Perhaps no major retailer has been a scrappier competitor this Black Friday weekend than Best Buy.
According to a November 24 Wall Street Journal report (available to subscribers only), they’ve been monitoring competitors’ sale prices on products they sell around the clock, then instantly undercutting them with e-mailed, social media and website offers.
But while they’ve been hawkishly fighting competition at the front door, they left the back door unguarded – all due to a desire for extra revenue and a quirk in the way that Google online advertising works.
One brand’s bug is another brand’s feature
The strength of Ads by Google is that it places ads on pages which contain the advertisers’ chosen keywords.
The weakness is that the algorithm can’t determine the context those keywords appear in – unless the website owner specifically blocks them.
Best Buy didn’t. Neither do many other websites.
While people.com blocks Ads by Google for US Weekly or Life & Style, other websites without direct competitors don’t bother.
This is why, for example, previous articles being highly critical of, for example, Chevrolet Volt advertising appeared on examiner.com with Google ads for…Chevy Volt. Or why, during the election campaign, Obama ads appeared on right-wing websites next to posts trashing him.
But when Best Buy decided to to open its website to Ads by Google, they didn’t bother to block competitors. They should have.
Because what wasted GM’s and the Obama campaign’s ad money proved to be an unexpected treasure trove for Best Buy’s brick-and-mortar and online competitors.
Letting the camel’s nose into the tent
As the old saying goes, when you let the camel’s nose into the tent, the rest of the camel follows. And that’s exactly what happened.
BestBuy.com pages for dishwashers had Google ads from manufacturers and competitors alike – LG and Kenmore, for example – linking to direct-purchase sale prices from the manufacturer or to listings of stores where shoppers could get dishwashers at sale prices.
Their home tv page has Google ads for LG, Sears and Kmart. There are washer and dryer ads from Samsung, vacuum ads from Philips Norelco, Dell computer ads from bargainroom.com, lowerprices.us and refurbees.com. Ditto for other brands of appliances and electronics.
This simple oversight turned BestBuy.com, as Consumerist put it, into “a good place to find websites other than BestBuy.com.”
Feeding the hand that bites you
It’s bad enough when that happens over the biggest appliance retail weekend of the year, but the long-term implications are even worse.
It’s not every day, or even every year, that consumers buy refrigerators, dishwashers, big-screen televisions, or other major appliances. So once Best Buy loses customers to a link advertised on their own website, it’ll be a long time before they see those customers again.
And if those customers got good pricing and had a good experience elsewhere, they may never come back at all.
Was it worth it?
“Lots of large websites run Google ads in order to generate a bit of cash without having to actively sell an ad module,” Consumerist notes.
But the revenues diverted to other e-tailers more than outweigh the few cents for each clickthrough to their competing websites.
Best Buy’s blunder offers two lessons about online advertising to smaller retailers:
- If you want to make a little extra money by having Ads by Google on your website, that’s fine. But first, figure out who all your brick-and-mortar and online competitors might be, and set up your program so that they never appear on your site.
- If you want to pick up some sales, try directing online messages to direct competitors’ search pages or websites by making their names (or the names of products you and they both sell) search words and keywords. They may be smarter than Best Buy was, but then again, you never know.