• by Aaron Goldman , Op-Ed Contributor, November 1, 2011

Well it’s November, and you know what that means… next month is the Search Insider Summit! Oh, yeah, and there are a few holidays, too.

The time to prepare is now. For SIS, that means getting your liver acclimated for the high altitudes. For the holidays, that means getting the right people and tools in place to maximize SEM performance.

Today, I’ll share some holiday season best practices. But, first, some lessons from the 2010 holidays. As for lessons from the last SIS, let’s just say I won’t be rapping this time around… unless MC Hammer accepts my challenge!

Lasting Lessons

Here are six takeaways from the 2010 Online Retail Holiday Shopping Report that my company published.

1. Search is sacred. Last year, we saw click rates up more than 50% compared to 2009 holiday season. The combination of consumers becoming more trusting of search advertising and advertisers creating more relevant advertising seems to get more potent each year.

2. Loyalty is lacking. In 2010, the total number of online sales transactions resulting from search advertising increased by 87% -- but the average order value dropped 10%. This means that consumers are “shopping around” more and not just buying everything on their list all at once from the same store.

3. Shopping starts sooner. Thanksgiving Day in the U.S. showed a huge year-over-year (YOY) increase in 2010, with revenue up 56%. We also saw a spike in queries related to Black Friday at 6 p.m. ET on turkey day itself. Let’s just hope people are wiping off the grease before handling their laptops, phones, and tablets.

4. Budgets are bigger. 2010 holiday season budgets were 52% higher in 2010 than 2009. However, we saw a dramatic drop-off after Christmas, with YOY budgets up only 3% between Christmas and the weekend after New Year’s Day. While advertisers clearly stashed away some cash for the big year-end push, many blew through their budgets and weren’t able to capitalize on the “returns” search frenzy.

5. Bids are bolder. Cost per click (CPC) rates showed high variability in 2010 and soared 25% higher on Cyber Monday. Retail CPCs peaked at an average North of $1 during the 2^nd shopping week in December. Greater adoption of automated bid algorithms helped advertisers jockey for top position based on performance metrics.

6. Search still scores. Despite the increase in marketplace competition, our advertisers saw a 25% increase in return on ad spend compared to the previous year.  Again, the trends toward consumers embracing search and online shopping proved to be symbiotic with advertisers embracing search advertising and sophisticated campaign management tools.

Timely Tips

Here are six best practices excerpted from the 2011 Holiday Season Guide that my company recently sent to customers.

1. Outline objectives. Before lifting a finger in your search engine accounts or campaign management platform, be sure you’ve determined your goals and key performance indicators (KPIs). Are you looking to drive top-line revenue at all costs or stay within a certain profitability threshold? What are all the proxy metrics that will indicate the health of your program? Set up alerts against each KPI so that you can keep up with the fluctuations and react quickly and decisively.

2. Balance budgets. Set program budgets with your goals in mind, but be sure to build in flexibility to capture opportunities that arise mid-season. If you’re using campaign management software, make sure you’re familiar with settings related to rolling over budgets from one campaign or account to another. Ideally this will happen in an automated fashion so you don’t have to manually monitor and intervene.

3. Schedule stuff. Changing ad copy and landing pages to reflect your latest promotions can be a pain when doing so requires having someone at their computer at 11:59 on Saturday night to push them live. Leverage tools that can schedule actions at desired times throughout the holiday season.

4. Pick portfolios. Managing your search advertising program at the keyword level can not only be cumbersome, it can be limiting, since consumer demand varies widely. Create portfolios of keywords, set goals and constraints, and let technology do the work for you. Strong portfolio algorithms can take into account historical data and your business’ promotional calendar to move bids around between keywords in a cluster to maximize performance of the overall set.

5. Forecast future. Before dumping piles of cash into a high-performing ad group or portfolio, be sure to run forecasts to see how budget changes will affect performance. Calculate marginal ROI and find the point of diminishing returns before investing.

6. Revisit reports. During the heaviest shopping season of the year, things change every hour. Set up all the proper reports so you can stay on top of the action. Create bookmarks in your campaign management tool to quickly jump to the screens you check most often. Schedule reports to be sent to your inbox daily. Append dimensions or other tags to your keywords based on various themes (eg, brand, non-brand, free shipping, 20% off) so you can monitor performance and take action outside the confines of campaigns and ad groups.

Now go forth and seize the (holi)day!