Florist Blames Sales Drop on High PPC Costs

Is this hubris? But on whose part? Christmas 2005

[pshea]

The international florist, FTD, issued a press release today and announced their online sales for December were down 4% over the same period last year. What is interesting is that the President of the company specifically cites the cost of online advertising as a key reason for the decline. One of the financial cable television networks here in the US is reporting that FTD balked at the price of bidding on related keywords and would not pay the asking price. Any insight, any thoughts?

[tedster]

To my ear that sounds like "we didn't advertise as much and our sales suffered." Sure, ppc costs are up -- but it's still a bargain compared to many traditional channels.

Online holiday sales are up significantly overall, but they missed the train because they refused to buy a ticket.

[rogerd]

I guess it depends on how well they understand ROI. It's clear that in some ecom segments one or more bidders are making bid decisions that are geared to obtaining customers for the future than making money on the current order.

I suppose it's possible that by accepting a slightly lower sales figure they actually maximized profitability. Still, it does sound a lot like whining to justify a revenue drop when most sites had robust sales.

[sem4u]

I wonder if this was due to the changes at Google (higher bid prices to make some keywords active) or just a general increase in bids.

[shorebreak]

I think it was due to the fact that in the floral space there are relatively few keywords that people use. Unlike finance, retail, travel and countless other categories, in the flower space there are 4-5 keywords that drive 80-90% of sales. In that environment conversion rate shortcomings are death, and yet FTD has never really been known for high-quality flowers. Back when I worked at a flower shop in high school (I was a floral conveyance specialist #:^) it was common knowledge that FTD's arrangements were the floral equivalent of McDonald's.

FTD needs to find a way to add value in the presentation of local florists' own unique styles.

-Shorebreak

[Bidera]

It is quite possible that relevant keywords for FTD were too overpice to justify spending much on them.
There have been some crazy prices for certain keywords this holiday season..
But, yes FTD is not know for high quality, McDonalds comparison is most apt here.

[BillyS]

I can't resist this thread because there is a lot of - err - "not so good" information.

I spent nearly two years trying to get an online flower shop off the ground. The PPC prices are extremely competitive. To this day, I still cannot figure out how anyone can make any money. (Despite this being my first attempt, I have had much success after this painful experience.)

At that time, the "high volume" keywords were between $1.50 - $3.00 if you wanted to be seen. My margin on a sale was in the area of $5.00. So you can imagine what the coversion rates need to be like.

The other problem was that the "unpopular" keywords were just that. Specialty flower names, misspellings... you wind up getting a lot of people looking for pretty pictures - so the negative keywords are key here. (I don't like supporting Sally's school project with my pretty pictures even at a quarter a click.)

Finally, FTD is certainly not the McDonalds of flowers. They are a network of florists, many of which are the mom and pop shops you'll find right in your own town (teleflora is also a network). In fact, FTD prices are higher than the typical 1800s and IMHO are of higher quality.

[shorebreak]

My point in equating FTD w/McDonald's is that most florists will tell you that the choices of arrangements from FTD's catalog are very limited and certainly no self-respecting florist is going to depend on FTD for his ideas.

[HRoth]

I noticed doing many searches for plants on Google this fall - I was always using botanical names plus a word like "germination" or "seed," never "flower" - that FTD's ads kept coming up. The plants I was searching on were things like native shrubs and perennials, which are not normally used in bouquets. Not to mention that people looking for bouquets don't use the botanical names of flowers to look for them. A couple of times I clicked through to see if they actually had anything about the plant in question. Of course not. I am not surprised they lost a lot of money on PPC. They must have used Hortus Third as a keyword database.

[tedster]

Interesting followup to this story in a Press Release from FTD (emphasis mine):

...growth for the 2005 Christmas season was below expectations due to our decision not to pursue high cost order volume associated with online search. In anticipation of continued competitiveness in the online search environment and to better manage the Consumer Segment business going forward, we have made management changes within this segment including the replacement of our head of marketing.

BusinessWire [home.businesswire.com]