Santa’s elves weren’t the only ones busy this past holiday season. Paid search was also working overtime to make sure shoppers ended up with perfect holiday gifts. The share of e-commerce transactions driven by SEM during November-December 2013 was 15%, up from 14% in 2012.
And, organic search accounted for 26% of holiday e-commerce orders. Clearly, Google was the gatekeeper for e-commerce success, with over 40% of all e-commerce sales originating in search queries.
These stats are based on e-commerce data from The Custora Pulse — a free US e-commerce industry benchmark, aggregating transaction and customer data from over 100 US e-commerce retailers, developed and updated by e-commerce marketing analytics company Custora (disclosure: my employer). Most of the stats pertain to the 2013 holiday period, but are just as relevant in 2014.
Stat 1: SEM Conversion Rate Was Up 20% During The Holiday Season
In November and December 2013, conversion rates for e-commerce visitors that came through paid search ads jumped up 20% relative to the rest of the year — from 3.00% in off-holiday months to 3.60% during the holidays. This is compared to a 10% bump for all other advertising channels. (Note: this refers to desktop conversions; we discuss mobile conversion below)
What It Means For Marketers
In an age where showrooming and instant online price comparisons have become the norm, customers have never had so many ways to find bargains with the click of a mouse. And savvy search marketers — the ones that can capitalize on that purchase intent to deliver the right product, at the right time, at the right price — are stepping in to clean up.
Stat 2: The Average Order Value Of E-Commerce Orders Originating From SEM Went Down During The Holiday Season
The average order value (AOV) across all channels except for paid search stayed remarkably stable — and actually inched upward — during the holidays, from $78 to $80. But for paid search, the AOV actually went down. Paid search shoppers dropped their average spend per transaction from $108 to $101. (Note: this is AOV of desktop shoppers; we discuss mobile shoppers below)
What It Means For Marketers
During holiday time, paid search attracts a more price-sensitive shopper: a bargain-hunter on the lookout for great deals. Google Trends identified the hottest-trending search terms in the month leading up to the Black Friday / Cyber Monday frenzy including three of the steepest-discounting big box retailers (Walmart, Best Buy and Toys R’ Us). Search terms like [plasma TV], [iPhone on sale] and [PS4] all saw huge spikes in traffic around Black Friday.
What does this mean for marketers? If you’re able to manage your e-commerce inventory, get your bidding strategy together and promote your deals in a timely way, you may be in for a great holiday season, maximizing revenue and transactions. But it’s worth bearing in mind that these shoppers are likely to be “fair-weather friends” — not the type of loyal customers who will drive long-term value to your business by way of full-price shopping.
SEM + Mobile = A Promising Future?
While the analysis so far has focused on the traditional desktop SEM landscape, the story becomes more complicated when we bring mobile into the mix. Mobile presents its own challenges — and opportunities — to marketers looking to identify insights from last year’s holiday season.
Stat 3: During The Holidays, SEM Desktop Conversion Rate Was 4X That Of SEM Mobile Conversion Rate
The difference between desktop and mobile SEM conversion rates shines a light on the gulf in advertiser and user experience across these platforms. During the non-holiday months, desktop outperforms mobile conversion rates at a pace of about 2 to 1. But during holiday time, that gap jumps to almost 4 to 1. In other words, paid search on desktop generates four times as many conversions per click than on mobile devices — a startling metric given that mobile site visits jumped over 40% from holiday 2012 and represented nearly a third of all traffic during the 2013 holiday season.
What It Means For Marketers
It wouldn’t be fair to attribute all of this gap to the nature of paid search alone. Much of this discrepancy owes to the fact that the shopping experience is simply more rugged on mobile devices than on a traditional desktop. Site navigation and checkout remain patchy, with not all retailers optimizing user experience for mobile. Advertisers remain constrained by space limitations and variations in ad format from one mobile device to another.
Nevertheless, forward-looking digital marketers will be focusing their sights on how to effectively leverage user purchase intent when the search takes place on a mobile device.
Stat 4: Average Order Value Of Mobile SEM Shoppers Was Up Nearly 20% During The Holidays (Relative To Non-Holiday Months)
One data point from last holiday season might be a consolation for mobile marketers. While the deluge of bargain hunters dragged down the AOV of desktop SEM shoppers, the AOV of mobile CPC shoppers actually shot up nearly 20% during the holiday months, relative to non-holiday months in 2013.
What It Means For Marketers
The mobile SEM shopper is a different animal. While desktop paid search has become the go-to for discount-seekers, mobile SEM is still driven primarily by tech-savvy users who aren’t daunted by the obstacles of mobile paid search.
With their higher spend, these customers represent a potential market for marketers eager to introduce pricier, higher-end goods into their mobile CPC strategy.
Summary
The holiday 2013 season highlighted the crucial role that SEM plays in the e-commerce ecosystem and surfaced key areas of opportunity for 2014 as the channel continues to evolve. Instant price comparison is the new norm — and SEM marketers will be focused on experimenting with new ad formats and extensions to reach price-sensitive shoppers when they’re in the market to buy. And as mobile e-commerce shopping reaches maturity, digital marketers will be focusing on closing the gap between the mobile and desktop SEM ad experiences.
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