping results. There is no point in creating a fake GTIN because has connections with all GTIN-databases and will immediately recognize if there are fake GTINs in your feed. Google reports that retailers that added correct GTINs to their feed had an increased conversion rate of up to 20 percent. What does this mean for you? When you target Australia, Brazil, France, Germany, Italy, Japan, The Netherlands, Spain, the Czech Republic, the United Kingdom, the United States, or Switzerland, starting May 16th 2016 you have to provide correct GTINs and the corresponding brands for all new products that are in stock and where a GTIN is supplied by the manufacturer. If you sell products that are made-to-order, hand-made or vintage products, these changes have no influence on you. In this case, you could improve your results by providing unique product IDs. Don't have GTINs? Your suppliers should be able to help you with all required GTINs. If not, then you can contact the manufacturer, or check the barcode on the packaging. For the latter, you can use a barcode-scanner app. Alternatively, some GTINs can be found in a GTIN database such as icecat.nl (this particular site is mainly for electronics). Correct GTINs are important for the optimal use of the Omnia Modules Providing correct GTINs for your products is very valuable and will pay off in both the areas of pricing and marketing. The GTINs form the basis of the Pricewatch and Dynamic Pricing modules in Omnia. Without GTINs we are not able to compare your products with competitors and it is not possible for the Dynamic Pricing engine to incorporate market prices in its calculation of optimal price points. Additionally, GTINs are the basis for the optimal performance of all marketing channels at a product level. Products with GTINs will have improved exposure on marketing channels, resulting in a substantial traffic increase for these products. Moreover, they allow the marketing channels to categorize products and expand the content of advertisements. Because of this, the consumer will be exposed to more information, and those who end up on your website will therefore convert to buyers more frequently. How do I adapt my feed in Omnia? The GTINs are entered by the Omnia user in their input feed. For each product there is a field for the correct GTIN code. In the ‘mapping’ section, Omnia has a function called ‘MakeEAN’, which will add zeros at the beginning of the GTIN code to reach the necessary 13 or 14 digits (if applicable). For example, the function will change “87263517” to “000087263517”. Moreover, the function checks to see if the GTIN is indeed an official GTIN. You are able to easily perform the same check with this tool. If the GTINs (EANs) are correctly entered in Omnia - Connect, then Omnia will automatically make sure that the right format will be supplied to marketing channels. When are these changes occuring? Google started warning advertisers February 8th 2015. Since this date you have seen a warning at the product level in the tab ‘Diagnostics information’ for products that do not meet the requirements. Update these products in accordance with the warnings. Starting May 16th 2016 Google will be enforcing this change. From this date you will see denials at the product level in the tab ‘Diagnostics information’ for all products that do not meet the requirements. After this date you have to adhere to the GTIN-requirements to be able to keep showing advertisements for your products. Want to know more? Do you want to know more about how to correctly provide GTINs to your marketing channels? Reach out to one of our Omnia consultants via email: info@omniaretail.com or call +31 (0)35-699 02 22. Good luck!
Sign up to be the first to get information from Omnia.
Sign up now