Commentary

Search Conversions Jump 19%, But Will Profits Suffer From Online Returns?

A bevy of data shows an uptick in conversions from paid search advertising, but with an increase in returns expected from online sales across desktop and mobile, what will it cost campaigns and advertisers?

Overall, the average cost per click for paid search advertising rose 1.56% between Thanksgiving Day and Christmas Day in 2016 compared with the same time period in 2015. Impressions rose 35.7% and conversions, 18.63%, and the average order value fell by 5.4%, respectively.

Search marketing company NetElixir analyzed aggregate holiday traffic data of more than 90 million visits across food & gourmet, consumer electronics, apparel, and gifting market segments from Thanksgiving Day through Christmas Day. The search marketing data comes from Adwords, Bing and Yahoo Gemini platforms, while sales data was pulled directly from ecommerce Web sites.

NetElixir also segmented the U.S. into regions for its 2016 Holiday Season: By the Numbers report. The South showed the highest increase in online orders during the 2016 holiday season at 19.9% compared with 2015, followed by the Western states with 9.5%, Central U.S. at 6.5%, and the Northeast at 5.8%.

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Across the board, the most popular time of day to buy was during the afternoon hours between 12 p.m. and 8 p.m., followed by the morning hours between 6 a.m. and 12 p.m. The same time-of-day statistics also applied to impressions and clicks.

The report also shows ecommerce rose 10.43% during the holiday season, compared with 2015. Purchases on mobile devices surpassed 30% in 2016. 

Mobile share of visits to Webs sites grew 54% compared with 2015, and sales jumped more than 30%, according to NetElixir.

And all this may seem rosy on the service, but will the jump in ecommerce cost retailers? eMarketer points to data from retail consulting firm Conlumino, which shows that total holiday sales rose 3.8% to $196.1 billion led by a 17.1% jump in online spending, but the expectation of consumers for cheap and free shipping became a "damper" on margins.

In late December, United Parcel Service said it expects returns for record ecommerce sales. UPS expects consumers will return more than 5.8 million packages in the first full week of January. 

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