• by Laurie Sullivan  @lauriesullivan, October 7, 2009

Budgets remain tight and the economy tough, but Century Novelty, an online retailer and supplier of party favors, has seen revenue jump by 20% this past year by increasing its paid search budget more than 50% with Marin Software.

It seems that paid search helps Century Novelty, founded in 1951, to attract first-time customers who are crucial to the party supplier of novelty goods. The company began to rely on search engine marketing in 2004 when it turned into a Web-only business, but turned to Marin Software after realizing that its paid search program had become too complex to manage, measure and optimize.

Many online marketers have a difficult time getting accurate performance data around search. It's difficult to tie in cost-of-goods-sold data to come up with a true profit margin. Most Web analytic tools just track conversions and revenue. Marin managed to tie in cost data to obtain a true profit number, according to Matt Lawson, director of marketing at Marin Software. "The other piece of the puzzle required sophisticated tools for bid management," he says. "Marin's algorithms found opportunities where they underbid on high-performing terms, so we raised the bids to drive more sales."

Marin also found opportunities where Century Novelty overbid on terms that did not perform well. It allowed Marin to reduce spend and cut out unwanted traffic. Marin's software also helped the company decrease time spent on paid search management by 25%, which boosted conversion by 11% and reduced CPAs by 38%.

There are two reasons why Century Novelty's business model works well with search marketing. They have an e-commerce model, so they sell goods online. The less obvious part is that they have a large selection of novelty party favors. Lawson says "there is a long tail or products" and many different keywords to bid those terms -- not for their highest-selling items, but all the way down the tail. They had 45,000 keywords when they started with Marin. Lawson declined to reveal the number of keywords they bid on today, but says it's "considerably more," which typically means double.

Lawson says Century Novelty will look for creative ways to manage the entire catalog through Marin, including options to bid higher or lower based on inventory level of items in stock. For example, if you had an item run out of inventory, it's difficult to coordinate the information to stop the ad. The system will be automated, similar to an automatic inventory replenishment system that sends a trigger to reorder stock -- only this time it stops the ad, rather than reorders the item.

The biggest challenge will become managing the product category, Lawson says.