As a Data Analyst, I speak to ecommerce managers from all kinds of industries. And there’s a misconception I come across all the time: that you shouldn’t advertise or bid for low-priced products.
For some retailers it might be the right choice, but not for others. So how can you know if it’s right for you? It all comes down to your first-party data.
I was recently speaking to a retailer offering free delivery with orders over £25 who felt it was unnecessary to spend money to bid on low-revenue items. “Surely they just bounce back, wasting your ad spend, right?”
Well, maybe. But before we agreed to remove the Shopping listings from the client’s Merchant Center, I thought I’d have a quick dig into the data.
And this is what I found
- Bounce rate wasn’t highest among the cheapest products
- Bidding for low-value items helps increase average order value (AOV)
For example, the cheapest item for sale led to an AOV 61 times greater than its sale price.
- Users who entered the website through an ad for a low-value item viewed recommended items and bought complementary products.
So what’s happening here? In this scenario, these cheaper products are known as gateway products.
What are gateway products?
Gateway products are low-value items which lead to a much higher value sale.
For instance, a sports retailer might bid more aggressively for a low-value item like a pack of six golf balls, knowing that his visitors go on to add more items to their basket - like a t-shirt, a scorecard holder, and some training equipment - before checking out.
And while the retailer only bids for a click on golf balls, they make a sale at a much higher value.
