Tens of Thousands of Merchants Use the Web To Find a Processor, But ISOs Fare Poorly

There’s at least $30 billion in annual volume up for grabs among merchants using the Web to seek out a processor. Trouble is, independent sales organizations are really lousy at Internet marketing, according to a report released this week.

Indeed, ISOs, banks, and point-of-sale software vendors spend about $17 million a year for clicks on Google Inc.’s AdWords programs, but much of that is wasted because of mistakes acquirers make in copywriting and design, says the report, “How To Acquire Merchants Online,” from AdilConsulting, an Omaha, Neb.-based consultancy specializing in merchant acquiring.

“Their marketing budgets just melt away and they don’t sign anybody,” says Adil Moussa, principal at AdilConsulting and author of the report. “The reason [Internet marketing] isn’t working is they really don’t know what they’re doing, how to write a good ad that links to a keyword, and then have a good landing page.”

Actually, POS software vendors like ShopKeep, POS Lavu, and Revel Systems, are pretty proficient Internet marketers, says Moussa, who studied the Web-based marketing efforts of some 67 ISOs, acquiring banks, and software companies. But apparently ISOs and banks have a lot of catching up to do. “POS software vendors are doing better because they’re not traditional,” Moussa tells Digital Transactions News. “These guys seem to get it perfectly.”

Not “getting it” is not only costing ISOs and banks a lot of money, it’s also potentially losing them business and market share as more and more companies selling software-based POS systems enter the market. Moussa estimates about 215,000 merchants each year use the Internet exclusively to look for and sign with a processor. These relationships start with some 4,500 so-called keywords related to merchant acquiring. But that doesn’t include merchants that use the Internet non-exclusively and so end up signing with providers through other means.

While the average account-acquisition cost through Internet marketing is a fairly light $80, marketers still waste a lot of money through misbegotten and misaligned campaigns, Moussa says. “If you do it right, it’s about $80,” he says. “But you have to do it right.”

Part of doing it right involves investing in Google AdWords rather than relying on so-called organic (unpaid) search results. With AdWords, marketers bid on certain keywords they think prospects will use in doing online searches. A typical keyword combination for acquiring, for example, is “merchant accounts.” The higher the bid, the higher the marketer’s ad will appear in the search results. Google then charges the bid amount for each click garnered by the marketer. The price usually ranges from $7 to $12 per click, Moussa says.

All of the POS software vendors Moussa interviewed use AdWords rather than relying on organic search, while only 55% of the ISOs do.

Moussa advises ISOs to use consistent language from their ad’s headline to the ad copy to the landing page, since merchants typically scan copy quickly and will abandon ad copy or landing pages that don’t use phrases that match what they saw in the headline. ISOs should also avoid industry jargon and use language that merchants understand. “Merchant accounts” is better than “virtual payment processor,” whether in a headline or in copy, he says.

It also helps, he adds, to link ads to multiple Web sites to correspond to the stages a prospect goes through, from exploratory to ready to sign an agreement.

Separate sites can also be used to explain or sell new products or services, such as mobile point of sale or tablet products, or to recruit specific segments of the industry. Too many single ISO sites are a “disaster,” Moussa says. “They want to sign up merchants and agents and ISOs with the same Web site.”