Rob Woods, director of marketing and merchandising, single-handedly managed that process, along with his other responsibilities, which include overseeing site design and merchandising.
But as BuildDirect’s portfolio of keywords grew and bidding became more competitive, managing the process in-house became unwieldy. In part, that was because the process had to be managed manually, requiring bids to be checked and adjusted several times a day. That also meant that measurement fell by the wayside. After several months, the company was not clear about its click conversion rate.
“My biggest challenge was I simply didn’t have the time to manage 1,500 bids manually on a day-to-day basis, and I didn’t have a sense of which position every bid should be in,” Woods said. “We really didn’t have a good sense of the ROI.”
In 2004, BuildDirect decided to invest in a Web analytics software package so that it could begin to look at conversion metrics and keyword performance metrics. That didn’t solve its search problem, however: Sales remained flat, even though there were efforts to optimize the campaigns in-house.
“[The Web analytics package] gave us a much better sense of how a given keyword was converting to sales,” Woods said. “It was OK on a one-keyword-at-a-time basis. I knew [for example] that ‘laminate flooring’ converted better than ‘laminate floors,’ but I still didn’t have a sense of the return on different positions [in search results] of a given keyword. We didn’t know the best level of spend on a given keyword.”
BuildDirect began looking at available tools and search engine marketing companies.
“We looked at everything from self-serve software solutions, rules-based bid management, right up to full service marketing agencies that would manage bids, keyword lists, creative and everything in between,” Woods said.’
Ultimately, the company decided to hire Efficient Frontier, a search engine marketing provider.
Efficient Frontier developed a technology solution for BuildDirect that allowed it to automate bid management for campaigns. Adopting the technology also meant BuildDirect could substantially ramp up its volume of keywords. It had been managing 1,500 to 1,600 keywords, but with the new technology, that number immediately spiked to 16,000. Currently, that number is closer to 20,000 keywords.
BuildDirect offers many products and varieties of hardwood flooring, roofing, siding, decking and countertops, so a larger keyword portfolio is the best strategy.
“A lot of those are the ‘long-tail’ keywords that probably get far fewer clicks per month but, as an aggregate, they drive a lot of traffic,” Woods said. That “long tail” also means lower-cost keywords are driving much of its sales.
Using the search technology also enabled BuildDirect to set budgets and manage profitability. It helped it define cost-per-acquisition targets and provided a dashboard report showing spending related to profitability. BuildDirect was able to measure the percentage of online and offline sales and adjusted the CPA to match the percentage of sales targets.
“Within the portfolio, the money will flow to the least expensive acquisition [keyword],” Woods said.
“BuildDirect is a good example of how a company can be successful in the b-to-b market with search marketing,” said Michelle Schofield, VP-marketing at Efficient Frontier. “The long-tail approach, expanding the amount of keywords you can use, has been effective for BuildDirect because we were able to capitalize on the fact that they have so many products and variations. It enabled them to significantly increase ROI and keep cost per acquisition low.”
Results to date have been impressive. In the second half of 2006, cost-per-click decreased 21% compared with the same period in 2005, and total estimated product orders increased dramatically—88%—compared with the second half of 2005. In addition, Woods said cost per acquisition improved by 25% in the second half of 2006 over the same period the year before.
Since last year, the marketing department has grown from Rob Woods as a solo operator to seven employees. A new VP-marketing was named after a round of private funding in August, and five more employees have come on board to support the overall marketing strategy. Woods himself will soon transition away from the search end of things to focus solely on Web site merchandising, functionality and usability.