Comparison Shopping Engines Drive Sales

May/June 2006 Issue: Page 50

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Rev your sales by driving comparison shoppers your way.

Could comparison shopping be the gas fueling tomorrow's affiliate sales? In 2005, three of the top comparison-shopping engines pulled in a whopping combined $351 million, thanks to merchant commissions. Yet insiders at the top shopping- comparison sites say the best days are still ahead.

"Comparison shopping really is vertical search and its day is just starting to dawn," Mike Aufricht, chief marketing officer of mega-shopping-engine Shopping.com, says.

Already the number of comparison shoppers online is growing faster than the number of new Internet users. comScore reports that the Internet audience grew 5 percent over 2005. The number of comparison shoppers, meanwhile, grew nearly twice that much, according to comScore.

What started as a way to directly compare prices and features for technology at various online retailers is now expanding to all kinds of products and services sold by retailers online and off. Some comparison engines categories are already top of mind, such as travel, books and soft goods like apparel. Others are just gaining a foothold, such as education, financial services, automotive, healthcare and real estate.

The result? Thirty-seven percent of those who went online or used an Internet application in January 2006 used a shopping comparison site, according to Nielsen// NetRatings. That's a whopping 57 million consumers in January alone. In the financial category, 15 percent of financial consumers based in the United Kingdom used a price-comparison engine in January before picking their purchase - up from 6 percent in 2003, according to Forrester Research. And here's the kicker for affiliates: Forrester also found consumers who use comparison sites spend 25 to 30 percent more online than those who don't.

Affiliates, Start Your Engines

So what new revenues are affiliates bringing in by adding comparison-shopping engine functionality? A whole lot, if you ask affiliate David Felts.

In 2002, Felts had one website with static affiliate links organized in directory format. Three months into running it he received his first affiliate check: $22. He now runs 40-plus niche price-comparison sites pulling from a database of over 1 million products from more than 50 stores. His main site, iShopHQ.com, receives an average of 400 visitors a day. In December 2005, gross revenue from his network exceeded $9,500.

Providing the ability for his customers to view in-stock products from multiple vendors in an aggregated, yet simple, format "definitely gives me an edge over single- vendor affiliates, and helps drive sales," he says. Vendor data feeds are automatically

downloaded and unzipped; data import jobs pull the new feeds into the database, and more jobs reconcile the inventory and rebuild the search index. The whole process kicks off every day at 2 a.m., giving up-to-date inventory daily. He hosts all the sites from his own server at his house using a business-class broadband connection. "As a Web application developer by trade, I was able to do all the programming myself," Felts says, "and my search engine marketing background enabled me to leverage PPC and SEO to complement my affiliate marketing efforts."

With search results filtered by price, price range, feature set, brand or whatever users want, price-comparison engines are indeed changing the process of comparison shopping, both on and off the Web.

"Rather than flipping through catalogs, writing down sale items from newspaper ads or scouring the Yellow Pages and calling local retailers," says NexTag vice president of product shopping Mark Bradley, "[shoppers] can now conduct product - and

many services - in a few seconds with a few mouse clicks."

While comScore's mid-2005 study of consumer electronics comparison shoppers found 75 percent were merely window shopping, 25

percent did buy within the next 90 days. Only 10 percent bought online, though. That's a figure top comparison engines are working hard to increase. Some have added buy-now incentives. Some have built-in peer pressure in the form of real-time blogs and peer-to-peer reviews. Some offer special deals only found online.

"Consumers are just beginning to understand the power of the Internet when it comes to shopping: comparison," Farhad Mohit, founder of the Shopzilla.com comparison engine, says. "In the offline shopping world, there hasn't been a service like this that lets you have all the choices for all the stores."

While the Sabre system in travel allows people to tap in to all the flights and seats that are available, there is no Sabre for shopping. "In a very real way, we are building the Sabre in our industry," Mohit says of today's top comparison engines. "All of us are attempting to do this."

But for affiliates, paying to be included in comparison-shopping sites is not very thorough searches for just about any seen as a benefit, according to industry observers. That's primarily because most merchants are already sending feeds to the big comparison engines and since most of those charge a cost per click, rather than a percent of the sales price, click costs also quickly add up. For instance, Shopzilla collects the equivalent of 10 to 15 percent commission in click costs for every product sold. Affiliates would profit only if their commissions were substantially higher.

A few enterprising publishers are launching their own comparison engines, simply adding search technology within their existing catalog of affiliated merchant products. Take Pepperjam.com, which since 1999 has amassed a loyal following of a reported 6.5 million unique visitors monthly to shop its QVC-advertised collection of grandmother's-recipe pepper jams and a growing assortment of affiliated merchant products. With more than $100 million in affiliate sales through LinkShare, Commission Junction and Performics in 2005, this 25-employee super-affiliate in March launched the Pepperjam Comparison Shopping Blog, its house-made search and customer review forum.

"Over the past six years, as we've grown as a company, we've received calls from a merchant or affiliate manager saying, 'How can we work more closely with Pepperjam to get more sales for us?' Now it's going to be easy," says Kristopher Jones, Pepperjam's co-founder and CEO. Featured search placement goes to merchants who increase their commission or open a Pepperjam online merchant account and bid their product to the top. "With 6.5 million visitors already coming to our site," Jones says, "now, in order to get the premier real estate on Pepperjam, [merchants] are going to have to give us more."

While Pepperjam has more than 1 million products in its catalog, the largest product selections are found on the existing biggies of comparison sites, which include up to 100 million products each. So, the secret for most affiliates to profiting on this trend is to get in as an affiliate of a comparison-shopping engine already offering categories their site visitors need. Continued on Page 2...

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Tags: forrester research, nielsen netratings, comparison shoppers, comparison shopping, comscore, consumers, comparison engines, start your engines, affiliate sales, chief marketing, financial category, vertical search, internet audience, soft goods, internet application,

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