As ongoing high-street closures – Debenhams being just the latest example – drive an increasing number of retailers online, it has never been more important for brands to invest in their online marketing strategy in order to stand out. 

Research shows that 65% of clicks for transactional search queries (i.e. from online customers looking to buy) go to sponsored search results on platforms like Google Shopping. This clearly highlights the importance of a well-optimised paid search strategy.

Retailers’ ability to gain control over these marketing and acquisition channels will, therefore, be vital to maximising long-term profitability. However, the sheer volume of data that must be gathered and analysed in order to do this accurately can limit their success.

Intelligent tools that automate these processes can simplify this while also taking away much of the guesswork associated with paid search by optimising pay-per-click (PPC) spend in a number of key ways. Indeed, it was recently argued that machines could provide a better PPC offering than humans up to 80% of the time.

With this in mind, let’s discuss how AI-based automation can impact and improve PPC campaigns.

Moving marketing spend to the most valuable search terms

When it comes to purchasing intent, most retailers would agree that it’s more beneficial to concentrate marketing efforts on those shoppers who already have a desire to buy a particular product – as they are much further along the buying funnel.

Intelligent, automated systems can make it easy for retailers to control whether they are bidding on broader, more generic terms – for example, ‘coffee machine’ – or on specific product terms – such as the make and model of one particular coffee machine – which are more likely to drive conversions.

They do this by automatically recognising, classifying and filtering search terms by type (for example, whether they include the brand name ‘Samsung’ or whether they are simple category keywords like ‘television.’)

The terms are automatically structured, allowing bids to be adjusted based on individual campaign performance. This results in higher bids for product terms and lower bids for generic terms and can hugely improve conversion rates.

Incorporating accurate margins into marketing spend

For PPC campaigns to be profitable, the margin of each product sold must be high enough to compensate for the amount spent marketing it. However, manually tracking the margins of all products – something which would prompt bid change – is simply not feasible on a daily basis.

Some automated bidding tools allow retailers to adjust PPC spend based on an average margin but this can often lead to budget inaccuracy and wasted resources. More intelligent algorithms, meanwhile, can move beyond this; collating precise, complete and real-time data for all products and automatically incorporating this into bids.

Such systems can generate new bids every hour, incorporating actual margins on the individual product level – representing a huge opportunity to boost profits across the board.

Monitoring and acting on competitor prices

Worryingly, pricing levels are not always used as an input for marketing decisions but automation through intelligent algorithms can change this.

Adjusting bids – or the maximum cost-per-click – is usually based on the conversion rate of a particular product (as the conversion rate increases, so too does the bid.)

However, conversion rates are rarely constant as they depend on that product’s pricing. If the price for a product drops, the conversion rate is likely to increase. This is particularly true for price-elastic products, whose volume is sensitive to price changes. In essence, a product does not have a conversion rate; only a product at a certain price point has a specific conversion rate.

Basing bids on an average conversion rate, therefore, means that marketers could be overspending when the product’s conversion rate is low but underspending when that product’s conversion rate is at its highest.

AI-based systems that allow access and analysis of competitor pricing data are therefore hugely valuable. They allow retailers to align conversion rates to pricing and – with the right configuration – automatically adjust bids for the product’s real-time price competitiveness.

A move to dynamic automated marketing

Bid management can sometimes be a gamble for retailers but as the ailing high street continues to force many brands online, marketing through these digital channels will become increasingly important in the future.

Software based on complex algorithms, which can calculate optimal product bids based on a range of data, will play a key role in this transition. What’s more, intelligently automating marketing processes frees up huge amounts of wasted time, allowing teams to think more creatively and focus on the overall future business strategy.