Shopping Blog

If two percent of your site visitors convert to sales on site, what happens to the other ninety-eight percent of the traffic on your site? Do they buy in-store?

One of the biggest challenges facing retailer marketers today is measuring the impact of online investments on in-store sales. To help address this issue, John McAteer, Director of Retail at Google interviews Avinash Kaushik, Analytics Evangelist at Google and author of the popular blog Occam’s Razor in a five part series for the Google Retail Blog.

Please view Part I of V of the video interview series below. In part I Avinash shares two basic ways to measure offline impact.

Posted by Emma Weisberg, Google Retail Team

A few weeks ago, Hal Varian, Google's Chief Economist, had a post on "Clicks, Christmas and Conversions". In the post, Hal talks about the importance of understanding the inter-play between CPCs (Cost-per-click), conversion rates (CR) and CPAs (Cost-per-acquisition). Hal stresses that retailers need to focus on the CPA when evaluating the success of their online campaigns and not get hung up on rising CPCs during the holiday season, because they are only one factor in the equation of success. (Of course we could get into a much meatier conversation around ROI and how to accurately measure ROI of online campaigns which it is much more complicated than simply dividing the cost of online advertising/online sales. The true ROI model should include a metric for offline sales generated by online advertising among other metrics...but this is a discussion for a later date)

Therefore, the answer to why we shouldn't get hung up on rising CPCs during the holiday season is: although CPCs rise, conversions rise at a more rapid clip which in turn serves to depress CPAs. The upfront rise in CPCs during the October-November research period is offset by spiking conversions and the resultant plunge in CPAs in the December purchasing period. CPAs are the bottom line!

Taking another look at the graph above, which Hal provided, it is also interesting to note that the CPA does exactly what it should on Black Friday (and the following weekend) and dips down from where it was on Thanksgiving Day. According to Hitwise, Thanksgiving day sees record visits to retail websites (Hitwise Retail Index December 2007 reported that Thanksgiving was when the highest market share of US visits to the Hitwise Retail Index occurred; online traffic to retail websites increased 20% from 2006).

Traffic is high on Thanksgiving day (now often referred to as Brown Thursday) but it is not the peak day for conversions or purchases because consumers are in the research phase on Thanksgiving day, planning out their online purchases and in-store shopping trips for the next day, Black Friday. Black Friday is when retailers traditionally start offering large price discounts. Additionally, Cyber Monday (the Monday after Thanksgiving), known for its high online retail sales, sees a slight dip in CPA and then December 1 rings in the purchasing season. We also see the clear and expected conversion rate increase on Green Monday (Dec. 10, 2007/ second Monday in December) which has been noted as being the strongest online retail sales day. If the trend holds, the highest online retail sales day of 2008 will fall on December 8th.

Finally, in thinking about the 2008 winter holiday season, here's what we know:

1. Both research and shopping will start early this year: 31% of consumers plan to start holiday shopping and research before Halloween and a majority (57%) will start before Thanksgiving.¹ Therefore, the shopping has already begun...is your marketing strategy ensuring that your brand is top of mind throughout the entire research-purchase process and making it into the consideration set early on?
2. Consumers will spend more time looking for deals: 43% of consumers say they plan to spend more time this year shopping around for gifts because of the current state of the economy.¹ Consumers are taking the time to research the right purchase...Brands will need to focus on having a strong presence and clearly expressing their value proposition to guarantee inclusion in the consideration set.
3. There are 5 fewer shopping days this year, between Thanksgiving and Christmas, than last year: This is when the peak of conversions happen; therefore, retailers need to be wary of the tightened timeline and put strategies in place to lessen the crunch, by urging consumers to start purchasing before Thanksgiving!

1.OTX/ Google 2008 Holiday Shopping Intentions Survey, 9/16-9/24 2008, n=10,039

Posted by Emma Weisberg, Google Retail Team

Wireless Shoppers: How Consumers Shop for Phones and Wireless Service

Google and Compete, Inc. Webinar on how consumers shop for phones and wireless service

These are challenging and turbulent times for the wireless industry. As mobile phone ownership approaches saturation, both carriers and device manufacturers need to attract new subscribers from competitors while retaining their existing customer base. In the current economic climate and on the verge of holiday shopping season, understanding how and why wireless consumers do what they do is more important than ever.

Join us on Tuesday, October 28th at 2:00 pm EST, as Karen Parker, Managing Director of the Telecom and Media practice at Compete and Sara Kleinberg, Head of Industry Marketing at Google, present research on:

• How internet research and search play into the decision making process of wireless buyers
• How to reach high value consumers online
  
• How quickly consumers make purchase decisions about wireless devices and services, and how you can reach them at the right time

Please click here to sign up for Wireless Shoppers

Posted by Sara Kleinberg, Google Retail and Tech-Comm Team

We are now just days shy of Halloween, but despite consumer uncertainty in a tightening economy, retailers at large should be able to calm their fears as we step into the ‘scariest’ holiday of the year.

According to the National Retail Federation’s Halloween Consumer Intentions and Actions Survey, more consumers plan on celebrating Halloween this year, spending more on average this holiday.

64.5% of adults (18+) will celebrate Halloween this year, up from 58.7% last year. Consumers will spend on average $66.54 on this holiday, totaling $5.77 billion and an increase of 13.8% over 2007. As Phil Rist, Vice President of Strategy at BIGresearch, said, “After months of bleak economic news, consumers are looking for a reason to let loose. And with Halloween falling on a Friday this year, consumers may plan to celebrate all weekend long.”

Looking to escape from the volatility of recent days, adults are not only dressing themselves up but also having their children and pets join in for some Halloween fun. 36.4% of their Halloween spend will be on costumes, 30.7% on candy, 27.4% on decorations, and 5.5% on greeting cards. So even for retailers whose niche is not in costumes, there just might be a treat in it for everyone.

But Halloween’s just the beginning. We took a look at the trend line for shopping click volume on Google.com from 2007 and mapped it against this year’s upcoming holidays; what we noticed was a significant surge in click volume immediately after Halloween, a trend we expect to see again this year:

This finding is echoed by the OTX/Google 2008 Shopping Intentions Survey highlighted in a previous blog entry, which shows a large percentage of consumers planning to start their holiday shopping and research sometime between Halloween and Thanksgiving this year. So gear up - the Halloween kick-off is just around the corner!

Posted by Julia Tang and Eric Lopez, Google Retail Team

To help you with your holiday preparations, we've compiled a list of tools and tips from Google that can help retailers optimize their ad campaigns and websites, drive free traffic, and control their marketing budgets.

We know that the fourth quarter is the busiest and biggest shopping season for retail advertisers and merchants. We also know that inventory is top of mind this year for all retailers. IHS Global Insight Economist Paul Bingham said, “Getting caught with unwanted inventory when demand is falling and commodity prices are falling anyway is to be avoided as much as possible and the risk of stock-outs is less of a concern than having to dispose of inventory at distressed inventory prices” (as reported by Logistics Management on 10/20/2008). Retailers should consider investing more heavily in the potential of search advertising to drive increased in-store sales this year and move that inventory off of the shelves; 89% of consumers research products online¹ and exposure to search ads has proven to double in-store sales.²

In addition, Google offers other tools that retailers can use to help drive additional traffic and sales this holiday season, such as Google Product Search, which allows shoppers to search for and find products they want to buy online. As a merchant, you can use Google Product Search to target users shopping on Google and promote your products for free. Visit our Google page on holiday success to see a full list of tools and tips.

Please note that Google Checkout is currently available only to merchants in the US and UK, and Google Product Search is currently available only to merchants in the US, UK, and Germany.

¹Yahoo! and comScore Study Finds Online Consumers Who Pre-Shop on the Web Spend More In-Store. July 2007

²Magid Abraham, “The Off-Line Impact of Online Ads,” Harvard Business Review, April 2008

Posted by The Google Retail Team

Google's clicks and impressions are up dramatically from this time last year, in most categories, for both search and content. According to a Google & Compete, Inc. report on Online Research and Purchase Activity (Sept 2008), 40% of general online consumers made a retail purchase online in Q2 2008, an 18% increase over the same time frame last year. Similarly, consumers have visited retail websites more frequently than they did last year, likely in an effort to shop smarter in a rough economy by investing more time looking for quality products at the right price.

New research suggests that we will continue to see an increase in online traffic and shopping in relation to the upcoming holiday season. An OTX/ Google 2008 Holiday Shopping Intentions Survey (Sept 2008) reports that 86% of consumers plan to do online research this year to plan their holiday shopping. 31% of consumers plan to start holiday shopping and research before Halloween and a majority (57%) will start before Thanksgiving.

36% of consumers say that Search engines are their go-to source for gift ideas this holiday season and according to the Google & Compete, Inc. report 16% of online retail conversions in Q2 2008 were referred by Search, up 12% over last year, so make sure your holiday campaigns are up and running. The E-Tail Group's recently released annual "Mindset of the Multi-Channel Shopper Holiday Survey," reports that this year the internet is the preferred shopping channel for multi-channel consumers! Nearly half of consumers surveyed said they planned to do their Holiday gift buying online with 72% of consumers saying they plan to do their research for holiday gifts on the web. The majority of consumers E-Tail surveyed (91%) plan to purchase and spend the same on (or slightly more) holiday gifts this year online.

Your consumers are researching their online and in-store purchases online and they are buying online; make sure you are there!

Posted by The Google Retail Team

Google and Unity Marketing Webinar on the Ultra-Luxury Consumer and the Role of the Internet in their lifestyle.

Pam Danziger, president of Unity Marketing, will present the results of an in-depth study, sponsored by Google, examining the role the Internet plays in the lifestyles of the ultra-affluents (consumers with incomes corresponding to the top 2 percent of U.S. households, with household incomes of $250,000 or more). The results provide powerful insights for all luxury brands, into how to reach and interact with these important consumers.

For this cash-rich and time-poor group of ultra-affluent consumers, Internet shopping offers the kind of customer service they value most: access to their favorite brands, when and where they choose to shop. Luxury marketers who want to learn how to more effectively connect their brands with these customers should make a point to attend the webinar.

Webinar Info:

If you missed the presentation or would like to watch it again please feel free to click on the link below to view the recorded version: Luxury Webinar

Posted by Paulita David, Google Retail Team

The holiday period will soon be arriving and retailers want to know what to expect. Last year Hal Varian, Google's Chief Economist, provided us with data and analysis to better understand the trends relating to online consumer research and purchase behavior during this critical period. The information proved to be invaluable to our retail clients in preparing for the holidays and understanding the week by week holiday traffic and associated cost and click metrics. Therefore, we are once again turning to Hal to analyze the 2007 data.

Lots of people focus on CPC (cost per click) but ultimately the performance measure that really matters is CPA (cost per aquistion). These two metrics are tied together by the conversion rate:

CPA = (cost/click)/(conversions/click) = CPC/CR.

The chart below shows median CPC, median conversion rate, and median CPA during the 2007 holiday season for US Google AdWords advertisers who use conversion tracking. The series have been normalized so they all start at the same point on October 1. Click on graph below.

Posted by Emma Weisberg, Google Retail Team and Hal Varian, Chief Economist, Google