’11 Holiday Season Paid Search Revenue, Returns Up

January 18, 2012

kenshoo-global-holiday-paid-search.jpgTotal global revenue driven by paid search rose 36% year-over-year during the 2011 holiday season (November 6 to December 25), while transactions rose 56%, according to a Kenshoo report released in January 2012. Average order value (AOV) peaked the week of November 20, but overall, consumers spent 13% less per transaction in 2011 compared to 2010.

According to Kenshoo insight, these trends are likely indicative of consumers’ willingness to shop around at different retailers when buying all the items on their shopping lists, as well as their propensity to purchase more frequently without regard to order size due to retailers’ free shipping offers with lower or no minimums.

Returns Up 23% Y-O-Y

kenshoo-search-roas.jpgData from Kenshoo’s “2011 Global Online Retail Holiday Shopping Report” indicates that the quality of paid search ad campaigns for retailers around the globe improved significantly as compared to the previous year. Acquisition costs were driven down as the average cost per conversion (transaction) fell 29%. Lower costs helped drive up return on ad spend (ROAS) to a total of $6.54, meaning that for every dollar retailers invested in paid search during the 2011 holidays, they generated $6.54 in online sales revenue.

The report notes that monetary figures were adjusted based on global currency conversions to US dollars.

Search Budgets and Conversion Rates Increase

Retailers around the world increased search ad budgets by 10% during the 2011 holiday season, compared to 2010, with the period of largest spend being the week of December 11-17. This aligned with the conversion rate peak, with overall conversion rates up 39% year-over-year for the period. Other metrics that rose year-over-year included clicks (+12%) and CTR (+13%), although impressions remained stagnant. By contrast, results from IgnitionOne, Performics, and Marin Software saw significant gains in impressions among their clients in Q4 2011, accompanying impressive rises in clicks and CTRs. However, similar to results from those entities, Kenshoo found that the average cost per click was not affected by the increased paid search competition, remaining flat year-over-year.

Meanwhile, according to Efficient Frontier, search spend increased 14% year-over-year in the US and 19% year-over-year in the UK in Q4 2011. Despite this increased budget, CPCs dropped 5% quarter-over-quarter across the board, due to a rise in mobile advertising, which accounted for 7-8% of search spend, compared to 2% the previous year.

Data from RKG Digital [pdf], meanwhile, shows paid search spend rose 31% year-over-year in Q4, while ad clicks increased 32.8%. Higher CTR was the primary driver, increasing 25.9% year-over-year, while impression growth was limited to 5.5%, CPC fell 1.4% year-over-year, and revenue per click rose 6.6%, suggesting a greater focus on efficiency among RKG’s base of advertisers.

Tablets Boast Highest Order Size

According to Kenshoo, tablets were responsible for the highest average order value (revenue per conversion) during the holiday season, at $149.84, slightly ahead of PCs ($146.07). PCs held the lion’s share of revenue (91.66%), though, with tablets accounting for 7% and mobile phones for 1.35%. Conversion rates on PCs (3.48%) were also higher than on tablets (2.72%), with mobile phones (0.87%) trailing distantly.

IBM Smarter Commerce results from December 2011 paint a different picture: according to those results, the conversion rate on all mobile devices shoppers was 3.1%, led by the iPad, which experienced conversion rates that reached 6.3% for the month (see link above).

Other Findings:

  • According to Kenshoo, for those consumers who did use smartphones to make purchases, Apple iOS mobile phone users represented a more desirable audience than Android users, spending 13% more on purchases ($122.48 vs. $108.33) and delivering a conversion rate almost 28% better (1.01% vs. 0.79%).
  • According to the Efficient Frontier report, Google maintained 80% spend share in Q4, although Yahoo/Bing clicks were 14% more valuable and had 9% more ROI. RKG data showed Google increasing its search lead over Bing and Yahoo in Q4, generating 86.5% of paid clicks and 83.5% of organic search visits. Meanwhile, recent comScore data indicates that Google led the US explicit core search market in December 2011 with 65.9% market share, with Microsoft overtaking Yahoo for the first time, at 15.1% and 14.6%, respectively.
  • Efficient Frontier data indicates that Facebook spend share reached 2.7% of biddable online advertising spend in Q4 2011, and is expected to reach 5% of all online advertising spend by the end of this year. According to RKG, Facebook generated 3.6% of referral traffic to sites on average in Q4, and 0.6% of all traffic. For marketers running Facebook ads, RKG found that 90% of Facebook impressions were generated by the ads, as opposed to organic or viral activity.
  • Efficient Frontier results indicate that Google’s Doubleclick increased its exchange display market share by 19% year-over-year in Q4, due to both inventory constraints and shifting strategies by Yahoo for their Right Media Exchange.

About the Data: The Kenshoo statistics were culled from an aggregation of more than 40 billion total search advertising impressions, 650 million clicks and 20 million online sales transactions. The mobile and tablet data represents a subset of retailers from the US in the index and a shorter window of analysis for the month of December 2011 only.

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