2011 GLOBAL ONLINE RETAIL HOLIDAY - Kenshoo · S H O P P I N G R E P O R T 2011 GLOBAL ONLINE...

S H O P P I N G

R E P O R T

2011 GLOBAL ONLINE RETAIL HOLIDAY

Release Date: January 17, 2012Covering Worldwide Search Advertising Trends

November 6 through December 31, 2011

2© 2012, Kenshoo, Inc.

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Infographic Overview

Key Insights

1. Consumers Using the Internet More Often for Holiday Purchases but Spending Less per Transaction

2. Consumers Most Actively Research Their Purchases the Week of Cyber Monday but Purchases Peak Two Weeks Later Just Prior to Christmas Shipping Deadlines

3. Paid Search Campaigns Improve Effectiveness

4. Retailers and Consumers More Heavily Invested in Search Advertising

5. Increased Paid Search Competition Had Virtually No Effect on Cost-Per-Click Rates

6. U.K. Retailers Generate Stronger Return on Ad Spend Than U.S. Retailers Due to Lower Cost-Per-Click Rates

7. Mobile Phones and Tablets Becoming More Prevalent in Online Shopping

2012 Global SEM Imperatives

Glossary

Methodology

About Kenshoo

Contact

CONTENTS

November 27 – December 3 Draws the Most Search Ad Clicks Globally

December 11 – 17 Generates the Most Global Revenue from Search Ads

Consumers Most Actively Research Their Purchases the Week of Cyber Monday but Purchases Peak Two Weeks Later Just Prior to Christmas Shipping Deadlines

Revenue Driven by Search

Advertising

36%

Total Online Sales Transactions Resulting

from Search Advertising

Average Order Value for Sales Generated by Search Advertising

56% 13%

2

Consumers Using the Internet More Often for Holiday Purchases but Spending Less Per Transaction

IIIIIIIIIIII

1

NOV. 27 28 29 30 DEC. 1 2 3

S M T W T F S

DEC. 11 12 13 14 15 16 17

S M T W T F S

2011 Global Online Retail Holiday Shopping Report

7 KEY INSIGHTS

Source: Kenshoo 2011 Global Online Retail Holiday Shopping Report | © 2012, Kenshoo, Inc.Note: Insights reflect year-over-year data from Kenshoo Global Retail Index from November 6, 2011 through December 31, 2011, vs. the same period one year earlier.

Paid Search Campaigns Improve

E�ectiveness

Retailers and Consumers More Heavily Invested in Search Advertising

3

Search Advertising Budgets: Up 10%

5 Increased Paid Search Competition Had Virtually No E�ect on Cost-Per-Click RatesYear-Over-Year Paid Search Average Cost-Per-Click Rates Flat at $0.47

Search Advertising Clicks

Search Advertising Cost per Conversion

39%

Search Advertising Return on Ad Spend

Search Advertising Conversion Rate

23%

29%

4 12%


7 KEY INSIGHTS


Mobile Phones and Tablets Becoming More Prevalent in Online Shopping

7

U.K. Retailers Generate Stronger Return on Ad Spend Than U.S. Retailers Due to Lower Cost-Per-Click Rates

6

U.S. Paid Search Average Retail Cost-Per-Click:

U.K. Holiday Season Search Advertising Return on Ad Spend:

£13.21 U.K. Paid Search Average Retail Cost-Per-Click:

£0.20

U.S Holiday Season Search Advertising Return on Ad Spend: $5.57

$0.52

14.5%

7%of All U.S. Search Advertising Clicks Came From Mobile Devices

Tablets Accounted for

of All U.S. Revenue Generated from Search

Advertising


7 KEY INSIGHTS



KEY INSIGHTS

1. Consumers Using the Internet More Often for Holiday Purchases but Spending Less per Transaction //////////////////////////////////

As measured by direct online sales from search advertising, consumers around the world spent more money through the

Internet this year and transacted more frequently. Total global revenue driven by paid search was up 36% year-over-year

(YoY) and transactions were up 56%. See Figures 1.0 and 1.1

FIGURE 1.0 | Global Holiday Season Revenue Driven by Search Advertising Up 36%

Source: Kenshoo 2011 Global Online Retail Holiday Shopping Report | © 2012, Kenshoo, Inc.

2010 Revenue

2011 Revenue


FIGURE 1.1 | Global Holiday Season Online Sales Transactions Generated from Search Advertising Up 56%

2010 Transactions

2011 Transactions


Average order value (also known as basket size) peaked the week of Nov 20th as early shoppers stocked up in advance of

the holidays. However, overall, consumers spent less per transaction in 2011 compared to 2010. See Figure 1.2.

These trends are likely indicative of consumers’ willingness to shop around at different retailers when buying all the items

on their shopping lists. Also, as commerce tools and technologies become available for merchants of all sizes to sell their

products globally, consumers have more choice and seek out niche retailers. Finally, many retailers are offering free shipping

with lower or no minimums and/or offering “shipping clubs” that incent consumers to purchase more frequently without

regard to order size.

FIGURE 1.2 | Global Holiday Season Average Order Value for Sales Generated by Search Advertising Down 13%


2010 Average Order Value

2011 AverageOrder Value


FIGURE 2.1 2011 Global Holiday Season Revenue Driven from Search Advertising by Week

2. Consumers Most Actively Research Their Purchases the Week of Cyber Monday but Purchases Peak Two Weeks Later Just Prior to Christmas Shipping Deadlines /////////////////////////////////////////

Boosted by high Internet traffic in the U.S. due to Cyber Monday, the week of November 27 - December 3 accounted for

the highest number of clicks during the 2011 season but was not responsible for the highest revenue figures. The week of

December 11 - 17 generated the most revenue as a result of search advertising. In fact, the two-week period from December 4 - 17

accounted for almost 40% of total sales revenue for the period. See Figures 2.0 and 2.1.

Clearly, consumers start their research early in the season and rely on paid search to find the best products and deals. However, the

biggest purchases happen a week or two later once consumers have had a chance to evaluate their options, discuss with friends and

family, and generally wait until the last possible minute to meet shipping deadlines. It’s also important to note that many retailers run

last-minute promotions during the weeks immediately preceding Christmas and that contributes to an influx in online sales revenue.

FIGURE 2.0 | 2011 Global Holiday Season Search Advertising Clicks and Revenue by Week



2011 Clicks

2011 Revenue


3. Paid Search Campaigns Improve Effectiveness ////////////////////////////

The quality of paid search ad campaigns for retailers around the globe improved dramatically this year. Acquisiton

costs were driven down as the average cost per conversion (transaction) fell by 29%. See Figure 3.0. Lower costs per

conversion helped drive up Return on Ad Spend (ROAS) by 23% to a total of $6.54. This means that for every one dollar

retailers invested in paid search during the 2011 holidays, they generated $6.54 in online sales revenue. Note: Monetary

figures adjusted based on global currency conversions to U.S. Dollars. See Figure 3.1.

FIGURE 3.0 | Global Holiday Season Search Advertising Cost per Conversion Down 29%

FIGURE 3.1 | Glboal Holiday Season Search Advertising Return on Ad Spend Up 23% to $6.54



2010 Cost Per Conversion

2011 Cost PerConversion

2010 Return On Ad Spend

2011 Return On Ad Spend


Another quality indicator that rose over last year was the Conversion Rate which measures the ratio of each click to an online

sales transaction. In Figure 3.2 we see that consumers were most willing to buy after clicking a paid search ad in the last two

weeks before Christmas. Overall for the holiday season, global paid search conversation rates were up 39% YoY.

FIGURE 3.2 | Global Holiday Season Search Advertising Conversion Rate Up 39%


2010 Conversion Rate

2011 Conversion Rate



4. Retailers and Consumers More Heavily Invested in Search Advertising /////////////////////////////////////////////////////////////////////////////////////////////////

Underscoring the importance of paid search in online commerce, retailers around the world increased search ad budgets

by 10% during the 2011 holiday season compared to the previous year. See Figure 4.0. The period of largest ad spend was

the week of December 11-17 which aligns with the conversion rate peak noted in Figure 3.2.

FIGURE 4.0 | Global Holiday Season Search Advertising Budgets Up 10%

2010 Budgets

2011 Budgets


FIGURE 4.1 | Global Search Advertising Key Metrics YoY

Correlated to the 10% increase in budgets, global search advertising clicks increased 12% in 2011. Due to more savvy paid search

campaign management, retail search ad budgets went a little further this year as the growth rate of clicks outpaced that of

budgets. Global consumers responded to the increase in search advertising by clicking on paid search ads at a higher rate.

The 13% increase in CTR YoY reaffirms the relevance and quality of paid search in the eyes of the consumer and demonstrates

a growing trust in search ads to deliver the best products and promotions.

The only key search advertising metric that did not rise in 2011 was impressions. Rationale for stagnant search ad impressions

includes a renewed focus by search engines to only show the most relevant ads as well as a tendency for consumers to seek

out product information and recommendations through social networks and alternative channels. See Figure 4.1


Impressions Clicks Click-Through Rate Budget


5. Increased Paid Search Competition Had Virtually No Effect on Cost-Per-Click Rates //////////////////////////////////////////////////////////////////////////////////////

As the global paid search market grew more competitive through increased budgets (refer back to Figure 4.0), the average

CPC remained flat YoY. The average CPC across the Kenshoo Global Retail Index during the 2011 holiday season was $0.47,

the exact same number as 2010. See Figure 5.0. CPC spiked during the week of December 11-17 as retailers increased bids in

response to higher conversion rates and revenue (refer back to Figures 1.0 and 3.2).

FIGURE 5.0 | Global Holiday Season Search Advertising Average Cost-Per-Click (CPC) $0.47


Average Cost-Per-Click


6. U.K. Retailers Generate Stronger Return on Ad Spend Than U.S. Retailers Due to Lower Cost-Per-Click Rates ////////////////////////////

For the first time in 2011, Kenshoo released separate holiday season research for the U.S. and U.K. markets. Full reports for

each country are available at www.Kenshoo.com/2011HolidayReport.

Many key retail search advertising metrics were similar across the regions. U.K. budgets were up 26% YoY; U.S. budgets were

up 31%. U.K. search ad revenue was up 26%; U.S. revenue was up 22%. U.K. cost-per-click rates were up 10%; U.S. CPC was up 8%.

U.K. conversion rates were up 31%; U.S. CVR was up 28%.

However, when all was said and done, U.K. retailers managed to pull in £13.21 in online sales revenue from each pound

invested in search advertising whereas U.S. retailers generated $5.57 for every dollar spent. See Figures 6.0 and 6.1.

FIGURE 6.0 | 2011 U.K. Retail Paid Search Return on Advertising Spend: £13.21


Return OnAd Spend

NEW

YEA

R’S

DAY

BOXI

NG

DAY

CHRI

STM

AS

FIGURE 6.1 | 2011 U.S. Retail Paid Search Return on Advertising Spend: $5.57

$-‐

$2.00

$4.00

$6.00

$8.00

$10.00

1-‐Nov

2-‐Nov

3-‐Nov

4-‐Nov

5-‐Nov

6-‐Nov

7-‐Nov

8-‐Nov

9-‐Nov

10-‐Nov

11-‐Nov

12-‐Nov

13-‐Nov

14-‐Nov

15-‐Nov

16-‐Nov

17-‐Nov

18-‐Nov

19-‐Nov

20-‐Nov

21-‐Nov

22-‐Nov

23-‐Nov

24-‐Nov

Thanksgivin

Black Friday

27-‐Nov

28-‐Nov

Cyber

30-‐Nov

1-‐Dec

2-‐Dec

3-‐Dec

4-‐Dec

5-‐Dec

6-‐Dec

7-‐Dec

8-‐Dec

9-‐Dec

10-‐Dec

11-‐Dec

Green

13-‐Dec

14-‐Dec

15-‐Dec

16-‐Dec

17-‐Dec

18-‐Dec

19-‐Dec

20-‐Dec

21-‐Dec

22-‐Dec

23-‐Dec

24-‐Dec

Christmas

26-‐Dec

27-‐Dec

28-‐Dec

29-‐Dec

30-‐Dec

New Years

New Years

2-‐Jan

Holiday Season Search Adver2sing Return on Ad Spend: $5.57 During the Holiday Season

2010 ROAS

2011 ROAS

THA

NKS

GIV

ING

CYBE

R M

ON

DAY

BLA

CK F

RID

AY

CHRI

STM

AS

NEW

YEA

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EVE

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GRE

EN M

ON

DAY



The biggest contributing factor to the disparity in ROAS between the U.K. and U.S. is the average cost-per-click rates in each

country. For the 2011 holiday season, U.K. average retail CPC was £0.20 whereas, in the U.S., average retail CPC was $0.52. See

Figure 6.2. This is indicative of highly competitive keyword bid auctions in the U.S. with more retailers jockeying for position.


FIGURE 6.2 | 2011 Holiday Season Cost-Per-Click Rates in the U.K. and U.S. (Adjusted to U.S. Dollars)

0

$0.30

$0.10

U.K. Cost-Per-Click U.S. Cost-Per-Click

$0.40

$0.20

$0.50

$0.60

$0.31

$0.52


7. Mobile Phones and Tablets Becoming More Prevalent in Online Shopping ///////////////////////////////////////////////////////////////////////////////////////////////////

2011 saw a remarkable diversification of device usage as smartphones and tablets increased in popularity and consumers

turned to them more often to search and actually make purchases. In Figure 8.0 we can see metrics that indicate how

consumers are using various devices to shop online in the U.S.

Personal computers still hold the lion’s share of both clicks and revenue. This is clearly the device that consumers are most

comfortable transacting upon. Personal computer conversion rates are higher than tablet and mobile which can be attributed to the

fact that most retailers have spent more time and have more experience optimizing the shopping experience for these devices.

Interestingly, tablets are responsible for the highest average order value (revenue per conversion) this year. As the market

share of tablets grows, retailers will have to make plans to accommodate them, including creating rich mobile sites as well

as considering creating applications with stripped-down functionality.

Mobile phone revenue accounted for only 1% of the total revenue and performed the poorest when measured by conversion

rate. Consumers tend to use their cell phones for quick searches, locating products or stores, and placing phone call inquiries

as opposed to completing actual transactions.

FIGURE 9.0 | Breakdown by Device of U.S. Online Retail Clicks and Purchases Resulting from Search Advertising



For those consumers who did use smartphones to make purchases, Apple iOS mobile phone users represented a more

desirable audience, spending 13% more on purchases and delivering a conversion rate that was almost 20% better than

Android mobile phone users. See Figure 9.1.


FIGURE 9.1 | U.S. Conversion Rates and Average Order Size by Mobile Phone Operating System

Conversion Rate

0.79%

Conversion Rate

1.01%

Average Order Size $108.33

Average Order Size $122.48

Android Mobile Phone Apple Mobile Phone


2012 GLOBAL SEM IMPERATIVES1. Connect online and offline campaigns to stretch budgets.

There is no such thing as e-commerce anymore. There is just commerce. Retailers must be nimble enough to operate optimally wherever

there are customers seeking their products. In years past, consumer flocked to brick-and-mortar locations for last-minute shopping, not

trusting the Web to deliver the goods in time. The 2011 Kenshoo Global Online Retail Holiday Shopping Report revealed a huge influx of

transactions at or near the end of the holiday season. With clicks and click-rates up globally, consumers are clearly more trusting of paid

search ads. However, consumers will behave differently in each region and for each category of retail purchase. Accordingly, marketers

would be wise to use tracking systems like Kenshoo that can bridge the online and offline environments when it comes to holistic

tracking and optimization based on location extensions, phone calls, check-ins, and other conversion proxies.

2. Automatically sync paid search campaigns with inventory and merchandising to increase average order values.

In this report, we saw that average order values fell by 11% globally. The proliferation of niche online retailers and lower minimums for

free shipping has created a lack of loyalty among consumers. To capture the one-off deal seekers, retailers must maintain paid search

keywords, ads, and positions that reflect current inventory availability and competitive promotions. Additionally, various merchandising

techniques must be tested and optimised to find winning combitations. Using solutions like Kenshoo RealTime Campaigns, retailers can

connect search campaigns with inventory feeds to have keywords, ads, and bids dynamically updated at all times.

3. Leverage advanced portfolio bid policies to react to marketplace fluctuations and maximize profits.

With paid search competition and retail SEM budgets at all-time highs, it’s critical for marketers to make sure they’re bidding the proper

amount on each keyword at all times. Additionally, seasonality varies from region to region across the globe in terms of peak shopping

times. Retailers that attempt to manually manage bids in paid search will not be able to effectively compete. Tools like Kenshoo can

automatically cluster keywords into portfolios based on volume goals or efficiency constraints. Kenshoo’s advanced algorithms run

thousands of models and clusters to continuously optimize to a set business goal, while meeting set constraints. This allows for holistic

campaign management without having to worry about each individual keyword’s bid, or the cluster or folder it belongs within.

4. Recognize the differences between regions and plan campaign strategies accordingly.

Retailers that want to succeed in a global economy must understand the subtleties between regions when it comes to the SEM

marketplace and create custom – or bespoke – campaigns to meet the market conditions of each country of operation. Digital

marketing software like Kenshoo can accommodate various languages, currencies, and global and regional search engines. And,

with customer service personnel on the ground in each major region, local experts are available to help retailers get the most out

of their investment. The data and trends presented in this report will help retailers benchmark their efforts against their peers but

acting on the findings requires a platform that is flexible enough to cater to specific business goals, advanced enough to account

to automate and optimize, and scalable enough to provide peak performance when its needed most.

http://www.kenshoo.com/2011HolidayReport.asp


5. Break out separate mobile SEM campaigns and tailor them for each device.

Marketers and consumers alike recognize the opportunity presented by worldwide penetration of smartphones. In research not

presented in this report, Kenshoo found a 300% increase in YoY global mobile SEM budgets. This is due to the fact that consumers are

conducting more research and actually transacting through phones and tablets than ever before. To best engage consumers at the right

time in the right place and in the right mindset, marketers must use platforms like Kenshoo to break out separate campaigns for mobile

versus desktop as well as target specific devices. Tailoring keyword selection, ad copy, landing pages, and bids to each particular device

will improve quality score metrics as well as conversions.


GLOSSARY

Click Through Rate:

Return on Ad Spend:

Average Order Value:

Conversion Rate:

Cost-Per-Click:CTR =

ROAS =

AOV =

CVR =

CPC = Clicks

Impressions

Revenue

Cost

Revenue

Conversions

Conversions

Clicks

Cost

Clicks

.


METHODOLOGYThe research provided in this report is based on the Kenshoo Global Retail Index™, a cross-section of Kenshoo retail

advertisers covering verticals like apparel, electronics, entertainment, home improvement, gifts, luxury goods, and toys. The

data set includes paid search advertising globally across channels like Google, Yahoo, Bing, and Baidu from November 6th

through December 31st in 2011 and compared to that same period in 2010. The total statistics were culled from an aggregation

of more than 40 billion total search advertising impressions, 650 million clicks and 20 million online sales transactions. The

mobile and tablet data represents a subset of retailers from the U.S. in the index and a shorter window of analysis for the

month of December 2011 only.

ABOUT KENSHOOKenshoo is a digital marketing software company that engineers technology solutions for search marketing, social media and

online advertising. Advertisers, agencies and marketing providers use Kenshoo Enterprise, Kenshoo Local and Kenshoo Social to

direct more than $15 billion in annual customer sales revenue. The Kenshoo Universal Platform delivers automation, intelligence,

integration and scale to make better marketing investments. Kenshoo powers 6 of the top 10 retailers in the world, 6 of the

top 10 hotel groups, 7 of the top 10 telecoms, 8 of the top 10 ad agency networks, and 23 of the Fortune 50 companies. With

campaigns running in more than 100 countries, Kenshoo customers include Annalect, Barnes & Noble, CareerBuilder, Facebook,

Havas Digital, Hitwise, iREP, John Lewis, KAYAK, LendingTree, Sears, Starcom MediaVest Group, Tesco, Travelocity, Walgreens,

and Zappos. Kenshoo has more than 10 international offices and is backed by Sequoia Capital and Arts Alliance. Please visit

www.Kenshoo.com for more information.

Kenshoo is a trademark of Kenshoo Ltd. Other company and brand names may be trademarks of their respective owners.

CONTACTPlease contact Ari Rosenstein, Director of Marketing Research at Kenshoo, with any questions about this research or the

insights derived.

[email protected]

http://www.kenshoo.com/

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