Search: Higher Budgets Proving Better ROI
It's one thing to budget higher for search ads during a two-month period around the holidays, but another to generate higher revenue and profit from the investment.
The "Kenshoo 2012 Global Online Retail Holiday Shopping" report recapping aggregate client paid-search budgets and cost per clicks identifies higher returns on larger investments during the last two months in 2012.
In the U.S. during the last two months of 2012, online sales revenue driven by paid search in the U.S. rose 23% compared to last year, along with a 16% increase in clicks and 20% in sales transactions, according to Kenshoo's report.
In the U.S., return on ad spend (ROAS) rose one 1% year-on-year. Conversion rates rose 4%; and average order value, 3%. Retail search advertisers generated nearly $6 for every $1 spent on paid search.
During the holiday season in the U.S., click-through rates averaged 1.94%; CPC, $0.54; ROAS, $5.78; conversion rate, 2.84%, and average order value, $109.46.
Google product listing ads (PLAs) in aggregate did well. PLAs draw nearly 1.5 times the click-through rate (CTR) of text ads and convert 23% better, resulting in a 31% higher ROAS. The report highlights PLA ROAS at $4.82 vs. text ads at $3.68. Click-through and conversion rates are higher, with PLAs bringing 2.73% and 2.49% vs. text ads at 1.86% and 2.03%, respectively.
The report notes that PLAs maintained a high ROAS for the first three weeks of December and the format seemed much less prone to weekly fluctuations. U.S. consumers generated 75% more search impressions, clicked on 36% more ads, and converted at rates 45% higher than in 2011.
For the entire holiday-season period, Free Shipping Day delivered the highest paid-search conversion rate, at more than 4%.
Globally, retail paid-search advertisers saw CPC rise 11% to $0.48 and budgets rose by 36%. Overall, retailers generated $7.49 for every $1 invested in paid search during the 2012 shopping season.