Case Study | AdWords

Aided by Google AdWords, Allied Electronics reduced its CPA by 40 percent and is seeing business grow at a meteoric rate of 90 percent
Allied Electronics is a small-order, high-volume distributor of electronic and electromechanical parts and components. Need a precision dual-rod pneumatic actuator with a 6mm bore? Allied has one. Need a few packs of AA batteries? Allied has those too. Allied has always relied on its famously large annual catalog to sell its products. Weighing in at 6 pounds and 2,304 pages, the catalog reaches hundreds of thousands of customers with information on 100,000 di erent items. The catalog still comes out every October. But these days Allied Electronics has become a powerful online merchant as well, with a content-rich website, a dedicated online marketing team, and 1.7 million products available to customers at the click of a mouse. Ninety percent of Allieds customers now visit the website before placing an order even if theyre ordering through the catalog. Building a bridge between the old and the new took foresight and innovation from the Allied team, sparked by observing a few key trends. Big shifts When Dan Stewart joined Allied Electronics in 2004, the company was just dipping its toes into the online ocean. Allieds website mimicked the catalog it was essentially an online PDF version with a simple search function and a phone number to call for orders. Dan became the companys rst Director of eCommerce. At rst he and his team worked under the shadow of the annual October catalog release. We used to synchronize launches, saving all of our [online] launches for October, Dan explains. But Dans team noticed that a dramatic shift was taking place. In a traditionally catalog-focused industry, the number of customers ordering directly from the catalog was shrinking quickly. The number of people who expected to research and order products online was growing just as fast. For Allieds online marketing team, that was a call to innovate. In 2005, Allied began a steady push to bring in more business through the web. Over the next ve years, their investment in online marketing grew 10 times. The Allied web site expanded to include not just the companys 100,000 core catalog products but its extended o ering of 1.7 million products as well, all of them impressively listed in full online. And to reach new customers online, the company turned to Google AdWords. Trial and error Asked about his original strategy for AdWords ads, Dan just laughs: Throw everything against the wall and see what sticks. He continues: In the B2B environment, and particularly in electronic components distribution, there wasnt really a set of best practices or rules around how to do eCommerce marketing. Maria Khan, Allieds Ecommerce Marketing Manager, explains: We took a lot of best practices from what we saw in B2C, like detailed product pages, rich images, and clear pricing. Dan, Maria, and the rest of the Allied team started evaluating the performance of their online campaigns with a cost ratio metric essentially, the cost of a campaign

About Allied Electronics

www.alliedelec.com Fort Worth, TX Distributor of electronic components and electromechanical products Transition the Allied Electronics catalog into an online resource Reach electrical components customers online Bring more of the companys business through the web Moved 1.7 million catalog products to the Allied Electronics website Used Google AdWords to drive highly qualied tra c to the website Optimized and rened AdWords campaigns to continually improve performance

Goals

Approach

Results

Reduced the cost to acquire one customer by roughly 40% Grew online business at a rate of 90% Increased number of website-only product releases, bypassing the catalog

About AdWords

Google AdWords is a performance-based advertising program that enables businesses large and small to advertise on Google and its network of partner websites. Hundreds of thousands of businesses worldwide use AdWords for text, image, and video ads priced on a cost-per-click (CPC) and cost-per-impression (CPM) basis. Built on an auction-based system, AdWords is a highly quantiable and cost-e ective way to reach potential customers. For more information visit: http://www.google.com/ads/adwords

divided by the revenue it generates. The team continues to use this metric as their primary measure of what sticks. When they spot success, they act on it immediately. Daniel Lackey, Allieds Internet Marketing Specialist, monitors the many changes the companys AdWords campaigns require every day. If the keyword actuator is on the rise, he adjusts ad text and shifts budget to take advantage. It takes work to update Allieds keywords and ad text daily to reect the companys ever-changing inventory, but Daniel says he has the resources needed to get his job done: Googles done a good job of making our lives easier, whether thats providing us with a new tool that can help us with our account or updating the way were able to work with our Google team. Something old, something new Dan notes the synergy between the online and catalog channels each working separately but boosting the other. In October, when we release our catalog, we always see a spike in tra c and revenue. They denitely go hand in hand. The online channel has also given Allied Electronics more exibility in releasing new products. In the last couple of years, weve changed our model so that we release more and more products throughout the year on our website only, and then they get added to our next catalog. That synergy gives more support to Allieds customer base, who can nd new electrical components wherever and whenever they need them. And AdWords helps get the word out about the new parts. Growing results Says Dan, AdWords is not just our most e ective marketing channel for eCommerce its our most e ective marketing channel online, o ine, anywhere. As part of a healthy media mix that includes the catalog, direct mail, print buys, email marketing, and TV, AdWords helps generate more customers at a lower cost for Allied. Theres more opportunity to gain customers when you leverage the web fully, and theres also an e ciency standpoint, says Dan. His team has proved it over the last two years, as theyve reduced the cost to acquire one customer by about 40 percent. With just one person dedicated to the entire AdWords account, were able to reach an audience that previously would have taken a sta of four or ve people. Rigorous performance analysis, constant account updates, and condence in their online strategy have certainly earned the Allied team bragging rights. Weve been through the worst economic times that Ive ever seen in my lifetime, Dan says, and weve still been growing our online business. Allied announced in 2010 that their online business was growing at a rate of 90 percent, outpacing their competitors and their own historical growth rates in the space. Says Dan, AdWords is playing a huge part in that. Online, online, and more online Whats next, you ask? Dan pauses, takes a deep breath and launches into an exciting list of new marketing initiatives: mobile, TV campaigns, social media. Allied aims to move 50 percent of its business online and then increase that target again. That means more than just boosting online marketing spend, according to Dan. For Allied, becoming even more of an ecommerce-driven business means Providing all of the tools, features and positive experience that our customers want. Its about making it easy to do business with us. And AdWords helps us do just that.
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Dan Stewart, Director of eCommerce, Allied Electronics AdWords is not just our most e ective marketing channel for ecommerce its our most e ective marketing channel online, o ine, anywhere. Dan Stewart, Director of eCommerce, Allied Electronics