I crossing holiday-retail-analysis-december-2010


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I crossing holiday-retail-analysis-december-2010

  1. 1. EARLY HOLIDAY SEASON ONLINE BUYING RESULTS OPTIMISTIC Traffic Up/People Buying More at Start of 2010 Season Written by: Reid Spice, VP Search Media Insights In an analysis of paid search data for some of iCrossing’s largest retail clients, it is clear that the 2010 holiday season will be much stronger than 2009, but is still recovering in a difficult economy. KEY FINDINGS + Traffic is up: Traffic to retail sites from paid search is currently up 29% over the same period in 2009. Traffic increased by 44% in 2009 over 2008. + Conversion rates are back up: Conversion rates have fluctuated this period from 7.26% in 2008, 6.67% in 2009 and 7.61% in 2010. + Those who buy online are ordering more: Average order volume has been rising slowly but steadily from $140.66 in 2008 to $147.43 in 2009 and $155.53 in 2010. + Marketers are getting more bang for their buck: The return on ad spend for core paid search branded keywords on exact match rose 12.3% on average over the past two years. + Cost Per Click (CPC) for branded keywords is decreasing: CPCs are down -34% from 2008-2009 and -29% from 2009-2010 for exact match brand keywords. Please note that the figures are not reflective of CPCs for non-brand keywords. Average order volume $147 $155 $140 .66 .43 .53 2008 2009 2010© ICROSSING. ALL RIGHTS RESERVED. 1
  2. 2. EARLY HOLIDAY SEASON RESULTS OPTIMISTIC DECEMBER 2010 WHAT IT MEANS Though this data does not necessarily provide any indicators about overall economic health trends, it does clearly indicate that 2010 will be a much stronger holiday season than 2009. The strong increases in traffic may simply be a result of the ongoing shift from brick and mortar to the convenience of online holiday shopping, a trend that does not necessarily indicate incremental revenue growth for all advertisers. However, the fact that the traffic increases are consistent across all brands, including those without physical locations, indicates that retailers are continuing to enjoy some incremental market growth and improved economic health. Decreasing brand CPCs are offsetting some of the costs incurred with the increased traffic, contributing to a stronger return on ad spend. The year-over-year increases in average order value are encouraging in the context of a stagnant economy, indicating that these gains cannot simply be attributed to inflation. Finally, it is interesting to note that, following mid-2009 changes to Google’s trademark policy (that many predicted would lead to an increase in CPCs), Google brand CPCs have actually decreased for all but one retail client in our study. With CPCs falling almost universally during a time when trademark policies became more relaxed, one might assume that Google has been making some changes to their pricing algorithm for keywords that appear to be trademark terms. Google’s Sitelinks program has certainly contributed to the decrease in exact match brand CPCs since its introduction in 2009. We will revisit our analysis at the end of the holiday season to see if retailers did indeed have a happy holiday or found another lump of coal in their stockings. METHODOLOGY iCrossing reviewed the traffic, CPCs, average order value and conversion rates for the core, exact match branded keyword for several clients (typically the trademarked name of the retailer) in Google for the period of November 20 through December 2, 2010. We then compared the data to the same periods for 2008 and 2009. The study purposely used a single exact match keyword in Google to ensure a consistent, sterile environment for the analysis (eliminating the potential noise of changes in matching algorithm, negatives, client spend/targets, Yahoo/Bing alliance, etc.). STAY CONNECTED Find out more at www.icrossing.com Follow us at twitter.com/icrossing Call us toll-free at 866.620.3780 Become a fan at facebook.com/icrossing© ICROSSING. ALL RIGHTS RESERVED. 2