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How to make eBay Promoted Listings work for you – Actionable Insights
David Brackin is the managing director of Stuff U Sell, the leading eBay trading assistant in the UK and a regular Tamebay contributor. In the first of this three part series and the first published rigorous wide scale scientific test of eBay Promoted Listings, David set out the basis for the experiments that Stuff U Sell carried out. Yesterday we revealed the results of the tests and today we have the conclusions and actionable insights that you can use in your business.
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.
I still don’t understand how (like us) you found PL to be ineffective before, but now you find it boosts sales by 27%.
“we have gone from nearly abandoning Promoted Listings altogether earlier this year to including it on every listing we do”
Do you really advocate PL for every listing? Continuously?
Just a quick follow-up, David,
What is it about your survey (other than its size and duration) that you think has made a difference?
If I toss a coin a million times, I might conclude that a slight majority of times it comes up heads.
Someone else does it a billion times and concludes the opposite.
What do you think you were doing differently before that contributed to getting poor results? The size and scope of this trial does not in itself provide a logical explanation for the change. Someone else could produce a larger trial and find no or lesser benefits.
I’m not questioning your integrity or anything like that, but to do the same again, only bigger, does not explain these figures.
Andy — I don’t think that what we did before necessarily yielded bad results — we just found it hard to see what the actual benefit was without conducting a proper controlled study. We didn’t do anything bigger in the study, just measured it better and — by designing the study up front to answer the question rather than trying to backwardly analyse a business decision — we were able to see properly what was going on.
A larger study would help close down the statistical variation, but I’d expect it to be broadly similar. I’d still like to know more about the effect of dosage, as well as the effective cost and the impact on best match (someone with deeper inventory will need to do that one).
Do I advocate PL on every listing? I advocate doing the test yourself and understanding your economics. My ingoing assumption is that many sellers will have a lot to gain from using PL properly. Since completing the study we have move to promoting every listing, in case you’re wondering whether my money is where my mouth is! We will run further trial to find out more and fine-tune our strategy.
I guess if buyers see your promoted listings they may not buy that listings but possibly click on your other listings in store.
If you have 10% promoted listings the other 90% might not get many more visitors.
If you have 50% promoted listing then there is a good chance the other 50% might have an increase in sales as well.
I personally hardly use promoted listings as don’t really want to go down the route of paying even more to eBay. I use them from time to time to try draw them into a listing with the hope they will go and buy other items I have for sale.
we wonder how PL will work when it is over dosed with seller take up
This is ideal for them when sellers are competing, one bids 5% extra, next one comes along and bids 8% all the time they make more and more money.
No more or less than the same effect on the Adwords platform, you might think.
I think the only people who really benefit from this are eBay themselves. Buyers aren’t going to buy more because of this, but eBay will get higher FVFs whilst their market share decreases, they scheme how to get more out of sellers for diminishing customers and service from the platform.
Quite agree Steve,,,,,,, shock horror eBay do something for eBay,,,,, no surprises there. Sadly, as with nearly all eBay announcements now, it’s the seller who ends up footing the bill.