Paid Search Holiday 2010 Wrap-Up

The 2010 holiday season got off to a blistering start for the RKG client base with year over year revenue gains for a representative basket of clients coming in around 20% in early November and an impressive 40% over the Black Friday weekend. While we were excited and encouraged by the early results, we were ultimately not surprised to see year over year comps fall back to earth for a period after Cyber Monday.  For the past several years we have seen holiday sales shift to earlier in the season, particularly to the days immediately following Thanksgiving as shoppers have become increasingly savvy about seeking out the best promotional offers. Fortunately, 2010 did not end up looking like the 2007 holiday season, when year over year comparisons weakened in early December and never recovered for many retailers as we entered into an economically disastrous 2008.  Instead, we saw strong, albeit spiky, gains this year as shipping deadlines approached and, for the full post-Thanksgiving period, we saw an average year over year revenue increase of 24% for competitive (non-brand) search. That's in line with, if a bit better, than the third party reports we've seen for online results overall.  That makes sense, given the composition of our sample, which leans towards larger well-established programs, while newer clients to RKG, which tend to see the strongest year over year gains, are left out. Handling Holiday Shifts: The macro shifts in holiday sales to earlier in the season as well as inconsistent day of week trending speak to the need to have smart and dedicated analysts actively managing your PPC program.  Over-reliance on algorithms looking at past weeks' or past years' data can easily lead to spending too much during slow periods or, equally bad, if not worse, not spending enough during the peaks.  An analyst with the ability to apply tweaks to a powerful and flexible bidding system can also anticipate the impact of new promotions, which can dramatically impact expected sales per click the moment they kick in. Even the most advanced algorithms are likely to be a day behind the curve without some human intervention as engine reported costs lag behind revenue.  When dealing with a discontinuous, yet critical event like a Black Friday, missing by even a single day is simply unacceptable.  We have seen data from other marketers showing huge jumps in ROAS during holiday peaks, but if efficiency targets were being hit before the peak, those figures may just show that the marketer failed to effectively account for predictable improvements in performance. Mobile Growth: While shoppers were more likely to buy in late November early December than in years past, they were also much more likely to research or complete their purchase on a mobile device.  We've noted the growth and increased importance of mobile PPC a number of times in recent years and Google has clearly shown it has a keen interest in continuing to dominant mobile search (One could easily view the Android operating system as a hedge against Apple deciding to favor Bing or even create its own search engine). In December 2009, mobile traffic made up 1.6% of all PPC ad clicks for RKG clients.  This December, that figure more than tripled to 5.3%.  If you include the iPad, which Google lumps in with cell phones in its default settings, mobile share was 6.4%.  While 1 or 2% of traffic is certainly significant, we are now getting to MSN/Bing levels before their alliance with Yahoo. This marks a real opportunity for retailers to improve their mobile site usability as we continue to see lower conversion rates on mobile devices.  It's also a difficult situation for advertisers as mobile research leading to desktop purchases depresses the measurable value of mobile traffic and shifts attribution to more navigational desktop traffic sources.  In 2011, this trending will only continue with early January results suggesting mobile devices were popular gifts. Moving Forward: It's never too early to audit your holiday performance and create a plan of action for the days and months ahead.  For some, this may mean reconsidering the team or tools they have in place to manage their paid search program, even if the overall results look strong.  In a year when most did well, it's important to consider whether sales dollars were still left on the table as spikes in efficiency hid under-performance at critical times.  If the data indicates so, you may want to ask whether your 2011 holiday campaign will be managed by an experienced analyst anticipating these changes in seasonality or by software programmed with a fundamentally different looking past in mind.
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