The pepper spray had hardly cleared the air before the first batch of Black Friday numbers started rolling in, offering signs of optimism for the larger holiday season and helping kick off a surge in the stock market. ComScore reported online Black Friday sales were up 26% year over year, while IBM put the increase at 24.3%. Figures for offline shopping, including those from the National Retail Federation and ShopperTrak, were also generally positive.
At RKG, we've been analyzing aggregate holiday paid search performance for a sample of clients that have been working with us for at least 19 months. This is the same grouping of well-established programs that we've used for our quarterly reviews, which have generally tracked well with the results that the search engines report. Here's our take on the holiday data so far:
Early Q4 Growth Continues Through Black Friday
For the first half of Q4 we saw a 43% YoY increase in non-brand paid search spend, and that growth has continued right through Thanksgiving and the Black Friday weekend:
Our clients' year over year increases in ad spend really seemed to ramp up towards the end of Q3 and revenue has kept pace. On Black Friday, we saw a 43% YoY increase ad spend, which was right in line with our average of the first half of Q4. Ad spend on Thanksgiving Day was up 42%, so we didn't see a dramatic change in shopping behavior within the week from year to year.
Interestingly, spend growth in the fourth quarter has been driven by click-through rate increases rather than higher costs-per-click:
On Black Friday, CTRs were up 29% YoY while CPCs were up just 2%. While some paid search traffic growth is surely cannibalistic of offline sales, retailers are likely seeing PPC cannibalize organic search traffic to some extent as well due to changes the engines, particularly Google, have made to the SERP, which are drawing more attention to the paid listings.
Looking at these results another way, with November 1st normalized to 100%, we can get a better sense of the spikes retailers see when holiday shopping really kicks in. Again, here are paid search ad spend and revenue:
After several weeks with normal ups and downs, Black Friday ad spend jumps to 56% above 11/1 levels. Ad revenue rises even farther, to 92% above 11/1 levels. Taking those together, here's our view of return-on-ad-spend by day:
Generally speaking, as long as budgets are flexible and efficiency goals haven't changed, we would hope to see ROAS remain fairly constant even as traffic surges. Here we see that ROAS did jump to about 23% above November 1st levels on Black Friday. I should point out that these figures are not accounting for the time of click, so the ROAS jump may be the result of earlier clicks converting on Black Friday after promotions began.
IBM's Smarter Commerce report included a number of interesting data points around mobile traffic. They estimated that 14.3% of Black Friday traffic was mobile, with the iPad alone accounting for 4.8% of traffic. In our data we saw "mobile" traffic surge to account for 11.5% of Black Friday traffic:
I put mobile in quotation marks above because tablet users are generally lumped with smartphone users even though their shopping behavior, as we pointed out two months after the first iPad was released, suggests they are better grouped with desktop and laptop users. Tablet time of day usage also suggests they are not commonly used on-the-go like a smartphone. That said, we did see a significant spike in tablet traffic around Black Friday:
Since it accounts for about 94% of tablet traffic, above is our view of iPad's share of paid search click traffic. We see the iPad's share jump from about 4% at the beginning of November to around 6% over Black Friday weekend. It's possible consumers see the iPad as the ultimate shopping device, or maybe usage spiked due to so many of us traveling for Thanksgiving. While normal tablet usage correlates closely with the hours most people are at home, we'd also expect tablet owners to take them along on trips. With some predicting a prolonged surge in mobile+tablet usage in December, it should be telling how tablet share trends over the next week now that everyone's back to work.
Cyber Monday and Beyond
While this holiday season seems off to a great start, we'll have to remain cautiously optimistic about the potential for the next few weeks. Last year also looked incredibly promising through Cyber Monday, but year over year growth fell back to earth shortly thereafter. We've suggested before that holiday sales may become increasingly front-loaded as consumers become accustomed to getting the best deals on the big event days like Black Friday and Cyber Monday.
Here ad spend is normalized such that three weeks before Thanksgiving (TG -3) equals 100%. In 2010, spend peaked the week of Cyber Monday while 2009 spend levels didn't peak for another two weeks.
Here's hoping that this year looks more like 2009 than 2010.