Driven by holiday shopping, the fourth quarter is obviously such a crucial period for retailers, most of whom rely heavily upon paid search ads to help drive both e-commerce and offline revenues. The quarter got off to a solid start with online paid search-driven sales up 13% Y/Y through mid-November, but the real fun doesn’t start until the week of Thanksgiving in the US.
It’s been reassuring to see that performance has only improved as we have entered the peak of the holiday shopping season and advertisers have gotten through the pivotal Cyber Week. Mobile and Product Listing Ads (PLAs) remained the biggest drivers of growth, but text ads continue to deliver for advertisers as well, especially as consumer search and shopping behavior changes after Thanksgiving.
Once again, sales appear to have shifted earlier in the week to Black Friday and over the weekend, but sales growth is still trending above early-Q4 levels as we have passed through to the post-Cyber Monday period.
Here are some of our other findings on Cyber Week performance across key dates, ad formats, and devices, as well as some considerations for closing out the quarter on a high note:
Thanksgiving Day Sales Growth Mixed after Strong 2015
After growing 39% Y/Y from 2014 to 2015, Thanksgiving Day sales driven by Google paid search rose just 12% between 2015 and 2016. There were a wide range of results, however, with the variability in growth rates from one retailer to the next running about twice as high as on Black Friday or Cyber Monday. We saw a similar pattern last year and this phenomenon likely reflects the impact of differing promotional strategies from brand to brand.
As expected, mobile traffic share peaked on Thanksgiving, hitting 69% of search ad clicks. Phones produced 58% of clicks, up from 42% a year earlier, while tablets produced 11% of clicks, down from 17% in 2015.
Mobile sales continued to lag mobile click volume, as phones and tablets combined for 44% of Thanksgiving Day sales. Phone traffic has narrowed the conversion performance gap with desktop traffic though, producing 31% of 2016 sales.
Online Sales Continue to Shift to Black Friday
Black Friday paid search-driven sales grew 34% Y/Y in 2016, a solid improvement from 25% growth between 2014 and 2015. Cyber Monday sales eclipsed those on Black Friday again this year, but the gap has narrowed considerably in recent years. In 2011, Black Friday was just the 14th biggest paid search sales producing day of the holiday season. It has now been the second most revenue volume for four years in a row.
Although mobile produced a slightly lower percentage of Black Friday sales than Thanksgiving Day sales, combined phone and tablet sales share was up 13 points on Black Friday from the previous Friday and even outpaced a typical weekend when mobile share tends to spike 5-10 points above the weekday average.
Google PLAs Produce Majority of Non-Brand Cyber Week Sales, but Share Slips Post-Thanksgiving
From the start of Q4 through mid-November, Google PLAs produced 65% of retailers’ sales from non-brand Google search ads. That rate began to slip noticeably on Black Friday, mirroring seasonality from recent years. On Cyber Monday, PLAs produced just over 59% of non-brand sales.
Along with major changes to other metrics like cross-device conversions, click-to-order latency, and average order value, the small, but clear decline in PLA sales share is another example of how consumer search and shopping behavior changes significantly after Thanksgiving.
Compared to 2015, PLA growth remains robust though, with sales produced by the format up 53% Y/Y from Thanksgiving through Cyber Monday. For comparison, text ad sales rose 16% Y/Y over the same period. PLAs continue to benefit from mobile and partner growth, including from Google image search, as well as from the Local Inventory Ad variant, which is included in these PLA figures.
There Are Still Plenty of Shopping Days Left
While most retailers have seen strong performance from paid search ads in Q4 so far, there is still plenty of opportunity to close out the quarter on a high note. Nearly 40% of Q4 paid search sales took place after Cyber Monday last year, a period that included five of the top ten shopping days of the season.
The 2016 calendar also benefits retailers with a couple of extra days between Thanksgiving and Christmas compared to last year. For brands that can turnaround the shipping, that should mean an extra solid Monday sales day late in the season. Hanukkah is also later on the Gregorian calendar than usual, which could provide a late boost as well.
With LIAs and in-store conversion tracking, brands have also never had better insight into the full impact of digital ads on brick-and-mortar purchases and capabilities to drive them with search ads. Though online sales continue to grow rapidly, the vast majority of retail sales still occur in store, particularly after Christmas shipping cutoffs hit. There is still time to adjust or finalize strategies to drive foot traffic at the tail end of the season.
Best of luck!