Scott Wingo of ChannelAdvisor recently gave InternetRetailer a good overview of the comparison shopping industry. He’s preaching what we have been practicing and our network of merchants is confirming with us. Here’s an excerpt from the article:

“While first-generation comparison shopping engines still produce larger volumes of consumer traffic, second-generation engines…have been known to produce higher conversion rates, Wingo says. Unlike first-generation engines, most of which pay for search traffic to their sites and then charge a mark-up in pay-per-click fees to merchants, second-generation engines rely on content like consumer-generated product reviews to generate free, natural search traffic, then charge merchants fees tied to each retailer’s sales resulting from that traffic. Because this is based more on cost of customer acquisition, there’s less risk for merchants,” Wingo says.

Retailers should be willing to experiment with second-generation sites, many of which offer smaller but more highly targeted groups of consumers, Wingo adds.”

We couldn’t agree more whole-heartedly. By providing a business model based on Pay Per Action and the promise of highly targeted visitors, we’re finding that our network of health merchants are providing their entire inventory of products and giving visitors to HealthPricer and our partner MarketPlaces more choice.

It’s a shame that Scot didn’t mention HealthPricer among the second-generation comparison shopping engines as part of the article, but we applaud his statements.

He goes onto allude to things heating up among product search engines: “Wingo adds that competition among comparison shopping engines may lead to more services and value offered to retailers.”

Here’s where things are getting interesting. One of our current efforts, to increase value to our merchants, is to power product search within partner health sites – basically driving higher volumes of targeted visitors to merchant sites. Wingo’s colleague, Scott Hurff, mentioned our initiative with healthline.com to “power an embedded marketplace for health products” on one of ChannelAdvisor’s blogs, CSEStrategies.com.

As goes for new services and value in comparison shopping, we’re seeing more developments taking place in “social shopping” that will drive consumer loyalty. For those of you that may not be aware, here are some of the most popular general social shopping sites – most of which have been around for a year or two: ThisNext, Crowdstorm, Kaboodle, Wists and Stylehive.

As I mentioned in a blog post on October 4 last year, we also have plans to enter the social shopping fray. We’ll keep you posted on this once we’re ready to unveil it.

The impending recession is prompting consumers to “hit the Internet before they hit the grocery aisles”. This is according to Prospectiv’s 2007 Consumer Packaged Goods Survey for 2007. Although I couldn’t find the number of respondents to the survey, Prospectiv says it reaches out to consumers on its two main sites, Healthier.com and Eversave.com as well as other properties and those reach millions of consumers.

So, I anticipate this survey reaches a wide online audience and its results are representative of consumer behaviour online.

The most astonishing results are 84% said they have changed their shopping habits due to concerns about a possible recession and 70% of respondents research everyday grocery products online before they go shopping. This should bode well for HealthPricer, our merchants and our partner MarketPlaces.

So, what are consumers doing differently?

• 66% are logging more hours online researching and comparing brands and prices
• 74% would welcome more online offers, coupons and e-newsletters from their favorite brands and products
• 79% already are or expect to dine out less frequently
• 60% are more likely to sign up/join a website or online community that offers recipes, healthy meal ideas, cooking tips and savings they can use at home

What interested me most in this survey is how consumers research CPG online. This is valuable information for our marketing efforts.

• 27% look for and sign up for online newsletters, specifically (although 74% welcome offers, coupons and e-newsletters)
• 25% use search tools (I anticipate they mean popular search engines, such as Google or Yahoo)
• 14% use general savings and shopping sites
• 14% use branded product sites

Those that are in the category of online newsletters readers, say specifically they are looking for newsletters that provide information on specials and savings offerings (27%) and valuable information on new product offerings (22%).

As mentioned above, 74% of respondents welcome more online offers, coupons and e-newsletters. This is too big a demand to ignore. So, my question to you, the consumer, is: as HealthPricer is the largest database of health product offers from merchants online, would you welcome and sign up for a newsletter from us that provides information of special offers, savings and new product offers?

During DEMO 08 we came out guns blazing with our tagline “HealthPricer is the Expedia for Health”. So you can imagine how flattered we were when a new online health services ‘shopping mall’ unveiled recently with “carol.com wants to do for healthcare what Travelocity did for airline tickets”. Feeling like the popular kid at school, I have to say the timing is perfect. ACNielsen have pegged Expedia and Travelocity the number one and number two ranked most-visited travel web sites. Let’s hope they will rank us the same in the years to come.

New healthcare services shopping mall: carol.com

Friendly banter aside, having two online consumer-driven healthcare companies launch new innovations to make healthcare more transparent to the consumer only serve to strengthen our goal. We applaud carol.com for their achievements to date and wish them every success in their expansion.

Michael Brown unveils HealthPricer at demo.com

Have any of you been watching jpod, the new series on CBC based on Douglas Coupland’s book? It’s basically a satirical look at life of a group of young people living in Vancouver, BC and working at a major gaming company called Neotronic Arts. In a recent episode, one of the characters, Kam Fong (labeled as “a loveable, generous-spirited Triad kingpin, massage parlor billionaire and human trafficker”), is rigging an online karaoke contest by having Chinese workers voting as fast as they can for the one video entry. Political correctness aside, I thought of this image of the workers clicking away frenetically when I saw this recent study.

I have often wondered about the effectiveness of using click-throughs as the measurement for online advertising success, and I’m sure I’m not the only one. Now Starcom, Tacoda and comScore suggest “the click is dead” for measuring results. They report that a very small group of consumers are accountable for the vast majority of display ad click-through behaviour. Heavy clickers represent just 6% of the online population, yet account for 50% of all display ad clicks.

Photo credit: natr_illustration (Flickr)

That in itself is very interest, but even more intriguing is the demographic profile of these heavy clickers. The majority of this group is aged 25-44 and in households with an income under US$40,000. While this group spends four times more time online than those that click less, their spending does not proportionately reflect this heavy Internet usage.

They study is suggesting that brands should rely more on brand attitude metric and analytics tying to online exposure to sales as true measures of online advertising efficacy, as the results suggests there is no connected between measured attitude between a brand and the number of times an ad for that brand was clicked. So optimizing for high click rates is not going to improve the campaign performance.

We’re watching developments in online advertising with interest as we start to work towards adding this model to our business (see our backgrounder for more information on our business model). Will this study move advertisers’ expectations of online ad measurements? How will this relate to vertical search and health in particular? Only time will tell how e-health visitors react to ads on our HealthPricer and partner MarketPlace sites and the metrics we need to adopt to measure brand performance.

More and more people are starting to pay attention to the power of Vertical Search Engines. The promise of high-value traffic and resulting targeted advertising opportunities is simply huge. Sramana Mitra in her recent article Is Google Invincible? voices her concern about Google’s absence from big verticals like Jobs, Travel, Auto, Real Estate, Health and Personals.

To support her concerns, E-Consultancy reports nearly 75% of 116 online publishers surveyed suggested one advantage of offering vertical search across their web sites would be to reclaim online communities from Google. Nearly 94% of these respondents also felt vertical search would benefit sites through improving authority and enhancing brand awareness.

And with this improved authority and brand awareness come the lure of targeted advertising. Mitra mentions the rise of Vertical Ad Networks and their threat to Google’s AdSense, which today is over 35% of the company’s revenue.

These statements and supporting numbers are absolutely fascinating to us. Health is now the number one search topic on the Net and leading health vertical search engines are capturing millions of unique visitors per month – people looking for specific and trusted information on health conditions and medications.

Health Ad Networks are the next stepping stone to delivering a complete visitor experience and driving sales for health advertisers. As experts in this area, we’ve learned that three features play a central role to the success of a health product ad. Those features are domain expertise, user experience and timing. Let me expand on this through an example.

Let’s say you are a diabetic. You’re interested in news on developments in managing diabetes and have signed up for regular Google Alerts for the search term “diabetes”. Today, you receive an alert for an interesting new article:

Contextual ads part of next-generation advertising

The Glucose Meter ad catches your eye as you have been looking for a better model than the one you use today, so you click on the ad, which takes you to a product page that shows a selection of retailers offering the Meter.

Ads that take you to a selection of merchant offers

Pleasantly surprised to see that you are not provided a one-store hard sell to the product, you spend a bit of time reviewing the offers from different stores and decide on buying it from a store with a 5 star merchant rating. The new insulin meter arrives a few days later.

Our word of advice for health advertisers is follow your instincts. Don’t settle for low-performing banner ads or slightly better-performing Google AdSense. Look to the future of next-generation advertising and the opportunities that vertical health ad networks, such as the one HealthPricer offers to gain higher conversions and build brand loyalty online.