Much of today’s comparison shopping is done through portals or platforms. Businesses advertise on search engines like Google and almost any product you can imagine can be purchased through Amazon. Yet, these intermediaries can charge high fees for online marketing.
In a recent article published in the June 2014 issue of Harvard Business Review, Benjamin Edelman offers four strategies to reduce dependency on large portals. While these strategies are not a substitute for traditional pay-per-click advertising, they should supplement marketing campaigns, especially for small businesses with more limited budgets.
First, Edelman advises, exploit the platform’s need for completeness. Sites like Kayak build their brand based on offering comprehensive and objective searches. American Airlines was able to capitalize on this promise by negotiating a direct link to AA.com from Kayak.
Next, search engines can discriminate in subtle ways. Edelman’s study refers to Google searches in 2010 requiring users to include “Yelp” in the search criteria when looking for restaurant reviews. Google had recently failed to acquire Yelp. Markedly, the additional search terms were not needed on competitive search engines like Bing and Yahoo. Ultimately, consumer complaints and regulatory investigation resulted in the removal of the search discrimination.
Third, supporting alternative portals can improve a supplier’s position. When MovieTickets threatened Regal Entertainment’s online cinema ticket purchases, Regal joined forces with other large, national cinema chains. The result, Fandango, blocked expansion of MovieTicket’s platform and sales from Fandango have exceeded those of the former monopoly platform.
Finally, dealing directly with customers from your own website makes good business sense. Online food ordering sites, like GrubHub and Foodler, charge high fees in an industry with razor-thin margins. Most people ordering take-out have already selected the restaurant. Direct ordering and the software to accommodate online orders with payment processing is typically far less expensive than per purchase portal fees.
Businesses need a multi-faceted approach to online marketing. The strategies described can offer some alternatives to the major portals: exploit a need for completeness, discredit advertising discrimination, support alternative platforms, and deal directly with your customers.
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