• by Laurie Sullivan  @lauriesullivan, January 7, 2009

Retail marketers spent 12% more on search ad campaigns between October and December in 2008, compared with the same period year-ago, according to a report from SearchIgnite, a provider of search and media optimization technology.

Roger Barnette, president of the Atlanta-based SearchIgnite, said most retail marketers spent the majority their budgets in the first half of the quarter, rather than the second. "Usually that trend is reversed," he said. "In previous years, typically we see retail marketers increase budgets in the second half of the fourth quarter."

Discounted merchandise earlier in the holiday season could have played a role in the decision by marketers to spend more early in the quarter, Barnette said. Consumers exhibited different spending behavior during the fourth quarter in 2008, compared with the year earlier.

To accommodate the shift, retailers increased budgets for paid search by 15% in October, and 43% in November, compared with the year-ago months. Budgets tightened in December when retailers reduced investments by 14%, compared with December 2007.

Consumers clicked more often in October. Online transactions rose 11% for the month, compared with October 2007. Despite heavy promotions by retailers around Black Friday and Cyber Monday, clicks that turned into sales or downloads fell 2% in November before rising 4% in December.

SearchIgnite's total client base spent 22% more in fourth quarter compared with the same period in 2007. That includes retailers, which make up more than 20% of the $350 million in paid search SearchIgnite manages for clients.

Most marketers are finally taking advantage of technology that measures campaigns, Barnette admits. "They use this information to make calculated decisions on how to invest and how channels influence each other," he said.

This report tracked more than 28 million clicks on Google, Yahoo and MSN during the third and fourth quarter of 2007 and 2008 across retail marketers, all of whom are clients of SearchIgnite or its sister company 360i.