How to make eBay Promoted Listings work for you
Over the past week, I’ve published the research that we conducted into whether promoted listings work on eBay. The evidence for a statistically significant uplift in sell-through rate was overwhelming, with an average uplift of 27%. There was some evidence also to suggest that increasing the Promoted Listing percentage got higher sell-through rates, although we suspect this is category specific.
Furthermore with the earnings announcement last week indicating that in the absence of strong GMV growth Promoted Listing revenue is going to be one of the main drivers of eBay profit growth, I’d expect there to be considerably more attention this year both on getting sellers to use the service as well as improving and refining the product.
Of course if there are changes, then some of those changes might affect the results I’ve published, and wider take-up might reduce the overall effectiveness of the programme. What happens if the programme is restricted only to Premium Service sellers? Would you qualify? However, I wouldn’t be surprised to see special offers coming out to entice sellers to try out the service and it would make good sense to be ready to take advantage of those.
So what do you do about it? The first step is always to understand the economics of your own business – how much do extra sales each week filter through to your bottom line? If you have a lot of overheads and make a good unit profit on each sale, then this is likely to be significant, whereas a slimline operation with small gross margins is less likely to benefit. Then you need to calculate the cost of the promoted listings.
One effect to bear in mind is that if you are bidding at 1% then the additional fees will not necessarily be 1% of the additional sales – you might get additional “free” traffic – but equally you might cannibalise some of your existing sales and pay extra for sales you would have got anyway. It’s important to experiment to discover what additional fees you will actually bear. If the expected benefit is more than the cost, then it’s time for you to run an experiment.
We’d recommend starting off by putting a low percentage across half your inventory and seeing if it has any effect. If not, then try 1.5% etc. I’d strongly recommend avoiding the “1% over competition” setting: we’ve never seen the money go out the door so fast! It will depend on your category how much competition there is for promoted listing spots and so the amount that you have to bid to have an effect. Finally, don’t forget that we’ve disregarded the effect of sales history and best match in this analysis: those may be significant if you have deep stock lines.
We run these sorts of trials at Stuff U Sell all the time – it’s one of the ways in which we provide a valuable service to our sellers. Given what we’ve learnt, we have gone from nearly abandoning Promoted Listings altogether earlier this year to including it on every listing we do. We don’t normally publish our findings of our research, but now you’ve seen it, I’d be surprised if the effect wasn’t similar for other businesses, and I’d love to hear your stories too.
Disclosure: As mentioned in the first article, eBay refunded the promoted listings fees to allow this study to be conducted, but had no say in the design or implementation of this research, nor editorial control over this write-up.