Search: When And Why Tax Incentives Work

Search marketers focusing on ads that entice consumers to make a purchase by eliminating sales tax might be wasting budgets and clicks for the exception of luxury items. While the overall price of the item remains important, whether or not consumers pay tax on an item does not greatly influence which retailer shoppers consider when making a purchase, according to a recent study.

When asked how important sales tax -- or the lack of it -- was when considering a purchase from a specific retailer, 29% of respondents to the study from Bizrate Insights. a Connexity company, said it was not a factor in making the purchase, 23% only considered the tax as it related to the final cost of the purchase, 22% said it was considered but not a high importance, 19% said it was not considered because of the retailer from they chose to make the purchase, and 6% it was important on its own.

The data reflects consumer behavior, although the Bizrate study does not explicitly consider search advertising as a conduit in which to reach consumers.

Most consumers accept the reality that they need to pay tax from online retailers. While about 48% of consumers making a purchase admit that sales tax is not generally something they consider, whether or not the tax change remains important depends on the purchase. For 15% of buyers having to pay, or not to pay, sales tax may influence their choice of retailer.

Big-ticket items may sway consumers one way or another. While 39% admit it's not generally something they consider, 24% of respondents said they focus on not having to pay the tax as the price of the order rises. Some 17% said it's important to have a choice to buy online vs. locally, 15% said it's important they have a choice to make the purchase through several online retailers, and 9% said considering sales tax is always important.

The Bizrate report suggests that paying sales tax isn't a deal-breaker. If the consumer wants the items they will make the purchase. In fact, not much has changed in the past five years. Some 77% of consumers said is wasn't a factor in whether or not they would make the purchase, compared with 75% in 2011.

The Bizrate Insights Sales Tax Studies were conducted from an online survey platform to buyers immediately after purchasing from the Bizrate Insights Network of e-commerce retailers in the U.S. and Canada. Data from each Sales Tax Study was collected from 6,216 online buyers from Aug. 1 through 4, 2016. To show growth or decline, it was combined with answers from 10,086 online buyers from May 1 through 9, 2013, and from 34,022 online buyers from April 21–May 31, 2011.

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