Get Ready to Spend Big on Holiday Search

(Searchline) It’s pretty late in the day to be worrying about the search marketing budget you’ve allocated for the holiday shopping period, but search marketing firm Performics is going to trouble your sleep anyway.

According to historical data they’ve compiled from the last two Christmas shopping seasons, if you’re not prepared to spend as much on keyword ownership in the last quarter of the year as you spent in the whole first half, you’re very likely to come up short.

“We’ve found from looking over the last couple of years that Q4 is usually pretty equal to Q1 and Q2 combined in terms of both clicks and spend,” says Cam Balzer, director of search strategy at Performics. “That can serve as a handy rule of thumb marketers can use to gut-check their budgets and make sure that they’re accounting for the growth they’ve already seen this year and not just guessing at a seasonal lift.”

Those predictions come out of Performics’ latest report on the Performics 50, a quarterly index of the top 50 active paid-search campaigns under management at the firm. The latest report covers results for Q2 2006. Usually the index focuses on the cost of bidding on and operating keywords and keyword lists for a month to spot pricing and spending trends. But with some previous holiday data under its belt, this quarter’s study also takes a sidelong look into the future at what marketers should be planning to spend on campaigns as a whole between now and the end of the year.

First, though, a look at the stats for Q2 2006. If the Performics 50 is any indication, marketers are increasing the size of their keyword lists; for the 50, those lists are 4% larger than they were in Q1 2006 and 58% larger than Q2 of 2005. And those lists made heavier use of the more expensive keywords, those costing more than $1 per click. Twenty percent of the impressions served up in June 2006 were on those costlier terms, compared to 14% in March.

“Those expensive keywords are growing pretty dramatically,” Balzer says. “That’s probably due to advertisers in the Performics 50 getting more aggressive and reaching out to higher-cost, higher-volume generic keywords. They’re probably increasing their focus on branding and awareness, understanding the value of being visible on those keywords as well as seeing the results in direct sales.”

Performics also noted a tendency for midtier keywords (those costing $0.21-$0.99) to get promoted to the higher price bracket if they performed well. But the average cost per keyword held fairly steady from the previous quarter, increasing only $0.14—less than 0.5%–from the Q1 average. Marketers managed to keep that average flat while still spending for more expensive terms by also mining the long tail of less expensive but strong-performing keywords.

The 58% year-over-year increase in the size of keyword lists was paced by similar increases in other search-related metrics for the index. For example, click costs were up 51% from the same metric in Q2 2005. Clicks were up 32% and impressions up 49% over the same quarter last year. And conversions from search rose 49%, while sales (in dollar terms) were up 57%.

“Even though clicks didn’t quite expand as much as the other metrics, sales did keep pace,” Balzer says. “That tells us that marketers, and Performics, are doing a good job of growing programs efficiently.” An increase in click volume larger than the sales growth would have meant that more of those clicks were happening on wasted or underperforming terms.

And judging by past seasons, marketers should expect total paid-search clicks to be 27% higher than total clicks in Q4 2005. If past is prologue, sales from search will increase 53% over last year’s totals. And while costs per click will not rise as steeply as either clicks or sales, marketers should still have the budgets in place to spend as much on search marketing in the last three months of this year as they did in the first six months.

Other than moving money around if necessary, what can search marketers do? The time for testing campaigns is gone, but there’s still time to make sure that keyword variations are optimized, Balzer says. “The forecast allows marketers to start tracking their performance early, using the Performics 50 as a benchmark. If they find their campaigns are off track in October, there’s time to intervene and prevent lost sales in November and December.”

And merchants should get rid of the mindset that views the holiday shopping season monolithically. The season has an arc, with different performance touchpoints for each of the four Cyber Mondays before Christmas. According to Balzer, Performics plans to issue some guidance soon on those four way stations on the holiday road.

Partner Content

Hincapie Sportswear Finds Omnichannel Success in the Cloud - Netsuite
For more and more companies, a cloud-based unified data solution is the way to make this happen. Custom cycling apparel maker Hincapie Sportswear has leveraged this capability to gain greater visibility into revenue streams, turning opportunities into sales more quickly while gaining overall operating efficiency. Download this ecommerce special report from Multichannel Merchant to more.
The Gift of Wow: Preparing your store for the holiday season - Netsuite
Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?
3 Critical Components to Achieving the Perfect Order - NetSuite
Explore the 3 critical components to delivering the perfect order.
Streamlining Unified Commerce Complexity - NetSuite
Explore how consolidating multiple systems through a cloud-based commerce platform provides a seamless experience for both you, and your customer.