December 2009 – Online Insights: Paid Search

Reaching Post-Holiday Shoppers: The Search Begins

The holidays may be “the most wonderful time of the year” for retailers, driving 25 to 40 percent of yearly profits in just one month, but that doesn’t mean the sales boom has to stop on December 25th. In fact, if you plan your post-holiday online marketing strategy correctly, the weeks after Christmas will bring a second boom in sales as gift-card shoppers and deal hunters flood websites in search of bargains. Over two-thirds of consumers take advantage of post-holiday sales, making these critical days in December and January a great time to clear out your remaining winter inventory and expose new buyers to your brand for the very first time.

One of the best ways to maximize post-holiday sales is to use paid search to drive traffic to your site. Google found in its 2009 holiday e-commerce study that 82 percent of Internet users find search engines “extremely or very useful” in making their purchases.

Who are Post-Holiday Shoppers?

Let’s step back and think about what consumers expect from the post-holiday shopping period. First and foremost, they want deals. Generally, people who are shopping a few days after receiving tons of gifts will be motivated only by great bargains; they don’t “need” to buy anything. Second, millions of shoppers will redeem gift cards or exchange unwanted gifts for credit to choose new items. Third, unlike the frenzy of buying for other people leading up to the holidays, in the post-holiday period, shoppers are mostly shopping for themselves—looking to pick up those items they wanted but didn’t receive, or to stock up on family essentials.

Also, think about your post-holiday goals. Of course, you want to get rid of excess winter inventory left over from the holiday season. But do you also want to promote some of your back-catalog or long-tail items? What about increasing sign-ups for your e-mail list or rewards program? Are there ways that you can capture these shoppers again and again, for example, by offering in-store credits for online purchases of over $100?

Thinking about your post-holiday marketing plan from both the consumer and the retailer perspective is a great way to get a head start on your post-holiday search marketing strategy.

SEM Tips for Boosting Post-Holiday Sales

Once you’re ready to create a post-holiday paid-search campaign, consider the following best practices to boost both sales and ROI performance:

Recalibrate your bids for non-holiday traffic. During the holidays, online merchants typically see increased traffic, conversion rates and sales, as well as higher-than-normal average order values. As a result, competition and bids for popular keywords usually increase during the run-up to the holidays. In the post-holiday period, you need to anticipate the shift downward in terms of conversion rate and average order values that results from consumers returning to their everyday habits. If you don’t, you may find yourself bidding more than you should for keywords based on ROI data from the period of holiday over-exuberance. An easy way to avoid this problem is to either look back to the period one year earlier to see how keyword prices changed as a guideline, or simply to exclude the most recent data from your bid calculations. While this means starting over, if you are using a tool which factors recent data heavily into bid calculations, you will be able to adjust your bids within just a day or two to quickly take advantage of the change in season.

Factor in costs of goods sold to make accurate bids. During post-holiday sales, consumers expect big discounts. Combined with the fact that most retailers are trying to clean out seasonal inventory, prices on many goods will hit rock-bottom levels. That means if you don’t factor in your cost of goods sold to calculate a net profit margin, you may be overpaying for some of your keyword terms. Use a paid search management application that captures your true profit margin, and then bid based on those findings. To take it a step further, consider grouping your keywords and building bids based on profit-margin targets. This will allow you to maximize your profits and deplete seasonal inventory by aggressively bidding on keywords for heavily discounted products, while still reserving a reasonable margin for the products you are introducing in the New Year.

Update your keywords and ad copy to reflect post-holiday sales. This might seem like a no-brainer, but it’s important to point out that you should bid on keywords and write ad copy that directly reflects your post-holiday promotions and discounts. Bid on keyword terms such as “After Christmas Sale” and “Post-Holiday Sale,” and include copy in your ads such as, “Sales Starts December 26th” or “Up to 75 Percent Off Starting December 26th.” Get creative with your keywords and ad copy, keeping in mind the typical consumer post-holiday behaviors discussed above. Try creative such as “Now Get the Presents You Really Want: Post-Christmas Sale” or “Gift Cards Burning a Hole in Your Pocket? Sale Starts Today.”

Watch out for stock-outs and adjust the keyword mix accordingly. In the post-holiday period, stock-outs are commonplace, especially as you clear out seasonal inventory you don’t plan to replenish. Monitor inventory levels closely to turn keywords off as soon as associated products fall below a certain inventory threshold. Sophisticated paid search management applications automate this process for you by analyzing a feed from your product catalog and inventory levels, and correspondingly adjusting or eliminating bids.

Clean up your campaigns for the new year. The shift from holiday to post-holiday is a tremendous opportunity to clean house and start fresh with search marketing. Take this opportunity to remove inactive ad copy that resulted from holiday testing, and identify ad groups that are missing creative altogether and associate new copy to them. Typically, after months of testing and optimization, your campaign structure may have grown unwieldy, and will need to be reworked. Review your ad groups with an eye toward relevance and the number of keywords per group. As a rule, you should have no more than 50 keywords per ad group. Restructure your ad groups to ensure associated copy is highly relevant. This will not only help your quality scores, but it will also make it easier to perform testing and optimization in the new year.

Just these few adjustments to your paid search marketing program can have a tremendous impact on your bottom line. One large retailer we work with followed many of these best practices last year with great results. The retailer excluded holiday-specific click and sales data when calculating bids on keywords, and used our bid-management solution to calculate and update bids daily using their most up-to-date performance data following the holidays. The retailer also tweaked keyword buys based on shopping trends and modified creative to reflect promotions. The result was a double-digit increase in post-holiday ROI year-over-year, with comparable spend on paid search. In this case, the end of the holiday season gave them a great reason to celebrate!

Matt Lawson is director of marketing at Marin Software, a leading provider of enterprise-class PPC management applications. He can be reached at mlawson@marinsoftware.com.