• by Jack Loechner , Staff Writer @mp_research, October 13, 2016

According to AdGooroo, a Kantar Media Company, data, measuring U.S. Google desktop text ad activity on the top 50,000 keywords in the retail category, December is the top month of the fourth quarter for paid search ad spend, followed by November and October in descending order. Retail advertisers spent $543 million on U.S. Google desktop text ads in December 2015, $510 million in November, and $391 million in October. This spending pattern is consistent with Q4 2014. Retail advertisers should consider reserving budget in Q4 accordingly, suggests the report.

For the top advertisers in the retail category, the study found they spend up to 45% of their annual paid search budget in the fourth quarter. And, for some seasonal advertisers, that number can climb as high as 85%. On average, retail advertisers spent 36% of their paid search budget in Q4 2015. This phenomenon is consistent with prior years as well; in 2014, retail advertisers spent 34% of their budget in the fourth quarter.

The primary reason retailers spend more in the fourth quarter, of course, is that more consumers will be shopping for the holiday season, says the report. This phenomenon is reflected in an increase in consumer clicks on retail paid search ads in the fourth quarter. Consumer clicks on retail paid search ads averaged 558 million per month in Q4 2015 compared to an average of 330 million clicks per month in the first three quarters of the year, a 69% average increase in clicks, says the report.

Retailers are well aware of the importance of Black Friday in driving Q4 sales, both in stores and online, says the report. In fact, according to the National Retail Federation, 103 million U.S. consumers shopped online over the Thanksgiving-Black Friday weekend in 2015,one million more than shopped in brick-and-mortar stores.

To help drive a successful paid search strategy for Black Friday, retail advertisers should consider sponsoring Black Friday-specific keywords, i.e. keywords that include the term ‘black friday’, says the report. In 2015,the study found 161 Black Friday-specific keywords generated $19 million in U.S. Google desktop text ad spend during the fourth quarter. The top Black Friday keyword, ‘black friday 2015’, alone drove $11.7 million in spend in Q4, ranking it #5 in U.S. Google desktop text ad spend among all retail keywords for the full year of 2015. In 2014, the keyword ‘black Friday 2014’ appeared 4th in the same ranking.

AdGooroo found that the average number of advertisers, sponsoring the top 2500 general retail keywords in 2015, increased 10% in Q4 over Q1-Q3 2015, increasing from an average of 28,000 advertisers per month in first 9 months of the year to an average of 31,000 advertisers per month in last 3 months of the year.

Looking at key retail subcategories that are popular for holiday gifts, apparel and consumer electronics, the study found significantly higher increases in Q4 competition in 2015. The number of advertisers sponsoring the top 1000 apparel keywords jumped 62% in Q4 2015 over Q1-Q3 2015, while the number of advertisers sponsoring the top 3000 consumer electronics keywords increased 41% in Q4 2015 compared to the first three quarters of the year.

Many advertisers, particularly smaller niche players such as flash sites, will hold back budget throughout the year to blitz the market during the holidays. For instance, according to the report, the site “blackfridaydiscount.net” spent $3.2 million on text ads campaigns in Q4 2015, placing it 10th in a ranking of the top 10 advertisers by text ad spend on the keyword group.

Aggressive niche advertisers can bump traditional retail advertisers from their position and siphon traffic during crucial shopping periods, as well as drive up cost per click, says the report. To help safeguard against such niche sites, suggests the report, retail advertisers should consider optimizing their campaigns early, ideally in September, including click through rates, ad copy and landing pages, to ensure a strong quality score relative to the competition.

In summary, the report says that retails will likely pay more for paid search campaigns this holiday season as retail paid search spend increased 24% in Q42015 over Q42014 while year-over-year spending from January August 2016 increased by 31% compared to the same months of 2015.

• The majority of Q4 paid search spend by retailers occurs in December
• Retail advertisers spent 36% of their paid search budget in Q4 2015
• Clicks on retail paid search ads increased an average of 69% in Q4 2015 vs. Q1-Q3
• Holiday oriented   retail categories like apparel and consumer electronics saw large increases in competition and cost per click in Q4

To review the full blog post, containing more findings and analysis, please visit here.