Holiday 2007 – How Did Your PPC Program Measure Up?

Did your Q4 PPC Sales meet expectations? How are those expectations set? Every retailer is different, and there can be very good explanations for being above or below the “norm”, but knowing what the norm is can be a useful place to start the evaluation process.

We took a careful look at Q4 performance of competitive (non-brand) search phrases across different categories and compared them to Q4 of 2006. We took the median changes clients in these categories experienced, studying only those clients who were with us then and now.

PPC Sales Grow Year over Year

(click to enlarge chart)

General trends worth noting:

• Sales growth varied significantly by category. These category variances are in-turn a function of more factors than we could accurately list, but might include the competitive landscape, online - offline tracking improvements, strategic shifts, and merchandising issues to name a few.
• remarkable year over year growth in Impressions, and corresponding decline in Click-Through-Rates. We believe this to be a function of the engines’ ever increasing definition of “broad match”.
• The Advertising Efficiency trends reflect changes in strategy, notably some of our CE clients growing increasingly aggressive given improved online-offline tracking.
• The increase in Average CPC is offset by improved Conversion Rates driven by algorithmic advances on our part as well as improved landing pages. We believe smart, effective website testing using MVT tools will be a top priority for 2008 and beyond.

Christmas Came Early

Most of our clients experienced a PPC trend similar to the overall retail market. Year over Year growth was stronger from Black Friday through the following week than it has been since then. Year over year growth rates declined steadily through Christmas.

Are retailers pushing Christmas shopping earlier and earlier? Have Black Friday and Cyber Monday specials convinced consumers to shop early and be done? Or, are we watching the results of macro-economics? Did the sub-prime credit crunch and stock market skittishness get consumers to put away their wallets early?

Hard to say, but it is in some ways reassuring that PPC marketing follows the same logic as the rest of the business world.

Looking Ahead: Four Paid Search Traps To Avoid in 2008 Q1

Here are some critical things to watch as the New Year starts.

1. January Inefficiency: We’re stunned that this remains an issue, but every year we see data from prospective clients indicating it is. Bidding robots, left to their own devices will overspend for the first few weeks after Christmas. They do this because they see the tremendous conversion rates of December and expect them to continue – they’re stupid that way. The right balance of human analysis and machine implementation will prevent that from happening. If you’re still having this problem it’s time to demand better attention.
2. Holiday Terms: Does it hurt to leave up those Christmas terms? It really depends: Do you still have inventory? The people shopping for Xmas ornaments in January are likely to be bargain hunters looking for remnant pricing. Great if you have them, bad if you’re still full priced.
3. Seasonal Shifts: If your product offerings are highly seasonal, recognize that the bidding machines are looking in the rear view mirror. Smart analysts know how to anticipate increased and decrease demand and conversion rates due to changing seasons. Make sure they’re watching.
4. Trademark High-Jinks: Keep an eye on your trademarked keywords. Not only do you need to police your affiliates – do a search at 9 PM, you might be unpleasantly surprised – but the “Broad Match” games engines play are getting more involved. We’ve seen “brand” ads served on non-brand/competitive searches, driving up costs in a way that’s hard to detect. We’ve also seen non-brand ads served on brand searches corrupting the bidding and making the general terms appear more efficient than they are. Watch the search strings and the ads that they fire. Adjust bids and match-types to address these anomalies.