One of the most common questions merchants ask before launching their CSE campaigns is, "what should my budget be?" This can be a very difficult question to answer because forecasting spending is very closely tied to forecasting traffic.
Traffic Fluctuation Variables
Even representatives from the engines will not speculate the traffic level that will be delivered. This is most likely because the traffic delivered to merchants is dependent on several variables, including but not limited to:
- Engine traffic acquisition strategy: CSEs get traffic in a variety of ways. Most of the major engines maintain a fairly consistent quantity of overall traffic over time, but each traffic source has the potential for volatility.
- Direct navigation is probably most likely to be stable.
- Paid Search likely delivers pretty consistent results as well, unless the engine themselves change focus and shift marketing money from one category to another.
- SEO is also likely relatively stable most of the time, but is always at risk due to the whims of the Google engineers (Shopping.com chalked up a big decrease in Q409 revenue to lower traffic due to search algorithm changes.)
- The affiliate network aspect is definitely volatile and sooner or later, most merchants experience a traffic fluctuation which is likely due to the behavior of CSE affiliate sites.
- Consumer behavior: Even if methods of traffic acquisition by the engines is consistent, user behavior is difficult to predict. A single product may receive 20 clicks one day and none the next. Consumers may visit engines consistently all winter, then when the weather changes, traffic could drop off significantly.
- Competitive landscape: If your product type has a low barrier to entry, you may see new competitors appear regularly. These competitors are likely to take some market share. Conversely, if other merchants are cutting back on spend or going out of business, your traffic may increase.
The options for setting one's budget vary by engine but most engines have at least the following options:
- Continuous budget plan: This just means that traffic never stop coming unless you pause your campaign. This is typically tied to a credit card which is charged any time the funds already paid to the engine are depleted. You can usual set the amount you would like the engine to charge you each time.
- Monthly set budget: This is a monthly cap that will not be exceeded. If the cap is hit before the end of the current month, your product listings will be removed until the beginning of the next month.
Attitudes about budgets vary. Some merchants see a budget as a number they can't exceed while others see it is a number they have to hit. In either case, you may find yourself in the situation where your average daily spend is trending above your budget, meaning you may run out of advertising funds for the month after only 20 days. In this situation, the limited budget control functions provided by most CSEs leave you only a few options:
- Increase your budget: This is obvious and often not an option, but if your return on investment is high, it might make sense to shift budget from other marketing channels that are not performing as well.
- Allow your listings to go dark: This is necessary at times but generally not recommended. The reason for this is the popularity/historical traffic aspect of CSE visibility factors. Once your products are no longer live, the clock is ticking and your popularity is slipping away. Meanwhile, your competitors are building popularity, making it harder for you to get your placement back once you are able to reactivate your campaign.
- Suppress products to control costs: This is generally the best option, but can be tricky to execute. Products that are removed from the feed will still lose popularity but the goal is to leave in the feed the top performing products, thereby allowing the top products to continue to get traffic and generate sales while maintaining their popularity. You can do this in the ChannelAdvisor system by using a filter that only includes in the feed the top product you've identified on each engine by reviewing performance data.