Retailers, particularly those with a strong online presence, have had plenty to cheer in the last week as a wave of Black Friday reports have shown big year over year gains for e-commerce. RKG data for the paid search channel provides additional support for that view and we've also found those gains were exceeded yesterday on Cyber Monday.
Here's a quick look at our findings for the early holiday shopping season:
Early Q4 Performance:
First some quick background: Compared to earlier this year, when we were seeing year over year paid search spend growth at around 30%, Q4 got off to a relatively sluggish start for a few key reasons.
First and foremost, advertisers have faced tougher comps as we've run up against a period of huge growth last year. Second, a number of advertisers have sought higher ROI this year as sales growth has outpaced spending growth. Last, the devastation from Hurricane Sandy was felt far and wide and online commerce appears to have been negatively impacted in late October into early November.
Thanksgiving and Black Friday:
By the beginning of Thanksgiving week, advertiser spending growth was back roughly in line with Q3 levels. Anticipating that a higher proportion of present ad clicks would pay off over the next few weeks, advertisers were also being more aggressive with their ROI goals and we saw the gap between spending and sales growth close.
On Thanksgiving Day, paid search sales growth spiked to 32%, well-above the levels we had seen earlier in the quarter. Black Friday growth was nearly as strong with sales up 25% Y/Y. For all the consternation about holiday shopping creeping into Thanksgiving Day, Black Friday sales volume still doubled that of Thanksgiving.
Interestingly, both ad spend and sales growth were relatively weak this past Sunday. This is likely due to shoppers holding out for the Cyber Monday discounts to come.
Mobile Traffic Spike:
As we anticipated, and others have since called out, there was indeed a major spike in mobile traffic over the long Thanksgiving weekend. Across all search engines, mobile generated 23% of paid search visits over the period of 11/22 through 11/25. Over the same weekend last year, mobile share was half that at 11.4%.
For Google, which holds an even more commanding lead in mobile search, mobile traffic share reached 31% of paid search clicks on Thanksgiving before falling off over the next few days.
On Black Friday, smartphones generated 16% of Google paid search clicks compared to 14% for tablets, but phones only generated 8% of sales compared to 12% for tablets.
Cyber Monday has been the biggest revenue day of the year among RKG retail clients since 2009 and it did not disappoint this year. Total same-site sales from the paid search channel were up 42% from last year.
Mobile traffic remained elevated from early November levels, but it fell to 18% of total paid search traffic on Cyber Monday as shoppers got back into their normal routines. For Google, mobile was 24% of traffic yesterday and 18% of sales.
Google Product Listing Ads:
A quick aside from the high-level data points for one specific development we've noticed: Google's move to monetize its product search with the existing Product Listing Ads format was one of the biggest online marketing developments this year.
While RKG clients did see an increase in PLA traffic and spend share as a result, as we've moved into the holiday season, PLA share has been flat to down:
This could reflect more competition finally getting into the PLA game, but we would expect to see an appreciable rise in CPCs relative to text ads if that were a major factor. Instead this may simply reflect changing user behavior as a larger proportion of shoppers are looking for gifts using queries that are less likely to trigger PLAs.
The improvement in paid search performance over the last week has been a welcome development, but it's not necessarily a strong predictor of how growth will shake out over the remainder of the quarter. As we've pointed out before, online shoppers have become increasingly savvy about striking when the best deals hit and we should expect to see growth levels subside at least a bit over the next few weeks.
On the plus side, with Thanksgiving falling earlier in the year, the holiday season will be a couple days longer giving shoppers some more time to buy an extra gift or two. Also, it's unlikely we'll face another disaster like Hurricane Sandy anytime soon -- at least we can only hope.