Online retailer eBags uses search to promote its stock of 8,000 bags and accessories. They're a company known for heavy testing -- including Web design and email tweaks -- which is how they've grown to be the largest profitable eretailer in their category.

So we called up eBag's Director of Business Development Chris Seahorn to find out what they've learned from recent search marketing tests. He revealed nine specific tips:

Tip #1. Use more than cost per acquisition in evaluating keywords and bid values

For every keyword at every PPCSE (pay per click search engine), eBags tracks the clicks, records the SKUs purchased by those visitors (up to 30 days after the initial click) and uses "margin less cost" as a success metric. In other words, they compare the profit margin of the actual purchases driven by an individual keyword with the click costs incurred by that keyword.

Seahorn says most people are tracking in less detail - a mistake - and that evaluations based on, for example, click costs per customer acquisition aren't thorough enough.

He explains, "Compare the cost per acquisition to drive a wallet sale to (the cost for) a piece of luggage. If it's $25 on a wallet, it's a really expensive ad buy. On a piece of luggage..."

Tip #2. Use tools as much as possible

Seahorn says, "We use tools, we don't use people," adding that automation is the only way to effectively manage thousands of keywords, multiple search engines, and different channels within each search engine.

For their detailed evaluation requirements, for example, eBags use an in-house reporting tool which takes a PPCSE report, matches it with sales information for that keyword's clicks, and then flags those keywords requiring manual bid adjustments.

As a result, all eBags search marketing is managed by one marketer working just half-time on the search buys.

Tip #3. Keep digging for new keywords

Gone are the days when you could easily find undervalued niche terms others wouldn't bother with. Retail competitors are also looking to tie up all the individual model name keywords, as well as the brand and broad-reach terms. So no resting on your keyword laurels.

Already bidding on around 10,000 keywords, eBags are looking to build this out to five times the number. Seahorn's tip - if you're a big enough customer, "...really utilize your account managers to help you out as much as possible."

Seahorn's sent the eBags product datafeed into his big buys and lets them suggest new words and categories.

He notes, "We have 10,000 SKUs in our datafeed and they can give me a list back of their top 50-60,000 recommendations. If you start them all at 10 cents you can use your data tools to work out which are the ones that are working, which aren't."

Tip #4. Find which listing positions work best for you at each SE

Seahorn says changes in the way the leading PPCSEs syndicate or use their paid listings means the differences in clicks generated by each listing position also changes. So you need to keep testing to find the bid/listing combination that gives the best results.

He stresses that some well-accepted assumptions don't always hold true, such as the one that says conversions from listings lower down the results tend to be higher.

Recently, eBags upped the number of keywords at Overture listed in the first three spots (premium listings). They got the expected increase in visitors, raising Overture-driven sales by 90%. More importantly, they also found that conversion rates from the top three positions were around 10% higher than conversions from lower positions.

Tip #5. Match ad copy with the search engine.

With Overture, you control your placement with your bid size. In Google, you can bid lower, but achieve higher placement with a higher CTR. Seahorn saves money by bidding lower in Google and encouraging higher clickthroughs through the ad copy.

"We have to use words like 'free shipping', 'free returns', '110% price guarantee' in the titles of Google AdWords to get the CTR up there. Whereas we'd rather say "shop for backpacks" in Overture."

Why not make Overture ads more enticing anyway, to boost visitor numbers from the same placement?

Seahorn says that more enticing ads means, "...you're sacrificing a little bit more on the conversion rate. On Overture, our frame of mind is almost like we're trying to say, 'don't click on this unless you really want to buy.' We will pay higher CPCs for that, and we'll always secure the number 1 or top 3 placement."

Tip #6. Use smaller PPCSEs too, but be aware of management costs

Seahorn's not effusive about the smaller engines outside of Google and Overture. He says, "If you aggregate them all together they start being a small buy. To be honest we wouldn't do them if we didn't have a tool to manage these relationships."

He notes, though, that bidding costs are "a good 50% less" than at the big two, but conversion rates are lower as well, which he attributes to audience quality.

Tip #7. Find a sensible solution for PPCSE competition from your own affiliates

Seahorn is relatively positive about affiliates bidding on the same keywords as eBags. He explains, "If we have 10 affiliates and we own the top 10 positions and somehow that traffic from the top 10 positions gets to our site, we'd be fine with paying an affiliate commission on it."

However, he does protect his own listings in three ways:

-- eBags' affiliates cannot include the words eBags or eBags.com in the visible or display URL of the search ad.
-- They must also indicate their affiliate status in the copy of the search ad.
-- They cannot link directly to the eBags site from the search ad.

This solution keeps search marketing open to affiliates, but without compromising eBags' own efforts. But do they still get into bidding wars with affiliates?

Seahorn says, "It's not been so much a problem for us. But when it has, we just call them...we don't want to bid their words up, they don't want to bid our words up - we're kind of in this together."

Tip #8. Don't forget natural "organic" search

Seahorn's understandably cagey about the on-site changes they've made to improve natural rankings so that they're on the first page for all their desired keywords, but he does have one tip. Like many retailers, eBags used to write copy in combination with product images. The mistake was to forget about searchers.

He explains, "When you came to our site, we called backpacks, 'packs'...there's an image of a backpack on there and we'd say 'buy this pack at eBags'. Nobody is searching that way on the Internet so you have to say 'backpack' if you want to get that relevancy. A search engine can't read images."

Tip #9. Keep your eye on new developments

Seahorn's stresses the importance of monitoring the new keyword-based inventory channels offered by the likes of Google through, for example, content ads.

He explains, "If we are measuring the keyword as a whole...we're going to become less and less effective with our advertising spend." The solution is to separate out each channel.

He notes that for content ads - compared to the regular search ads - eBags has found "conversion rate is actually significantly lower." As a result, "We pay typically 30-40% less for a contextual ad."

And with more channels likely on their way in search marketing, Seahorn concludes, "You're really going to have to make sure the management tools are in place and that you've got your finger on the lever."


Note: eBags is a member of Shop.org, a forum for retailing online executives to share information, lessons-learned, new perspectives, insights and intelligence. More info at http://www.shop.org