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Online Retail Stats: CyberMonday 2008 vs. 2007

One day doth not a retail season make, but I thought folks might find it interesting to see our clients' "CyberMonday" results this year compared to last year. "CyberMonday" is the first Monday after Thanksgiving. This year, CyberMonday was two days ago, December 1st, 2008. Last year, it fell on November 26th. The day was named by Shop.org and is a large (but often not the largest) online retail sales day of the year. Background: we serve about 100 online retailers, predominantly B2C, with an aggregate annual search spend of $100 million. Considering only those clients we served in both 2007 and 2008 (to remove the impact of our firm's growth), and then aggregating all those clients together, and comparing 2008-12-1 versus 2007-11-26, here's what we saw:

cybermonday

Let's index those against the change in adspend:

cybermonday2

We see sales grew much slower than adspend: our clients typically opted for lower efficiency targets this year versus last. Clicks grew faster than adspend, indicating lower CPCs, reflecting lower SPCs. Orders and clicks grew at the same rate, indicating this year's soft sales were more due to lower order size than due to reduced conversion. Impressions grew faster than clicks, indicating the engines earned lower effective CPM rates on their inventory. We're privileged to manage search for some of the web's largest advertisers (many thanks for your business!) When we aggregate cost and sales across our clients, our largest clients, by definition, have the largest impact on the totals. To avoid this skew, we also computed year-on-year CyberMonday metrics for each client (again, only considering clients we served in both years). The following chart and histograms are based on this "equal-client-weighting" perspective. This treats each client equally, so a small client up x% counts the same as a huge client up x%. The "equal-client-weighting" provides a better sense of what a typical client experienced than provided by the agency-total metrics.

cybermonday3

The means are quite different from the medians, a sure sign of skewed distributions. Here are the histograms themselves. The x-axis is % change, year-on-year.

Sales: Our typical client (treating all clients equally) saw less revenue this CyberMonday than last, but many also experienced healthy revenue gains. The story is quite mixed.

Advertising spend: Again, a mixed bag. About half of our clients reduced ad spend in response to lower sales-per-click arising from lower average order values. And about half our clients spent more on advertising, in some cases considerably more.

AOV: Nearly all clients experienced a considerable decline in average order. This trend began in early November. Very few clients saw increase in AOV, year-on-year, for CyberMonday.

Clicks: While some clients bought fewer clicks, most clients bought significantly more this year.

CPC: Nearly all of our clients instruct us to bid to a target efficiency, investing some predetermined percentage of sales (or margin, etc) in advertising. This approach mandates bidding lower when clicks perform less well. With many of our clients experiencing AOV softness, many of our clients brought down bids accordingly.

CPM: While paid search clicks are sold on a cost-per-click basis, CPM (cost-per-thousand-impressions) is a key metric for the search engines, because CPM indicates how well a job they're doing monetizing their traffic. On CyberMonday, most of our clients paid less per impression this year compared to last year.

Lots of numbers and charts. So, what does all this mean? If our client base is a representative sample of online retail as a whole, we'd say that:
  • For most retailers, CyberMonday 2008 was not as strong as CyberMonday 2007. However, results were mixed. A decent fraction of retailers experienced strong year-on-year growth.
  • On average, retailers traded bottom line for top line, increasing their advertising aggressiveness.
  • The search engines experienced lower CPMs, pulling less revenue from their advertisers per PPC impression.
Honestly, before running these numbers, I expected to see far far far worse results. While the online retail 2008 holiday season isn't starting out strong, it also isn't starting out as a total disaster either. While we shouldn't extrapolate too much from a single day, I'm viewing CyberMonday 2008 as promising start, a tidbit of positive news about online retail and perhaps in turn about our national economy. May this season be a strong one for us all. What are you seeing? Update: ComScore put out a press release reporting overall strong CyberMonday sales: E-Commerce Spending Jumps 15 Percent on Cyber Monday to $846 Million, the Second Heaviest Online Spending Day on Record
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