From 0 To 31 Million Dollars With Search Engine Marketing & Inventory Financing: Kim Pedersen, CEO of 1000 Bulbs (Part 6)

Sramana: In 2004, after you received inventory financing, were you still getting 80% to 90% of your business through pay-per-click marketing?

Kim Pedersen: Yes. That is not true today, but at that time it was. Search engine marketing is key for us today. We take 99% of all sales orders on the Internet today. We did some affiliate marketing campaigns for some time and that was successful for a limited timeframe and we eventually dropped it. It was not a high-yield campaign.

Sramana: What is unique about your search engine optimization process? I see your site ranked high in several search results.

Kim Pedersen: We do a lot of search engine optimization work. That has evolved to the point where it is its own department. I brought on Jeremy early last year, but up until that point I managed all of the paid search myself.

Today, our marketing focuses on paid search and organic search with some other exploratory areas. We have arrangements and work with a dozen different shopping sites. Those are comparison shopping sites such as Google, NexTag, and Shopping.com. We are not on eBay, but we did just launch as a direct seller with Amazon. We also do some direct e-mail marketing.

Sramana: How large is the keyword volume you have to manage for PPC and organic search for your site?

Kim Pedersen: We have in the neighborhood of 14,000 paid keywords which are organized into 25 different ad groups. The number for organic search is in the millions.

Sramana: How did you manage 14,000 keywords by yourself?

Kim Pedersen: I was probably managing about 10,000 keywords at the time I turned it over. I worked morning, noon, and night six days a week. I did it one keyword at a time and I managed it manually. There were several times where I tried to outsource that function, and each time I ended up pulling it back in house due to overspend or mismanagement.

I would enter into very short-term contracts with these firms to manage my campaigns for me. They are the ones who came up with the 10,000 keywords. When I fired them I still had the keywords, so I would just manage those keywords one at a time.

Sramana: What was your process for managing a single keyword?

Kim Pedersen: It was basically pulling up an ad group on the Internet and viewing each keywords ranking. I would make a determination at that point about the importance of the keyword. I decided which product group it would touch, and I would know by looking at the keyword if it was a mover and profit maker for the company. I would increase it, decrease it, or exclude it from the list after I saw it.

Sramana: How did that workflow change as you professionalized the process?

Kim Pedersen: We put things into more specific groups on the back end. We know what makes up a buyer and what each buyer was worth. We know if that user continues to shop with us and if they continue to use those keywords to find us. That lets us know what we can afford to spend on someone who is purchasing a light bulb. A lot of times, we take a loss up front on a customer’s first purchase. They may spend $12, and we will spend $25 to acquire that customer.

The history here is that as our customer list has gotten larger and larger, and as we reach out beyond organic search into other advertising methods, we have to know how much we can spend to acquire each customer. Spending our resources appropriately will let us continue to grow our business.

Sramana: Are you using analytic tools to manage and track this whole process?

Kim Pedersen: Yes. On the back end we are using Google Analytics. It is sufficient to the point to allow people to manage the process. As we continue to grow, we are going to look at bringing in more analytics staff, at which time we will pick up a more robust analytics program. We just don’t think we are at the point yet where we need to pick up Omniture or a comparable program.

This segment is part 6 in the series : From 0 To 31 Million Dollars With Search Engine Marketing & Inventory Financing: Kim Pedersen, CEO of 1000 Bulbs
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