Search marketing may have seen some budget pressures in the darkest marketing days of 2008 and 2009. But two new reports on pay-per-click ad spending on Google, Yahoo and Bing in the last months of 2010 suggest that marketers optimized their chances for a happy holiday shopping season by beefing up their spending on search to pre-recession levels.
Search marketing budgets for retailers in November and December 2010 showed a marked year-over-year increase, and produced a resulting increase in sales attributable to search, according to a new study by digital marketing software provider Kenshoo.
The report, published earlier this month and covering the period beginning 21 days before Thanksgiving through the weekend after New Year’s Day 2011, found that spending on search marketing among an index of Kenshoo retail customers was up 52% last holiday season compared to spending in the same period of 2009. The increased spending produced a 54% increase in the click-through rate for ads by the indexed merchants, along with a 21% increase in conversions from search ads during the two-month run-up to the Christmas holiday and beyond, to January 3, 2011.
The report found that overall online sales transactions for the indexed retailers were up 87% year over year. More particularly, online sales revenue attributable to pay-per-click search ads was up 69% compared to the same period in 2009. By Kenshoo’s calculation, that amounted to a 25% hike in the ROI from search marketing for the season year over year.
“When we released our first report after Cyber Monday, the state of the economy and search industry at large had already proven to be healthier in 2010 compared to 2009,” Kenshoo CMO Aaron Goldman said in a release. “But the upward trending of budgets, sales and revenue increased further in the weeks before Christmas, helping the Kenshoo U.S. Retail Index earn an average of $10.60 for every $1 spent on search ads.”
The Kenshoo report also found that online holiday search marketing began earlier this year and contained some new spending peaks, most likely reflecting an evolution in consumer shopping behavior. For example, the study found that retailers’ search budgets rose dramatically about a week before Thanksgiving 2010, compared to an inflection point only a few days before the holiday last year. They drove much higher on Cyber Monday, the customary start of the online shopping season right after Thanksgiving. And search budgets spiked almost as high during the second shopping week in December 2010, indicated that retailers were anxious to attract shoppers who had put off gift purchases until relatively late in the season.
The agency also concludes from its findings that consumers proved more responsive to pay-per-click ads than in 2009, since the 54% increase in clicks and the 21% jump in searchad conversions were accompanied by only a 1% increase in ad impressions. In other words, people weren’t necessarily being exposed to more ads; they were clicking more often on the ones they saw.
And while consumers were conducting more transactions attributable to search ads—87% more than during the 2009 holiday shopping period—the value of the average ticket for each conversion actually dropped 10%. Shoppers were buying more often, but buying less each time. The Kenshoo report speculates that the widespread offer of free shipping contributed to this trend by removing the driver that led shoppers to consolidate purchases into fewer, larger buys.
The Kenshoo Retail Index, on which the report was based, includes a cross-section of the agency’s retail clients in vertical categories such as apparel, electronics, entertainment, home improvement, gifts, toys and luxury goods, including five of the top 10 retailers as measured by the National Retail Federation.
Those rosy conclusions about the impact of search were echoed in a study of U.S. search spending during the whole fourth quarter of 2010 produced by performance marketing services provider SearchIgnite. That firm’s Q4 2010 analysis found that SEM spending increase 35.5% year over year during the quarter, and that search budgets for the month of December were in fact 44.8% higher than they had been in 2009.
Other SearchIgnite metrics for the quarter showed a similar upturn, with a 20.6% year over year increase in clicks, a 2.3% jump in ad impressions, and a 17.9% hike in clickthrough rate (clicks divided by ad impressions.)
The strong quarterly performance capped a trend that saw a yearlong increase in search spending, says the SearchIgnite study. Overall, search spending for all of 2010 was up 18.5% over 2009.
Like the Kenshoo study, SearchIgnite’s research points to a strong increase in search spending among retailers during the quarter leading up to the holiday shopping season. SearchIgnite finds that the retail category spent 36.6% more on pay-per-click ads in Q4 2010 than in the same quarter the previous year and saw a resulting year over year increase in conversions (22.5%).
But unlike the Kenshoo report, the SearchIgnite research reported a year over year increase in average order values both for the whole fourth quarter (up 31.3%) and specifically for the month of December (up 48.3%).
Network
