How Paid Search Can Become a Top Advertising Strategy for Brands and Retailers

If they form a cooperative partnership, they'll shine together

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Even though retailers already spend the majority of their advertising budget in digital, 80 percent of their co-op funds have traditionally gone into non-digital channels. However, with players like Amazon and Google effectively moving the co-op game to digital, the modern terrain is shifting. Increasingly, we’re going to see retailers and brands evolving their co-op marketing strategies to encompass paid search and product listing ads (PLA).

At present, companies are investing about $70 billion in co-op marketing, but only 20 percent of that is digital. Moving more co-op dollars into digital channels—and specifically paid search and PLA—makes strategic sense for brands and retailers. For one, about 75 percent of all ad-induced sales today come from paid search and PLA, and an infusion of co-op dollars into this space represents a huge opportunity. In addition, unlike offline co-op marketing via print circulars and other similar tactics, digital co-op marketing provides brands a keener understanding of where their budgets go.

Benefits of collaboration

About 75 percent of all ad-induced sales today come from paid search and PLA, and an infusion of co-op dollars into this space represents a huge opportunity.

Cooperation between retailers and brands will unlock even greater results within the paid search realm for both parties through the strength of their shared budgets. Paid search, after all, is highly competitive, and many solo retailers just can’t afford the top positions. For brands that sell through retailers, this often means that their products don’t occupy prominent real estate or simply don’t show up at all. If brands and retailers join forces, they can bid more aggressively and expand their profiles where it matters.

The savviest marketers are realizing the scale and impact that a more collaborative approach to paid search and PLA can unlock. At the same time, however, these marketers must be thoughtful in how they approach data sharing and attribution within this cooperative framework.

Cooperative approach to data reporting

Retailers usually split their budgets between prospecting, in order to target new customers, and retargeting, in order to target previous website visitors and retain existing customers. To broaden the opportunity, a retailer could give its brands access to its audience data, allowing them to target specific consumers via their own search activities and get their products in front of them.

In addition, Google offers a feature called Similar Audiences that retailers can in turn make accessible to their vendors, allowing them to target new customers who are similar to the audience chosen for retargeting. If done this way, the regular activities that are performed and paid by the retailer can be easily split from the co-op activities, thereby solving one key element of the measurability challenge.

As an example, imagine that a brand of running shoes targets generic terms for PLA exposure. In this costly and highly competitive environment, partnering with a retailer helps the brand push out its competitors and gain a greater share of the available impressions.

Co-op partnerships iron out conversion issues as well. With co-op budgets, retailers can show brand ads to previous visitors via retargeting campaigns and focus their prospecting efforts on generic terms. Not only do non-branded terms perform better with first-time visitors, but this strategy blocks any potential cannibalization. After all, if the shopper already knows the retailer, that individual is likely to make a purchase through the retailer’s site as opposed to the brand’s shop.

To truly advance the opportunity of co-op search and PLA, our industry requires new reporting capabilities. Brands need dedicated reporting where they can break out co-op ad spend and revenues at a more granular level and get a clear picture on how and where to attribute their outcomes. With that kind of detail, they can make budget adjustments to achieve their targets. Finally, marketing teams should set up automated management for retargeting campaigns and other targeting tactics, such as Similar Audiences. Automation ensures an even, consistent, workflow.

In conversations with the industry’s largest brands, we know there is appetite for these methodologies. Amazon’s digital co-op products alone have grown by about 100 percent. With Google and Bing also moving into the space, awareness for this new search co-opportunity will increase. As co-op paid search becomes a best practice, we can expect imminent growth in these types of initiatives and the rise of one of the most dynamic marketplaces in our industry.