Part II: Drive Profits by Understanding Catalysts for Holiday Spend Patterns

In Part I of this series, we discussed strategies for reaching the value-driven consumer. Today, we will explore the mind of the consumer by analyzing shoppers' historical spending patterns and highlighting the best dates to focus on targeting the cost-focused vs. convenience-driven consumers.

Targeting Cost-Focused Customers on Black Friday and Cyber Monday:

Black Friday, the Friday after Thanksgiving, which falls on November 29th this year, has traditionally been one of the busiest shopping days of the year for brick-and-mortar retailers. Today, many customers are looking for Black Friday savings online as well; online Black Friday spending reached at $531M in 2007 [1].

Cyber Monday, which falls on December 1st in 2008, is the online retailers' response to Black Friday. It takes place on the Monday following Thanksgiving, and last year, consumers' enthusiastic response brought in $733M in additional online consumer spending [1].

Historically, consumers have been particularly receptive to shopping on websites that advertise for Black Friday and Cyber Monday promotions, and this year, given the current economic mood, more consumers are actively seeking deals and using the online marketplace to find them. In fact, in a survey from Harris Interactive, 54 % of respondents noted that limited-time offers such as sales or free shipping would significantly influence their decisions, and, in certain instances, might cause theme to buy immediately rather than continue shopping around.

This year, in order to match consumer mood, retailers are heavily leveraging discounts and promotions. In a recent survey, more than a quarter of retailers said they would increase online marketing of Black Friday promotions this year, while 84% said they will host special Cyber Monday sales--a 12% increase from last year.

To maximize profits, retailers also might consider targeting Generation Y, one of the brightest spots this holiday season. Having never experienced a real recession, Generation Y (13-26) tends to be fashion-forward and impulsive. Further, according to Maritz Holiday Shopping Poll 2008, this generation doesn't plan on cutting back on holiday spend and are the most likely to take advantage of Black Friday and Cyber Monday deals.

Green Monday Targeting: The Convenience Shopper:

Green Monday, the second Monday in December, is the date when consumers make their last-minute purchases online so they can be shipped in time to reach loved ones around the country in time for Christmas. Green Monday, which will fall on December 8th this year (if you go by the definition that Green Monday is the second Monday in December), set a record in 2007 as the heaviest online spending date in history with $881 million in sales.

So let’s think about this year’s calendar and what will motivate shoppers in this critical period. According to a recent AdWeek poll, the number one reason why consumers purchase online, rather than in stores, remains convenience. The 2008 calendar will likely prompt additional online convenience shopping this holiday season; there are five fewer shopping days than last year between Thanksgiving and Christmas which creates a shorter shopping window for buyers who don’t start making their holiday purchases until after Thanksgiving.

The last-minute shoppers would like their online buying experience to be fast, convenient, and easy, after all, in the highly connected world where we live, they are likely multi-tasking as they buy. Shopping at work is also becoming increasingly commonplace; the National Retail Federation says that 55.8% of workers with Internet access, or about 73 million people, plan to do their shopping from the comfort of their own cubicle.

Additionally, despite the economy, according to a study by Harris Interactive, we can expect some impulse buying this holiday season from the convenience shopper. Fifty-nine percent of online shoppers would be likely to make an impulse shopping decision if they saw something online that is perfect for someone they know and more than 50% plan to take advantage of promotions and sales to buy something for themselves this holiday season.

Source: [1]comScore

In the months leading up to the presidential election, individuals worldwide held their breath at what promised to be a historic event. Political programs shot up the ratings chart as Americans tuned in to hear the latest poll numbers and pundit commentary, front lawns became littered with political signage, and Tina Fey put Saturday Night Live back on the cultural map with her famous impersonation. Regardless of what side of the party line you fall on, the anticipation was great.

The anticipation seemed all the more intense given our current economic situation so we wondered how this election sentiment has been affecting consumer behavior and in which direction it's been moving online retail.

Prior to the election, economic conditions set the shopping climate for consumers. Our unemployment rate was on the rise, consumer prices fell at a record pace, food costs were up, and new-home building slumped to fresh lows. The status of the economic downturn excerpted consumer confidence which dropped 38.1% last month, the worst decline ever for the consumer confidence index.1 Good news came in the form of oil prices dropping 22% per barrel from September to October,2 a typical pre-election sign according to David Blue, executive director of the International for Ecological Agriculture.3 A six-day run beginning October 28 also left the major indexes up by at least 17.7%.4

Aside from economic conditions affecting the retail industry as a whole, the fact that 2008 is an election year also affects the outlook. Using Hitwise market share data for online shopping and classified sites, we mapped 2008 data (blue trend line) against 2007 data (yellow trend line). In the months leading up to the election we saw substantial year over year growth in the market share of online shopping and classified sites. Market share, as is typical throughout the year, peaked on weekends and were stronger and generally in line with the same days in 2007.

While consumers were shopping online for the holidays earlier than usual this year, the days leading up to the election, we started to see the gain we had over last year's online shopping market share (the gap between 2008's and 2007's trend lines) narrow. Online retail market share even fell below last year's norm, declining to 9.23% -- a record low for 2008 to-date -- on the day of our election. While it has been noted that consumers historically tend to hold back on purchases shortly prior to election day,5 these figures tell us that this year's economic uncertainty caused consumers to shop even less than expected on those few days. According to Bill Martin, co-founder of ShopperTrak, "people [were] kind of waiting -- they're not certain over what's going to happen, whether they [would] see more of the same economic program or if we're going to see some change with new leadership."5
Using Google Insights for Search below, we mapped the search interest level in retail (as observed as a relative percentage on the y-axis) in the days before and after the 2008 election (blue trend line) against the same days for the 2004 election (green dotted trend line). We noticed much lower levels of search interest beginning as early as the Friday night before this year's election whereas the search interest did not decline until the Sunday prior to the election in 2004. In general, however, presidential elections take an entire day away from consumer shopping as everyone heads to the polls on Tuesday and watches the live election coverage afterward. This year was no exception -- similar to the 2004 election, there was minimal retail search activity on election day.

On Tuesday night we witnessed Obama's historic victory as he became our president-elect, but in the wake of post-election Wednesday, our nation found itself in what has been deemed by some "a collective political equivalent of December 26"6 as we faced our economic reality again. That day the DOW shed nearly 500 points and consumers were not inclined to do as much holiday shopping or research online as in non-election years. As William Rutherford, president of Rutherford Investment Management explains, "yesterday there was a certain euphoria about the election, but today they are focusing on the market fundamentals, and they don't look so good."7

While both retail search interest and online retail traffic share (refer to Hitwise chart above) recovered to typical levels over the weekend as consumers resumed shopping, that is not to say that all returns to normal. Given the renewed worries about the struggling economy, it will be increasingly crucial for retailers to stay current and continue to adapt to the fast changes in today's online retail landscape. We saw many good examples during the election season: J. Crew was able to anticipate consumer interest and use the online channel to effectively respond to Michelle Obama's appearance on The Tonight Show with Jay Leno (in which she wore the retailer's ensemble) by quickly creating a specific Michelle Obama J. Crew search ad and a Michelle Obama J. Crew page on their e-commerce site. Bluefly created a Fashion Decision '08 site to poll users on different candidates' fashion choices and in turn create buzz around their brand and site, and Gap created a new 'Vote For' T-shirt and launched an entire campaign to market their new product. So whether your top holiday goals are to drive online conversions or in-store sales, take advantage of the flexibility and immediacy of online to be innovative with your advertising, from changing your ad text, to strategic keyword buys, to adjusting your bids and even landing pages.

[1] 2008 Market Harmonics, Consumer Confidence Index, 11/1/08.
[2] U.S. Department of Labor
[3] New York Times, Ken Belson, A Post-Election Bump at the Pump?, 11/6/08.
[4] The Wall Street Journal, David Gaffen, What to Do When Everything Rallies, 11/5/08.
[5] The Wall Street Journal, Halloween Shopping Helps Nudge October Sales Up 0.7%, 11/4/08.
[6] New York Times, Tara Parker-Hope Quoting Robert Thompson, The Post-Election Blues, 11/5/08.
[7] CNN Money, Alexandra Twin, Dow Sheds 486 Points, 11/5/08.


We know this is a challenging Holiday Season for both merchants and consumers, but, despite consumer concerns about the health of the US economy, predictions of growth in e-commerce spending represent a significant opportunity for retailers to reach active shoppers. Forrester Research projects that online holiday sales will grow 12% over 2007 to a healthy $44 billion even as same store sales remain flat. [1]

Shopping drivers of convenience, selection, and perceived value will continue to attract buyers to the Web this holiday season - over 91% of online shoppers plan to purchase the same number or somewhat more gifts online this year.[2]

To maximize the value of your marketing dollars, we wanted to offer some relatively simple best practices for converting cost sensitive consumers:

·Sweeten the Deal by Offering a Holiday Perk in Your Ad Text: Frugal shoppers want to find the best overall value online – regardless of whether you typically compete on price, you still might consider sweetening the deal with complimentary gift wrapping or shipping.

·Consider Removing Negative Keywords like ‘Free’ or ‘Discount’ From Search Campaigns: While normally, some retailers benefit by filtering out users looking for discounts, this may prevent your ad from showing to value-seeking consumers who may inadvertently wind up buying from a higher cost competitor. To do this effectively, you may want to use negative exact match keywords like ‘-[Free "brand name" Purse]’, which filter out unnecessary clicks as you likely don’t intend to give away a free purse, without preventing your ads from showing to potential buyers who are hoping for ‘free shipping’.

Visit the AdWords Help Center section on Keyword Types to learn more.

·Increase Profits by Offering Discounts that Encourage Shoppers to Buy More: Consumers typically need to buy multiple gifts at this time of year and you want them to purchase presents for multiple people on their list when they visit your website. Consider an offer such as ‘buy two, get the third 30% off’ rather than offering 10% off per single item; you offer the same savings per item, but encourage volume purchasing. As an additional benefit, if the shopper’s mother, daughter, and sister all love their new sweaters, you’ve managed to kill two birds with one stone by spreading your brand as well.

·Avoid Major Site Changes: With value-focused users visiting multiple sites before making purchases, they may visit your site a few times before making a purchase. To avoid confusing them, make sure they can use the same navigational path to complete purchases.

·Employ Values Marketing: With a reduction in consumerism comes a cultural shift that breeds a focus on self-sacrifice, reassigned priorities, and a return to those things that really matter. Shoppers are spending more time at home this season and spending time with family and friends. Advertising that echoes consumer priorities is more likely to breed an emotional connection with your brand - increasing both conversions and brand loyalty.

·Engage in Successful Price Discrimination by Targeting Promotions Based on Search Behavior: If you are a branded retailer, you're likely have a segment of your customer base searching for promo codes for use in your online store or coupons to bring with them into your brick-and-mortar location. Consider building a landing page specifically targeted to this search behavior - you'll to show your cost-conscious brand enthusiasts that you've anticipated their needs and further increase brand loyalty.

[1] Forrester Research, Outlook For US Online Holiday Sales, 2008, Economic Woes Promise A Challenging Holiday Season For Web Retailer, October 21, 2008

[2] E-tailing group's third annual "Mindset of the Multi-Channel Shopper Holiday Survey," sponsored by ATG, October 2008, n=1,000

I spent my first 4 years at Google aggregating "Retail best practices" and sharing them with advertisers. During this time, the majority of these "best practices" were focused on driving greater cost effective e-commerce. Over the years, retailers and their marketing partners/agencies have become more open to ideas of cross-channel inclusion and testing.

Over the last year, I've shifted my focus a bit. While there is so much that marketers CAN DO in online advertising - I feel like we online marketing enthusiasts sometimes become blind to what we SHOULD DO. In this vein, I've tried to focus on what Retail marketers do in other media channels - so we can apply those concepts to the online marketing channel without re-inventing the wheel.

I've often asked the question - "What works for Big Box Retailer X?" The answer .... "Circulars" Why do retailers love circulars? ... Some (and not all) reasons include:
  • They work! Retailers (and manufacturers) can track on a local level the sales lift of products in circulars and compare to the cost of the circular - which almost always shows a positive return - and most importantly - moves large volumes of product.
  • Consumers find value in them - Research shows that consumers still love their Sunday FSIs.
  • Costs are usually shared between retailers and their manufacturer supplier.

In summary - Circulars over the last 20+ years have been the ultimate merchandising tool. They have put the RIGHT OFFER in front of the RIGHT CUSTOMER at the RIGHT TIME - in a scalable way. Customers read circulars to find the best deals ... the fact that they are seeking this information out pre-qualifies them as being interested in those products, and the retailers offer "deals" on the circulars to help drive these customers into stores to purchase the goods.

Now, we've all probably read the news about declines in Newspaper circulation. And while this is true, Circular advertising still thrives due to the bullet-points above (as it should!) If it works - no marketing, sales, or merchandising function is going to panic.

The conversations I have with retailers are not about how they need to SHIFT marketing dollars away from the circular and into digital media merely because of media consumption trends. Conversations I try to have, especially in these economic times, are about optimal merchandising that will net the best, accountable sales results...and in the online channel - I believe there is TREMENDOUS opportunity...

To paraphrase again - circulars work because they PUT THE RIGHT OFFER IN FRONT OF THE RIGHT CONSUMER AT THE RIGHT TIME. Search Advertising works in the e-commerce equation because it puts the right message in front of the right user at the right time ... So - my question is: How come we can't combine the two?

We have the right user at the right time (someone who theoretically raises their hand to say "I'm in the market for a blender" by searching Google for "blenders"). In the cross-channel merchandising equation -- the online channel is missing "the right offer". While no one has completely figured it out - I can say that a lot of retailers are trying to figure it out. The concept of locally targeted offers to relevant, online customers is certainly an area that most retailers agree is an untapped market. We have examples we are happy to share to those interested...

Getting tactical for a minute ... I urge readers to search for any retail related general query on Google. Example: "Printers" or "refrigerators" or "Men's Suits" or "Running Shoes" (I can go on for a while here). In almost every case - there are National and Local Retailers who promote the general category ("Buy Printers at Retailer X") and there are manufacturers promoting their brands/websites ... BUT ... there are typically no instances of joint co-op marketing.

The paid results you see are what I'm calling "The Virtual Aisle" or "The Virtual Shelf Space." I like to equate this to walking into a store and asking the clerk where they sell printers. In most cases, the clerk will say (for example), "Aisle 7." As you, the consumer, approach aisle 7, you will often be greeted by an "end cap" merchandising display, usually promoting manufacturer brands (that are funded by these manufacturer partners). Additionally, when you walk into aisle 7, the top-to-bottom shelving order is often based on merchandising relationship with manufacturers as well. In the online world - there are very few "Virtual End caps" to point to.

If manufacturers want to reach consumers who come to "aisle 7" - I can't think of a reason why they wouldn't want to reach a much larger audience of extremely qualified shoppers (people searching thousands of variations of the keyword "printers"). Furthermore - when retailers reach the consumers looking for printers - I believe their is an untapped merchandising expertise that can lead them to more creative ways of driving sales than the message: "Find Printers at Retailer X"... For e-commerce - that messaging works, but e-commerce only represents 6% of total sales. The internet effects a lot more than 6% of sales (89% of shoppers say they use the internet before purchasing products*) - but the digital merchandising to date has not matured to this story - and again - this is what I talk about around the enormous opportunity...


Unemployment is up, Consumer confidence is down, is this really the season to be jolly?! If ever we needed retail therapy its now! And shoppers have gone to the couch in huge numbers…with laptops in hand. Google search driven traffic is up nearly 30% over last year in categories like Home Furnishings, Home Improvement, Consumer Electronics and Jewelry and Watches. Even Apparel and Office Supply search driven traffic is up almost 25% year over year.

If predictions by the National Retail Federation ring true the forecasted holiday sales growth in Retail overall will be hovering around 2%. But for online retail the outlook is a bit more festive with Forrester Research predicting retail sales this holiday season will grow 12%. Online will play a role in 86% of the upcoming holiday shopping season both as a research tool and to make purchases; beating out "in-store" (54%) 2008 Google/OTX Holiday Shopping Intentions Study . According to the latest Internet Retailer survey, 81% of retailers believe their holiday web sales will grow this season. reports, in their 2008 eHoliday Study conducted by Shopzilla, that 56% of online retailers expect their holiday sales will grow at least 15% year over year.

So what can retailers do to channel Dr. Phil? Shoppers are beginning their holiday research and shopping earlier this year so make sure your sites are ready to accommodate the increased traffic. Free shipping and promotions are already in full swing. To ensure you are there when and where shoppers are looking for you don't cap your search budgets (would you close your doors at 2pm because there were too many people trying to enter your store -- we know Dr. Ruth wouldn't). Consumers are expected to spend more time researching this holiday season, so give these info hungry shoppers everything they need. According to, 33% of retailers have added reviews and 43% have added video to their sites. If you have product videos load them up on YouTube, its free and a great way to reach consumers. Lastly, if you are reading this post you are probably already know all about search but don't ignore the power of display advertising. Search is great and Display is great but together they are like Frasier and Niles.


Did you know that YouTube is the second largest search engine on the web, after Google?

YouTube Sponsored Videos now allows marketers, content partners and users to take advantage of the YouTube search functionality by promoting their content in a dynamic auction-based marketplace. Similar to Google AdWords, YouTube Sponsored Videos leverages keyword targeting and Cost-per-Click bidding within YouTube search results.

To promote their back-to-school penny product sale, OfficeMax created a series of eleven hidden camera videos in which pranks are pulled on unsuspecting strangers. With just six weeks to drive buzz and awareness before the back-to-school season came to an end, OfficeMax did not have time to let an audience form organically over time. To drive immediate awareness of their videos and generate viral views, OfficeMax participated in the beta release of YouTube Sponsored Videos. When users searched on “OfficeMax”, “funny pranks” or “penny pranks”, for example, an OfficeMax ad appeared next to search results, directing the user to watch the video.

Watch the OfficeMax video case study to learn more about the success of the “Penny Pranks” campaign and the power of YouTube Sponsored Videos.

For more information about YouTube Sponsored Videos, visit:


Have you reached nirvana?

Two weeks ago we debuted Part I of our five part video interview series with Avinash Kaushik, Analytics Evangelist. The post received very positive feedback and we are excited to share Part II of V with you today.

The interview focuses around the theme of online activity driving in-store sales and how retailers can measure this impact. In part II Avinash continues to share pertinent recommendations for measurement including the “holy nirvana” of measurement.


Over the past few posts we have been examining the impact that online has on in-store sales. So far we have approached this from a few angles; measurement and testing methodology. Today we are going to approach the topic from another angle; custom research.

Ken Cassar, VP of Industry Insights at Nielsen Online, has joined us to share the findings of his report called "Pinpointing the Value of Multi-Channel Behavior". For the research Ken used Nielsen's online and Homescan panels which allows Nielsen to track online website visitation as well as actual offline purchases. Therefore, Ken was able to measure the effect of website visitation on offline sales and to better understand the role of the Internet in both high consideration and low consideration purchases.

Please watch the video interview below and you can download the report here:


Last week we heard tips from Analytics Evangelist Avinash Kaushik on how to measure the in-store impact resulting from online investments. Today we are continuing in this vein and discussing ways for retailers to test the online-offline impact for themselves.

The average American spends as much time on the Internet as they do watching TV (31 percent of total media consumption is online, Source: Jupiter Research/Ipsos Insight Entertainment and Media Consumer Survey, 08/07, US online consumers only), and yet advertisers only spend around 6 percent of their total media spend on online advertising. One big reason for this, at least in the retailing world, has been the difficulty of showing how online advertising affects consumer purchasing behavior in stores.

According to a study done last year by Yahoo! and comScore, 89 percent of consumers look for information about products online. While selling products online is a great source of revenue, perhaps the true value of online advertising is its effect on what consumers do in store. So how can you figure out the effect that your online advertising has on offline purchases?

One of the most common methods is to look at the individual consumer. This can be done through online coupons, credit card tracking, individual surveys, or Nielsen's HomeScan tracking data (where people who opt in, physically scan products they buy using a bar code reader in their home). Although the individual consumer method can surely provide interesting results, it is often too difficult and too expensive for most advertisers.

Another approach that seems to be more scalable is randomized test and control, which is similar to the method used for FDA drug testing. The three basic elements are designing the test, running the rest, and analyzing the results. The design is perhaps the most important element, because if your design is poor the results will be meaningless. Although this method can have dozens of variations, I'll give a simplified over view of the design to get you thinking about how you can measure the online/offline impact.

First, you would choose cells, each with multiple metropolitan test areas. The test areas should have similar attributes – population, sales, etc., and each cell would be exposed to different variations of advertising. Here is one possible design:

Cell 1: No online ads in test product categories

Cell 2: Existing online ads, no change from campaigns prior to test

Cell 3: Max out Google Search and max out potential keywords, but use no Display

Cell 4: Max out Google Search and layer on Display ads to boost reach

A few things to consider are the timing, the product categories that are tested, the number of test areas, and the spend level. You should try to avoid testing when there is a lot of other noise, such as seasonal promotions and holidays. The product categories can also have a big effect on the test. If you choose categories that typically have big revenue numbers it is more difficult to see changes caused by your test, so it is usually better to pick categories with smaller sales numbers. And lastly, the number of test areas and the amount spent on the test go hand-in-hand. If you choose too many test areas your testing dollars will be spread very thin and it will be difficult to make an impact. But if you choose too few test areas the test won't be statistically significant. So it is important to pick a middle ground that allows you to put a significant amount of testing dollars into each test area.

Online product research has become an integral part of the consumer shopping experience, and your online presence surely contributes significantly to your ROI beyond what is sold online.

As Jeff Smith of Accenture Retail said, "Instead of replacing bricks and mortar stores, the Internet is an extension of consumers' in-store shopping experience providing a resource to research product and price. Retailers and manufacturers must understand this consumer behavior trend in order to reach shoppers, educate them, serve them and earn their loyalty."

Now you just have to test it for yourself.