Allied Electronics is a small-order, high-volume distributor of electronic and electromechanical parts and components. Need a precision dual-rod pneumatic actuator with a 6mm bore? Allied has one. Need a few packs of AA batteries? Allied has those too.
Allied has always relied on its famously large annual catalogue to sell its products. Weighing in at 6 pounds and 2,304 pages, the catalogue reaches hundreds of thousands of customers with information on 100,000 different items.
The catalogue still comes out every October. But these days Allied Electronics has become a powerful online merchant as well, with a content-rich website, a dedicated online marketing team, and 1.7 million products available to customers at the click of a mouse. Ninety percent of Allied’s customers now visit the website before placing an order – even if they’re ordering through the catalogue. Building a bridge between the old and the new took foresight and innovation from the Allied team, sparked by observing a few key trends.
Big shifts
When Dan Stewart joined Allied Electronics in 2004, the company was just dipping its toes into the online ocean. Allied’s website mimicked the catalogue. It was essentially an online PDF version with a simple search function and a phone number to call for orders.
Dan became the company’s first director of e-commerce. At first he and his team worked under the shadow of the annual October catalogue release. “We used to synchronize launches, saving all of our [online] launches for October,” Dan explains. But Dan’s team noticed that a dramatic shift was taking place. In a traditionally catalogue-focused industry, the number of customers ordering directly from the catalogue was shrinking quickly. The number of people who expected to research and order products online was growing just as fast. For Allied’s online marketing team, that was a call to innovate.
In 2005, Allied began a steady push to bring in more business through the web. Over the next five years, their investment in online marketing grew 10 times. The Allied web site expanded to include not just the company’s 100,000 core catalogue products but its extended offering of 1.7 million products as well, all of them impressively listed in full. And to reach new customers online, the company turned to Google AdWords.
Trial and error
Asked about his original strategy for AdWords ads, Dan just laughs: “Throw everything against the wall and see what sticks. In the B2B environment, and particularly in electronic components distribution, there wasn’t really a set of best practices or rules around how to do e-commerce marketing.” Maria Khan, Allied’s e-commerce marketing manager, explains: “We took a lot of best practices from what we saw in B2C, like detailed product pages, rich images and clear pricing.”
Dan, Maria, and the rest of the Allied team started evaluating the performance of their online campaigns with a cost ratio metric – essentially, the cost of a campaign divided by the revenue it generates. The team continues to use this metric as their primary measure of what “sticks.”
When they spot success, they act on it immediately. Daniel Lackey, Allied’s internet marketing specialist, monitors the many changes the company’s AdWords campaigns require every day. If the keyword “actuator” is on the rise, he adjusts ad text and shifts budget to take advantage.
It takes work to update Allied’s keywords and ad text daily to reflect the company’s ever-changing inventory, but Daniel says he has the resources needed to get his job done: “Google’s done a good job of making our lives easier, whether that’s providing us with a new tool that can help us with our account or updating the way we’re able to work with our Google team.”
Something old, something new
Dan notes the synergy between the online and catalogue channels – each working separately but boosting the other. “In October, when we release our catalogue, we always see a spike in traffic and revenue. They definitely go hand in hand.”
The online channel has also given Allied Electronics more flexibility in releasing new products. “In the last couple of years, we’ve changed our model so that we release more and more products throughout the year on our website only, and then they get added to our next catalogue.” That synergy gives more support to Allied’s customer base, who can find new electrical components wherever and whenever they need them. And AdWords helps get the word out about the new parts.
Growing results
Dan says: “AdWords is not just our most effective marketing channel for e-commerce; it’s our most effective marketing channel online, offline, anywhere.” As part of a healthy media mix that includes the catalogue, direct mail, print buys, email marketing and TV, AdWords helps generate more customers at a lower cost for Allied.
“There’s more opportunity to gain customers when you leverage the web fully, and there’s also an efficiency standpoint,” says Dan. His team has proved it over the last two years, as they’ve reduced the cost to acquire one customer by about 40 per cent. “With just one person dedicated to the entire AdWords account, we’re able to reach an audience that previously would have taken a staff of four or five people.”
Rigorous performance analysis, constant account updates, and confidence in their online strategy have certainly earned the Allied team bragging rights. “We’ve been through the worst economic times that I’ve ever seen in my lifetime,” Dan says. “And we’ve still been growing our online business.”
In 2010, Allied announced its online business was growing at a rate of 90 percent, outpacing their competitors and their own historical growth rates in the space. “AdWords is playing a huge part in that,” Dan says.
Online, online, and more online
What’s next, you ask? Dan pauses, takes a deep breath and launches into an exciting list of new marketing initiatives: mobile, TV campaigns, social media. Allied aims to move 50 percent of its business online – and then increase that target again.
That means more than just boosting online marketing spend, according to Dan. For Allied, becoming even more of an e-commerce-driven business means “Providing all of the tools, features and positive experience that our customers want. It’s about making it easy to do business with us. And AdWords helps us do just that.”
About AdWords
Google AdWords is a performance-based advertising program that enables businesses large and small to advertise on Google and its network of partner websites. Hundreds of thousands of businesses worldwide use AdWords for text, image, and video ads priced on a cost-per-click (CPC) and cost-per-impression (CPM) basis. Built on an auction-based system, AdWords is a highly quantifiable and cost-effective way to reach potential customers.
