Company: The Source By Circuit City
Location: Ontario, Canada
Industry: B2C, Retail
Annual revenue: $700,000,000
Number of employees: 4000
When an online electronics retailer runs a holiday-season Google paid search campaign, and the resulting cost per acquisition is far higher than the average cost per order, something is not right. Yet that's what happened with the 2005 holiday campaign of The Source By Circuit City.
The following year, Source flipped its keyword strategy, changing the focus from paid-search result position to achieving lower customer acquisition cost per order. The change resulted in a 58% reduction in per-order cost during the 2006 holidays.
In 2005, The Source By Circuit City, the Canadian Internet arm of the popular electronics retailer, ventured into the paid search space for its holiday campaign. It was an expensive undertaking.
"The cost of acquisition was extremely high," says Joanne Dunford, online marketing manager for The Source.ca, who joined the company in the middle of 2006. "The (Google search campaign) purchase was made without a huge understanding of the medium."
Because the results of the first campaign were so poor, it seemed likely that the company could improve results the following year. However, consumer electronics is a very competitive market. "I went on the assumption that my competitors would spend more than I would want to spend," she says.