Online Shoppers Are More Responsive to Paid-Search Ads This Holiday Season

According to Kenshoo’s “2010 Online Holiday Shopping Report,” search advertising budgets and total online sales transactions were both up during the 26-day period ending with Cyber Monday from their levels last year. The report also notes that online shoppers are more responsive to paid-search advertising.

Advertisers spent 31 percent more on their paid-search campaigns in the 26 days running through Cyber Monday than the same period in 2009, according to Kenshoo, a search engine marketing platform. The company observes that retailers began dramatically ramping up their budgets about a week before Thanksgiving this year, while in 2009 budgets started to balloon just a few days before the day of turkey.

This coincided with consumers starting their online shopping earlier this year. During the 21 days leading up to Thanksgiving, there was “a disproportionately larger percentage of overall online sales revenue compared to 2009, largely at the expense of Cyber Monday,” the report notes.

Kenshoo also shows evidence that interactions (measured by clicks) with search advertising increased 55 percent year-over-year in 2010, while traffic (measured by impressions) rose 5.84 percent year-over-year. Conversion rates (the percentage of clicks that resulted in online sales) rose 13.54 percent in 2010 compared to 2009, “showing that consumers did more buying and less browsing.”

The total number of online sales transactions rose 83 percent year-over-year, though the average order value shrunk 7.95 percent during that time, from $142.32 to $132.03. Meanwhile, revenue from search advertising is up 60 percent for the holiday season through Cyber Monday compared to last year’s numbers.

Paid-search return on ad spending is up 19 percent this year from last year, while search advertising cost per click is down 14.5 percent through Cyber Monday.

Kenshoo takes the liberty to dub Thanksgiving “Cyber Kickoff Day,” as paid-search online revenue grew 56.48 percent on Thanksgiving Day year-over-year, and transactions grew 69.11 percent during that time.

Searches for “Black Friday” peaked around 7 p.m. EST on Thanksgiving evening and at midnight on Black Friday.

However, competition for retailers peaks on Cyber Monday, as budgets rose 48.15 percent. Revenues increased 16.90 percent, and the number of transactions was up 20.95 percent, but return on ad spend declined 21.09 percent.

The implications for all this for advertisers are:

1. Approach online advertising with confidence
2. Plan ahead
3. Build in flexibility
4. Experiment with merchandising
5. Leverage advanced bid algorithms
6. Focus on relevancy

Sources:</strong

http://www.kenshoo.com/imgs/Kenshoo_2010_Online_Holiday_Shopping_Report_FINAL_12-1-10.pdf

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