Bidding to Value During Back to School
Pencils are being sharpened, fresh sneakers laced, abacuses sanded and oiled. Ready or not, it’s back to school time yet again, and with it comes additional demand for some products. But how much of a lift should online marketers expect to see?
Well, it’s no Christmas…
While television ads and media attention on back to school make it seem as if there should be a sizeable increase in demand, most online retailers see very little if any lift in their paid search programs. The graph below shows normalized sales and traffic levels throughout the 2012 year for a group of long standing, well-established RKG clients in the retail vertical.
As you can see, there isn’t much of a lift in sales or traffic in August/September, when schools are returning to session, and the (very) slight increase in sales that does exist certainly doesn’t compare to the busy holiday season in December.
This may be the result of the school supply buying season occurring over a longer stretch of time than the holiday season, as schools return to class at different dates. If anything, however, the slow increase in sales we begin to see in late August looks more like a recovery from the slower weeks prior.
Increased Traffic for School-Friendly Advertisers
Looking at a grab bag of retailers doesn’t tell the whole story, however, as there are certainly some advertisers who specialize in products or services that do see a fairly strong increase in interest and demand before the start of school and during the first few weeks of class. This includes those specializing in books, children’s apparel, uniforms and other back to school necessities.
But can these advertisers afford to bid more aggressively during this time frame while maintaining their ROI? For insight, we take a look at traffic versus sales per click for three clients that saw larger than average back to school lifts in traffic in 2012.
For this advertiser, traffic began increasing in early August and remained well above summer traffic levels throughout fall and winter. Sales per click, however, decreased as traffic rose, indicating that this additional traffic was not more valuable and thus not worth bidding more for. Comparing this to the leap in traffic and SPC in December, when traffic is clearly more valuable, the back to school season seems underwhelming.
Advertiser 2 similarly saw an increase in traffic with a corresponding decrease in sales per click beginning in early August. Sales per click did bounce back to spring time levels in mid-September, but at no time during the back to school season was sales per click high enough to justify higher bids than during the earlier summer months.
In this last example, traffic began to increase in early July and held steady until the holidays. Sales per click remained relatively the same as clicks went up during the summer, again showing that this traffic wasn’t any more valuable on a per click basis.
One variable that this analysis doesn’t account for is the possibility of in store spillover. The effect of paid search traffic on brick and mortar sales might be even greater during the back to school season than at other times, when kids are researching products online and then going in store with parents. Measuring the impact of paid search visits on in-store sales can create a fuller picture of the value of that traffic, allowing advertisers to decide if clicks during this time really are more valuable.
While some verticals may see increased traffic on paid search ads as a result of back to school shopping, this does not necessarily mean that those advertisers should be getting more aggressive with bids during this period.
As with any traffic surge, it’s vital to measure the value of clicks, including any conversions that occur offline or through a different online channel after a paid search visit, in order to accurately gauge how much an advertiser can afford to spend per click.
This may sound like a simple concept, but many advertisers get caught up in trying to take advantage of perceived trends without doing the math. More traffic and sales are great, but at the end of the day the bottom line is what keeps companies in business.
So if you find yourself being urged to increase bids to take advantage of the back to school season, make sure you’re getting a return on spend that meets your profitability needs first. And, more importantly, enjoy the last few days of summer!