Credit for this column goes to Amy from Brooklyn, who wrote, "I'm sure you'll have some things to say about the volume of holiday shopping done online and how search played into those numbers."
To be honest, the holidays were so startlingly busy, I barely had a chance to examine the numbers, let alone make sense of them. However, after reading Amy's e-mail, I sent a line to Lizzie Babarczy at research firm Hitwise, which monitors Internet usage patterns of over 25 million users around the world.
While Hitwise has released some information on holiday shopping already, Lizzie and Research Vice President Bill Tancer helped shed light on the role search engines played.
The Great Migration
One of the more surprising findings was that the percentage of visits to shopping and classifieds Web sites coming from search engines has been on the decline, from 26.5 percent in December 2003 to 19.9 percent in June 2004 to 18.22 percent in December 2004. Puzzled, I asked Bill what could account for this.
"Comparison shopping sites are starting to build brand equity," Bill said. He noted that in the past, people would turn to search engines directly for product searches. While that's still a common activity (on Overture alone, there were 1.97 million searches for the term "digital camera" in November 2004), Bill says comparison sites are growing in popularity. Traffic to these sites jumped 22 percent from the 2003 season, accounting for much of the dip in search engines.
The moral is that customers are not relying less on search; they're instead getting smarter. Sites like Yahoo! Shopping, Froogle, Nextag, and Shopping.com offer a wealth of information, reviews, product specifications, merchant ratings, shipping costs, and other features that help customers make purchasing decisions.
For retailers, comparison shopping sites need to be part of the online strategy. The challenge still remains the same as it does with search engines. Consumers need to be able to find you over your competitor, so optimization and paid search strategies come into play, together with paid inclusion and XML feeds. This can present new challenges, but when a customer arrives at a comparison shopping site, that person is almost always in researching or buying mode. It's the epitome of reverse direct marketing; customers are seeking you.
Hitwise reported that visits to Dell, eBay, and Amazon peaked on December 9, 10, and 11 respectively. What was previously unreported is that search engines peaked at almost the same time. Yahoo! Search was an odd one, seeing its busiest day on November 14. MSN Search, meanwhile, hit its high mark on December 11, while Google crested December 12.
Though more analysis is needed, perhaps time-shifting plays a role. Consider a consumer who knows what he wants and goes to an e-commerce site directly. It turns out the product's not in stock or he's seen better deals elsewhere, so he then hits the search engines to see if he can do better. That would explain a flurry of retail search activity bookending the online shopping season.
This can have implications for paid search. Shoppers in November are either incredibly industrious and organized, or they're in research mode. Shoppers in mid-December are bordering on that state of panic and despair. Tailoring paid search copy to reflect consumer mindsets will dovetail well with the increasing focus on personal search this year.
Digital Division Subtracted
Bill noted that 44 percent of online shoppers over the holidays were from rural areas. As 37 percent of all Internet visits come from rural areas -- that means rural users are significantly overrepresented at shopping sites.
To a degree, this makes sense. Rural Internet users can't readily drive to the store. Impulse buys, shopping malls, and window shopping aren't parts of these users' daily lives. Online access and mail order are godsends. On some level, this represents the original vision for borderless World Wide Web (though the pioneers saw it more for communication than commerce).
Countering this borderless trend, however, is that regional retailers tended to only reap online sales from their region. People shop with who they know and trust, even when the physical location doesn't matter.
Expect that to translate into more sophisticated local search in 2005. For instance, a retailer in the Southwest may want to exclusively target by geographic region, or perhaps the reverse will be true and it will use its Web presence as a way to introduce itself to new markets.
I was half joking when suggesting planning for the 2005 holidays this week. Some retailers do plan integrated campaigns 18 months out, so if this triggers some ideas, then start asking questions and building strategy now. Happy 2005 holidays in advance.