First there was Black Friday. Then came Cyber Monday. Now there's Cyber Kickoff Day?!?
Indeed, following today's release of the Kenshoo 2010 Online Holiday Shopping Report, we have a new benchmark sales day to contend with.
After analyzing the 26-day period from Nov. 4th through Nov. 29th, it's clear that consumers aren't waiting until Cyber Monday to do their online shopping. Rather, they're firing up their computers immediately after dinner on Thanksgiving Day to begin the bargain hunting. "Hey Grandma, you gonna finish that stuffing, or keep messing around on Amazon?"
Here's an overview of the report.
The data is based on a cross-section of Kenshoo retail customers, covering verticals like apparel, electronics, entertainment, home improvement, gifts, luxury, and toys. This scope is paid search advertising in the U.S. only and aggregates over 1 billion total advertising impressions, 30 million clicks and over 1 million online sales transactions.
· Search advertising budgets up 31% in 2010 over 2009
· Online sales transactions up 83% year-over-year (YOY)
· 60% overall increase in online sales revenue YOY
1. The holiday shopping season is starting earlier. In 2010, consumers began buying products online earlier in the season. The three weeks leading up to Thanksgiving accounted for a disproportionately larger percentage of overall online sales revenue compared to 2009. Accordingly, retailers ramped up budgets dramatically about one week before Thanksgiving this year as opposed to 2009 when budgets started to spike only in the last few days before the holiday.
2. Online shoppers are more responsive to paid search advertising. This year, consumers demonstrated more of a willingness to interact with search ads. While impressions across our index were only up 6% YOY, clicks were up 55%. Additionally, conversion rate was up 13.5% in 2010 over 2009 showing that there was less browsing and more buying.
3. Consumers are buying more often with smaller basket sizes. Overall sales conversions rose 83% in 2010 but the average order value dropped about 8%. This could be due to consumers spreading the wealth a bit more and buying from niche online retailers. Or it could be due to retailers lowering prices or employing other bundling and promotional tactics. Overall, though, there was a YOY increase of 60% in revenue from search advertising in 2010.
4. Paid search advertisers have increased effectiveness. In 2010, retailers got more bang for their buck. In aggregate, cost per click (CPC) was lower and return on ad spend (ROAS) was higher. This is likely because advertisers have gotten more sophisticated with managing paid search and are using more advanced technology platforms to optimize campaign performance.
5. Thanksgiving is now "cyber kickoff day."As mentioned earlier, the spikes in online shopping activity began on Thanksgiving Day with revenue and transactions showing significant increases year-over-year on turkey day itself. And, in 2010, total sales volume for Black Friday actually exceeded Cyber Monday, underscoring the jump start that consumers got with their online shopping. Additionally, search query volume for keywords related to "Black Friday" spiked immediately around dinnertime (6 p.m.) in the Eastern time zone and held consistent until about midnight when, presumably, shoppers logged off to catch some Zs before hitting their favorite offline retailers.
6. Competition for retailers peaks on Cyber Monday.Search advertising budgets increased nearly 50% YOY on Cyber Monday but average CPC was higher as well, leading to an overall decrease in ROAS of 21%. It seems many retailers were jacking up their presence on Cyber Monday to try and compete for the hearts and wallets of shoppers.
Implications for Advertisers:
1. Approach online advertising with confidence. People are spending more time and money online during the holidays than ever before. They're more comfortable transacting online and open to influence from search and related online ads. Buy mode = go time!
2. Plan ahead. No more lazy summers. Get your house in order so that you can kick it into gear come November. Don't wait for Black Friday or Cyber Monday to start your heavy-up.
3. Build in flexibility. The only constant in this space is change. As each year goes by, consumer habits vary based on macro-variables like the economy and micro-variables like personal preferences. Make sure your team is equipped with the tools necessary to change course mid-campaign to react to marketplace conditions and capture new opportunities.
4. Experiment with merchandising. Try different promotions, price points, and product bundles. With people buying more often but not filling their baskets as high, you need to find the sweet-spot between conversion rate and average order value. Make sure your search ads are updated with your latest offers and inventory availability as well. There are some great technology platforms that can automate this process to make sure your search ads are in sync.
5. Leverage advanced bid algorithms. Set holistic goals for the holiday season and look to optimize in a portfolio approach. Don't rely on Black Friday or Cyber Monday to hit certain thresholds. Give your search management team and software the best chance to succeed by setting bid rules and adjusting other campaign variables to meet overall objectives, not any one-day metric.
6. Focus on relevancy. The more competition increases, the more relevancy rules. The more Google tweaks Quality Score metrics, the more relevancy rules. And the more consumers seek out the perfect deal from the perfect merchant, the more relevancy rules. Make your brand relevant by customizing keywords, copy, landing pages and other campaign elements to meet the intent of your best prospects.
See you next week in Park City!