'TIS THE SEASON: 2011 HOLIDAY INSIGHTS & SEM BEST PRACTICES

Aaron Goldman, CMO, Kenshoo_______________________, Yahoo!

November 1, 2011

Aaron Goldman

Chief Marketing Officer

Carla Valencia

Research Manager, Strategic Insights & Research

Retail & Tech/Telco.

November 1, 2011

Kenshoo: Proprietary & Confidential Information |

2

Webinar Information

Audio instructions – listen via computer speakers or dial into conference call at numbers listed in email from gotowebinar@citrixonline.com

Still can’t hear the webinar? Tell us please!

Ask questions during & after the webinar via Webcast@Kenshoo.com

Carla Valencia Research Manger,

Strategic Insights & Research Retail & Tech/Telco

Topics

• Understanding Search as part of the purchasing process

• Holiday Trends

o Retail Saleso Key Dateso Online traffic to Retail Categorieso Demographicso Coupons

• Economic Landscape

• Implications for Marketers

Topics

• Understanding Search as part of the purchasing process

• Holiday Trends

o Retail Saleso Key Dateso Online traffic to Retail Categorieso Demographicso Deals & Coupons

• Economic Landscape

• Implications for Marketers

News websites

Brand's Facebook page Twitter blog etc.

Online video sharing websites

Magazine websites

Information about this type of product in blogs or message boards

Coupon websites

Online auction websites

Consumer websites

Shopping-related emails that I signed up for

Shopping comparison websites

Saw an advertisement from the manufacturer/retailer while on the Internet

Online-only retailer websites

Online consumer reviews and ratings

Store/retailer websites

25%

25%

26%

29%

33%

37%

38%

38%

41%

43%

47%

50%

50%

61%

Searchers are savvy shoppers that incorporate a wide range of online resources in their purchasing process

Source: Yahoo! & . 2010. “Searchers: Hyper Engaged Shoppers” comScore. qSearch Data. September, 2011

% RespondentsThose who Searched Prior to Purchase

There are 224MM unique

searchers in any given month.

Each one of them search in

average 121 times.

Before Now

This makes their purchase decision making process complex and sophisticated

… because digital content is an initial filter to further in-person investigation, marketers have the chance to help their potential customers in the process by understanding who they are and how they search

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%30%

40%

50%

60%

70%

80%

90%

100%

Consumer Site (AOL,Yahoo!)Company’s Facebook

Department Store Site

Podcast

Search Engine

Retail Site

Consumer Report Site

Brand Site

Dealership Site

Expert Reviews on Website

Reviews on Brand Site

Read Digital Articles

Watch Video, Expert Created

Watch Video, Manufacturer

Enthusiast Site

Salesperson

Print Stories

TV Stories

Online sources are considered as influential as in-store sale associates, and reach is their advantage Influence to Purchase by Overall Usage

INF

LU

EN

CE

ON

PU

RC

HA

SE

OVERALL USAGE IN SHOPPING PROCESS

VERY INFLUENTIAL KEY

COMPARE DIGITAL OFFLINE

NOTVERY

INFLUENTIAL

Source: Yahoo! & & . . “The Long and Winding Road: The Gamesmanship of Shopping”. 2011

Topics

• Understanding Search as part of the purchasing process

• Holiday Trends

o Retail Sales o Key Dateso Online traffic to Retail Categorieso Demographicso Deals & Coupons

• Economic Landscape• Implications for Marketers

$466 billion predicted to be spent on 2011 holiday shopping

24%of total Department Store sales generated during the holidays

A critical time of the year for retailers

National Retail Federation 2011 Holiday Survival Kit

Offline purchases represent the largest share of Retail Sales in the US, but online purchases grow faster

1st QTR 2010

2nd QTR 2010

3rd QTR 2010

4th QTR 2010

1st QTR 2011

0%

4%

8%

12%

16%

20%

6.6%7.4%

5.7%

7.8%8.6%

14.4% 14.6% 14.9%

16.5%17.6%

Total Sales E-commerce

% Change from Prior Year

Source: US Census. Estimated Quarterly U.S. Retail Sales (Not Adjusted)

$43 billionspent on e-commerce during Q4 2010

91%of retail sales still occur offline, despite 12% YOY growth in e-commerce

Search patterns highlight consumer interest1

0/1

2/0

91

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91

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/09

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/17

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/24

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/27

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/23

/10

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/19

/10

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/10

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/16

/10

10

/25

/10

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/3/1

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/10

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/18

/10

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/27

/10

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/11

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4/1

11

/23

/11

2/1

/11

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12

/19

/11

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13

/9/1

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/18

/11

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/5/1

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/11

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/2/1

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/11

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15

/29

/11

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Gifts Holidays & Observances

20102009 2011

Holiday Season

Memorial Day Weekend

Holiday Season

Memorial Day Weekend

Weekly Search Buzz Index TrendSearch activity query volume

Labor Day Weekend

Source: Yahoo! Internal. Search buzz index = measure of share of search, specifically weekly number of searchers of specified product category or keyword divided by total weekly number of searchers in audience segment * 100,000

Consumers use search to find gifts

DEPARTMENT STORES 30%

APPAREL & ACCESSORIES 28%

CONSUMER ELECTRONICS 30%

FLOWERS & GIFTS 27%

% Traffic from Search Engines to …

Source: Hitwise . Industry Statistics. Week of 12/26/10

Holiday Shopping Trends

The online holiday shopping season historically peaked each year around December 12. However, holiday season sales have received a push from promotional dates. Cyber Monday has emerged as the top online spending day of the year. Similarly, Thanksgiving Day, Free Shipping Day and the week leading upto Christmas all posted sales growth above the 13% rate in 2010.

Source: comScore. Dec’2010

Total Holiday Spending in 2010 was $30.1 Billion

Thanksgiving Day

Black Friday Ciber Monday Green Monday Free Shipping Day

Dec 20 - Dec 26

$318

$595

$887 $854

$586

$2,098

$407

$648

$1,028 $954 $942

$2,450

2009 2010

Holiday TOTAL RETAIL Online Spending

Millions ($)

12% 61% 17%% change from prior

year

Source: comScore. Dec’2010

In 2010 total online retail

spending grew 13% from prior

year.

28% 9% 16%

Mon

day

11.1

.10

Wed

nesd

ay

Friday

Sunda

y

Tuesd

ay

Thurs

day

Satur

day

Mon

day

Wed

nesd

ay

Friday

Sunda

y

Tuesd

ay

Thank

sgivi

ng

Satur

day

Cyber

Mon

day

Wed

nesd

ay

Friday

Sunda

y

Tuesd

ay

Thurs

day

Satur

day

Gre

en M

onda

y

Wed

nesd

ay

Free

Shippin

Day

Sunda

y

Tuesd

ay

Thurs

day

Christ

mas

Mon

day

Wed

nesd

ay

Friday

Sunda

y -

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Page Views

Consumer Electronics Department Stores Home Improvement Mass Merch Apparel

Online users shop and compare first and then make a purchase decision on key dates

Source: Yahoo! Internal. Magellan Panel Data. Nov,10

Although PV’s hit the highest point on Black Friday, hard data for Cyber Monday let us assume that users shop and browse for products earlier and then make a decision on Monday. A

similar trend happens on the days following Christmas.

Total Spent $1.0B

Total Spent $648M

Total Spent $954M

Total Spent $942M

Total Spent $2.4B

Online shoppers population grows fast as Holidays get closer

UU’s to Select Retail Categories(in millions)

Source: comScore. Media Metrix.

86

69 71

64

41 41

3431

2016

9188

77

70

54

4239 37

3126

Oct'10

Dec'10

Family tops the list for gifts this year

Parent(s

)

Spouse or s

ignificant o

ther

Sibling (s

)

Friend(s)

Childre

n

Other C

hildre

n

Myse

lf

RelativesPets

Grandparent(s

)

59%

53%51% 50%

47%44%

38%35% 35%

25%

Bought/Buying for in 2011

HOL1 For which of the following people, if any, did you buy gifts for last holiday season (2010) and which do you plan to shop or buy gifts for this holiday season (2011)? Please think of any gifts that you may shop for or purchase during the holiday season, as well as those you may shop for or purchase after the holidays (e.g., post-holiday sales). Base: Total Sample (1500)

Most will experience some type of stress this holiday season with finance topping the list…

HOL40 What is your biggest concern this coming holiday season?

My biggest concern this holiday season is….

Dealing with children

Decorating the house/tree

Gift wrapping

Pressure to maintain traditions

Dealing with family

The stress of gift buying (dealing with stores/finding the time)

Knowing what gifts to buy

Money/expenses and other financial pressures

ANY STRESS FOR HOLIDAY SEASON

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

2011

2010

Online advertising not only drives sales but it also is an effective way to connect with Holiday Shoppers

20

Get gift ideas

Get me into the holiday spirit

Entertain me for the holiday season

Know when there are sales events

Informed about deals , offers, & promotions

Make a decision about what I should buy

Remind me of stores don't usually think of

Remind me about different products & brands

Find out about stores I want to go to

Find out about other places I want to go to

55%

20%

13%

50%

47%

36%

31%

34%

33%

26%

Online Advertising Should Help Me…

SPIRIT

DEALS

REMIND

HOL24 How might online advertising help you while shopping for gifts during this upcoming holiday season? Base: Plan to Buy Gifts This Holiday Season (1402)

A majority of holiday shoppers are interested in offers and promotions, free shipping is key!

21

Price discounts or sales

Free shipping

Purchase incentives

Coupons from newspapers/mags

Coupons received through email

Rebates

Coupons that I found online

Gifts sold as sets or with free items for less

Coupons from a coupon club website

Lay-away plans

21%

20%

27%

24%

24%

25%

23%

23%

21%

13%

60%

56%

42%

44%

41%

38%

39%

28%

29%

22%

79%

75%

66%

64%

63%

56%

60%

48%

48%

32%

Definitely Interested

Definitely/Probably Interested

HOL31 How interested are you in taking advantage of the following types of holiday offers and promotions from your local retailer (such as Target, Best Buy, JC Penney’s, etc.)? Please think of any offers that you might receive online as well as those offline. Base: Plan to Buy Gifts This Holiday Season (1402)

I am definitely/probably interested in the following…

Holiday Shoppers largely mirror US population

Source: Hitwise.

Volume of 2010 Black Friday related searches similar to previous holiday season

3%

52%

Source: Hitwise.

Searches for retailer coupons and discount codes showed strong growth last Holiday Season

+27%+13%

Source: Hitwise

Topics

• Understanding Search as part of the purchasing process

• Holiday Trends

o Retail Sales o Key Dateso Online traffic to Retail Categorieso Demographicso Deals & Coupons

• Economic Landscape

• Implications for Marketers

Declining economy make people feel less optimistic about their current and future situation

C

C

The powers in Washington have overused their powers and don't care about the rest of the nation

All of our opportunities are disappearing. We are letting too many

immigrants in and giving them everything they need

while we all suffer.

The country isn't really doing anything positive right now and the

unemployment rate is very high.

I consider it not the land of opportunity unless you are

a politician or big business.OBAMA

ECON21.Why don’t you consider America to be the land of opportunity?Base: Strongly/Somewhat disagree that America is still the land of opportunity

Source: Yahoo! Consumer Pulse.. IPSOS OTX. Sep’11

… and this outlook has an impact on their expenditures pattern

Total 2010

A

Total 2009

B

Total 2008

C

38%

38%

39%

7%

8%

9%

37%

27%

23%

18%

27%

29%

Spend less now Don't know About the same Spend more now

Current Discretionary Spending 2010, 2009 And 2008

*Letter indicates statistical significance between comparative groups at the 90% confidence level

MoreLess

BC

C A

A A

ECON2/ECON3/ECON4. How does your current discretionary spending compare to your discretionary spending in 2010, 2009 and 2008? Base: All respondents (n=1,500)

Source: Yahoo! Consumer Pulse.. IPSOS OTX. Sep’11

Avg. # of GiftsPlan to Buy

Avg. Budget for Gifts

Avg. $ Per Gift

Total 11 $725 $66

Parentof 0-17 15 $893 $59

Dads 15 $1,005 $67

Moms 15 $819 $55

Parents, especially Dads, buy the most gifts and spend the most money

28

HOL2 How many people in total do you plan to shop or buy gifts for the upcoming holiday season? Base: Total Sample (1500)HOL18 How much money will you be budgeting to cover all of your upcoming holiday gift purchases? Base: Plan to buy gifts this holiday season (varies) *Excludes outliers (2 x standard deviation plus the mean)

-1 vs 2010 -11% vs 2010

Consumers are buying 1 less gift and spending 11% less per gift this year.

Despite negative views of the economy, Holiday spirit is still prevalent and gift shopping has already started

I've already done the

majority of it

After Halloween

On Black Friday

Thanksgiving weekend

Cyber Monday

After Thanksgiving

weekend

Just days before the holidays

After the holidays are over

8% 25% 19% 6% 5% 24% 11% 2%

When do you plan to do the majority of gift shopping for this 2011 Holiday Shopping?

Source: Yahoo! & IPSOS OTX. Sep’11. Attitudes about Holidays

“Buy Early” Type Late Shoppers

Implications for Marketers

• People who SEARCH represent a group of hyper engaged shoppers. They gather information from more sources prior to purchase.

• Purchase decision making process is complex. Marketers need to be present all along the way to help conversion.

• Search remains the key driver of traffic to retailers and represented 28% of all upstream traffic in December 2010.

Understand the purchasing

cycle

• Holiday Shoppers start early in their gift shopping process. • Holiday Shoppers are also budget-conscious shoppers that turn to search to find discounts & deals during the holiday season,. In 2010 searches for retailer branded coupons increased 13% YoY

• Holiday shoppers will spend less money this year in gifts than last year

Understand the consumers

state of mind

• Display enhances search

• Holiday Shoppers will buy gifts mainly for their parents and their

significant others and/or spouses.

• Long tail terms are fertile ground to gain SOV

Strategize

AARON GOLDMANCMO

KENSHOO

Overview

Learn from past holiday seasonsPlan your strategy and tacticsExecute your campaigns with decisive action

30%+ of Yearly Sales Can Be Driven In the Next 2 Months

We are here. Are you ready?

32

LEARN

33

Search is Sacred

34

Loyalty is Lacking

35

Shopping starts Sooner

36

Budgets are Bigger

37

Bids are Bolder

38

Search still Scores

39

PLAN

40

Calendar Cues: 2010

41

Calendar Cues: 2011

42

Outline Objectives

43

Balance Budgets

44

Schedule Stuff

45

ATTACK

46

Boost Bids

47

Pick Portfolios

Portfolio: • Define scope (Profile, Campaigns, Ad Groups)• Set goals (Profit, Revenue, Conversions, Traffic)• Set constraints (e.g. ROI>2.5, Daily Spend<10K)

Input: • Historical data• Custom seasonality index• Custom keyword similarity groupings

Output: • New keyword bid recommendations• Performance forecasting

48

Pick PortfoliosPortfolio:

• Define scope (Profile, Campaigns, Ad Groups)• Set goals (Profit, Revenue, Conversions, Traffic)• Set constraints (e.g. ROI>2.5, Daily Spend<10K)

Input: • Historical data• Custom seasonality index• Custom keyword similarity groupings

Output: • New keyword bid recommendations• Performance forecasting

885% Profit Increase for campaigns running Portfolio Bid Optimization during the 2010 holiday season vs. Manual

and Keyword Bid Optimization

49

50

Forecast Future

Reporting Reminders

51

Reporting Reminders

52

Reporting Reminders

53

Reporting Reminders

54

Reporting Reminders

55

Reporting Reminders

56

Reporting Reminders

57

Reporting Reminders

58

RECAP

59

Recap

Learn– Mine trends and be ready!

Plan– Schedule and automate actions!

Attack– Stay vigilant and react!

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HAPPY HOLIDAYS!Kenshoo.com/2011HolidayGuide

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