NetElixir Blog

Why We Are Optimistic about 2009 Holiday Season

Our keyword search advertising report received press coverage today-

http://www.internetretailer.com/dailyNews.asp?id=31964

The release states our bullishness about the upcoming holidays based on keyword search advertising trends.

Its important to realize the significance of keyword search trends as economic indicators. We have seen all the three parameters - clicks, click through rate and cost per click - bounce back from "the terrible lows of April and first few days in May 2009".

People are searching more. Each conversion is preceded by more clicks. The rising clicks reflect a change(improvement) in searcher intent.

Its difficult to extend our findings to anything beyond just this "improvement in searcher activity and intent".

- Does improvement in searcher intent mean potential improvement in online sales. We don't know. We definitely hope so, but its not possible for us to make such an extrapolation based on this limited data.

You can download a copy of our report here and interpret the findings as you deem appropriate:

http://www.netelixir.com/pdf/NetElixirKeyword2009Holiday.pdf

- Udayan Bose

eMarketer's Predictions - US Retail ECommerce - Should we pay attention?

First the excerpt:

eMarketer has revised its forecast of US retail e-commerce sales growth after a lackluster first half of 2009. Retail e-commerce sales, excluding travel, are expected to contract by 3.1% this year.

Growth will resume in 2010, at 5.5%, as consumer spending recovers from the recession. By 2011, eMarketer expects pent-up demand to accelerate growth, peaking in 2012. Retail e-commerce sales will continue to increase, but the rate of growth will fall off in 2013, continuing the pre-recession trend of strong but slowing growth.

Previously, eMarketer projected flat growth for retail e-commerce, expecting declines in the first half of the year followed by second-half recovery. But August figures from the US Department of Commerce (DOC) show sales decreased more than expected in Q2, falling 4.5% year over year to $30.77 billion.

Our comments:

I am often amused by the lack of accuracy of predictions. Despite constant revisions they still fail to be accurate.

I firmly believe that predictions and forecasts should be based on "what is really happening at the ground level". However, many research associations still keep throwing macro economic data into in-house forecasting models (that are often inadequate and irrelevant) and use the results to make predictions that are "way off the mark".

There was a great article by Carl Bialik (Numbers Guy) in WSJ edition of 12th August. The article was called Forecast: Next Year to Arrive in 2010-ish. It describes how "Crystal Balls have become Hazy" in times like these.

Its "impossible to make accurate predictions". However, by keeping ear to the ground, one can make forecasts that are far more accurate than outdated forecasting models.

- Udayan Bose

NetElixir's holiday gift for e-retailers

NetElixir released the an SEM "workbook" for retail search marketers to help them turbo charge their SEM program for 2009 holiday shopping season.

Here is the press coverage: http://www.internetretailer.com/dailyNews.asp?id=30925

There is wide consensus on the fact that 2009 holiday shopping season will be the most difficult one a retailer has experienced in decades. A marketer will have to be both creative as well as clinically efficient to do well.

Our workbook is NOT A THEORY MANUAL on SEM best practices. It is a workbook. Retail marketers have to take the pains of filling the tables/charts in the workbook. We firmly believe that just following the 10 tips mentioned in the workbook and solid execution will take care of efficiency issues for most retail marketers.

The workbook can be downloaded here: http://netelixir.com/contact.html

Happy Selling!

- Udayan Bose

The First NetElixir SEM Workbook to be launched at the Internet Retailer Show on 15th June

Alpha Graphics delivered the first set of 300 copies of our first SEM Workbook - Fresh Ideas to Turbo Charge Your Keyword Search Advertising this Holiday Season.

NetElixir has been working hard to share the best practices in SEM that we ourselves learned through our experience of managing SEM campaigns for more than 200 US retailers over the last 5 years. This workbook is NOT a theoretical best practices handbook. It is a WORKBOOK that any retail advertiser can use - its 100% "execution" focused.

The workbook will be particularly handy in difficult economic times like this. Everything points towards the most difficult holiday season in many decades for any retailer. We hope that some of the lessons we share in this workbook will help search advertisers improve their campaign management efficiency.

- Udayan Bose

Our New White Paper on Mother's Day Keyword Advertising trends

Key Points -
1. CPC's keep moving down (this has been an ongoing trend since Q4,08)
2. Average Order Value (AOV) is down by about 10%
3. The Revenue generated per dollar spent on PPC remains almost un-changed

Here is the link:

http://www.netelixir.com/PDF/NetElixirMDWhitePaper.pdf

Happy Reading!

Udayan Bose

Google's TM Policy Change

The changes in Google's ad policies regarding trademarks announced for next month are causing quite a stir.
Here is the link:

https://adwords.google.com/support/bin/answer.py?answer=145407

And here is the link from NYTimes on the reaction by advertisers:
http://www.nytimes.com/2009/05/15/technology/internet/15google.html?_r=3&hpw

 

Upon initial investigation of the ramifications, the biggest winners and losers of the change appear to be...

 

Winners: 

• Resellers and department stores, as they will now be able to bid on TM keywords and display TM terms in their ad copy without permission from the TM holder.  Keep in mind that many such resellers have deeper pockets than the TM holders themselves...
• Google, at least in the short-term, as increased competition for popular TM terms is likely to raise both the amount that each advertiser will have to bid on such terms as well as the aggregate amount being bid on them.

 

Losers: 

 

Unfortunately, TM holders themselves who now may have to bid more on their own TM terms to appear in prime ad display positions.

In the long run, I feel this action will work against Google. They are using their position of dominance to push forth such a "controversial" policy.
But, as we all know times change.. markets evolve .. and, people/companies move on.

- Udayan Bose

eMarketer's Predictions for 2009

Here is what eMarketer's predictions are for 2009.

I think they are too optimistic. I would be surprised if the overall online advertising growth rates exceed 6%. I think estimates on video ads, display ads are both optimistic.

The optimistic me thinks search is the only online advertising channel that will show double digit growth.

Here is the eMarketer article:

http://www.emarketer.com/Article.aspx?id=1006813

eMarketer's Predictions for 2009

DECEMBER 16, 2008

What lies ahead in the new year?

David Hallerman, Senior Analyst

Online Ad Spending: Still Solid Choice

Video ad spending will run counter to overall economic developments, rising by 45% in 2009 to reach $850 million. Two key factors support this trend.

First, the sharp escalation of professional video content on the Web—mainly from TV networks—is creating a viable base for brand marketers.

Second, even though most advertisers are increasingly cautious with their budgets, they still need to reach online audiences and woo their shrinking wallets with messages that reach their hearts and minds—hence, more video.

 Search marketing spending will grow by 14.9% in 2009, to $12.3 billion. Search marketing is not recession-proof, but it is recession-resistant. Two basic assumptions support this eMarketer projection. Search is highly measurable, so it will maintain its place in many budgets and increase in some others, as advertisers look for secure and effective methods to combat fear in an economic meltdown.

Also, consumers—who monetize search ads by deciding whether or not to click—will take money off the table by shopping less, and put money back on by searching for deals. Although search advertising will grow less in 2009 than in any previous year, its inherent strength will mean greater spending gains than for any other major form of advertising, whether online or offline.

Total US Internet ad spending will increase to $25.7 billion in 2009, an 8.9% growth rate. That will be the lowest year-over-year increase for online advertising ever. Yet it will still be a robust increase compared with nearly all other media.

How big was CyberMonday this year

We have done a continuous - literally hour by hour search pattern analysis
between 0:00 hours, 27th November - midnight of 2nd December. There is
hardly any analysis on search trends during this period because of TG
holiday. Given the importance of CyberMonday (this year being VERY SPECIAL
for most retailers given the economy - quite literally was a historic Black
Friday and CyberMonday )- we thought of analysing the key patterns in search
traffic, purchases - value - time - number, keyword click price movements,
click to purchase conversion rates.

The analysis was done on 3 clients from totally different categories of
retail - large Speciality Food etailer, large Consumer Electronics retailer,
large Gifts retailer.

There were some very interesting findings.

Key Search Trends by category:

Electronics

- On 27th-30th Nov, search traffic spiked between 6am-8am EST and 12-2pm EST
and also 9pm-11pm EST (especially on 30th).  (Reasoning: Maybe, people were
trying to find the best deals for CyberMonday)

- The click to purchase conversion rate increased on CyberMonday by 40%, CPC
to maintain a particular position increased by 20%, total traffic increased
by 30% (all numbers compared to rest of the days)

- Maximum purchases on CyberMonday happened between 10am EST-12 Noon EST
followed by 4pmEST-6pm EST (Comment: Expected online purchase times)

Summary:

- CyberMonday purchases seem to have happened after considerable "early
morning" and "late evening" research sessions

- The electronics online purchase happened as predicted during prime office
time

- The purchase intent of search queries was significantly higher than
normal on CyberMonday. (Higher Conversion Rate)

Specialty Food

- There were no remarkable traffic spikes like we saw in Consumer
Electronics on all days leading to the CyberMonday. However, on Cybermonday
there were huge spikes in traffic between 10AM-Noon EST, 5pm-7pm EST

- The traffic on Cybermonday was 133% higher than traffic on other days!

- The average order value was the same on all days, though

- The click to purchase - conversion rate - was 21% higher, surprisingly the
CPC was lower than normal by almost 15%!  (Reason: This retailer has a BIG
BRAND name. Given the fact that there were no big differences in price after
the deep discounts offered, people preferred to buy from this retailer.
Also, I believe the CPC went down because of Google's algorithm of Quality
Score that gives greater credit to brand name firms such as this because
they draw more clicks than lesser known brands)

Summary:

- (Sounds funny but true) Online shoppers buy food online closer to their
meal time (lunch time/dinner time). This is a remarkably important point to
be noted in terms of "targeting ads" - timing ad listing displays and also
the message

- If the brand is strong, people dont mind paying 10%-15% MORE than they
would do for a lesser known brand

Gifts

- The largest traffic spike on both Cybermonday and 2nd Dec was between
9pm-11pm EST. There were spikes between 5pm and 8pm. (Question: Do people
search for and buy gift items like Teddy Bears after office hours?)

- Cybermonday traffic was up by 50% over regular traffic

- Average Order Value was actually 10% lower than other days

- The conversion rates were 21% higher

- The CPC was same as other days (again this is a very big brand name
retailer)

Summary:

- Online shoppers are more likely to shop for gift items like teddy bears at
night/evening hours

- Again, shoppers prefer to buy a "strong brand" (you gift a "brand" - not a
product/teddy bear)

Overall Summary:

- Searching pattern and shopping patterns vary from category to category

- Cybermondays on an average mean 50%+ more sales

- the search queries used on Cybermonday have stronger "purchase intent"

- Retailer brand seemed more important in "food and gifts" category than
electronics category (where, manufacturer brands are more important and it
becomes a price battle).

Sidenote: Comparative shopping engines would be better channels for consumer
electronics than food and gifts

As we dig deeper into the data we are sure to un-earth more interesting information on buyer behavior.

- Udayan Bose

How much will Online Retail Sector grow this holiday season

How much will the online retail grow this holiday season.This is the biggest question doing rounds at this time.

My optimistic guess: 8%
More realistically, 2-3%

We at NetElixir will be doing a comprehensive analysis of the holiday months. Watch out for our Report to be published in January 09.

- Udayan

The sole bright spot in a gloom and doom economy

The IAB published Q3,2008 Internet Advertising Revenue numbers today. There has been an 11% growth over the same quarter last year. The third quarterly revenues this year have touched $5.9 B. Indeed, online advertising continues to shine in a gloomy economy.

Three observations -

1. In the difficult economy that is likely to extend beyond 2009, online advertising should see heavy gains

2. A lot of advertisers who stayed away from internet advertising more because they could not fathom the importance or did not have adequate knowledge or just did not care would now be forced to include internet advertising in their advertising mix

3. The ONLY advertising option for a small business(quite literally) for these difficult times would be internet advertising

- Udayan Bose

Grab the Online Shopper

We released a white paper today on Smart SEM Tactics for a slow holiday season. The white paper was based on our analysis of the 2006 and 2007 Holiday months (November and December) for 7 large US Retailers. The white paper contains actionable tips for the smart search marketer.

The white paper is our way of sharing that knowledge with the retailer community and hopefully helping some of the E-tailers have a more successful holiday season.

You can download your copy here:
http://netelixir.com/HolidayWhitePaper.html

Thanks,

Udayan