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Holiday Sales Disappoint Optimistic Retailers

Massive retail discounts failed to rescue this holiday season and delivered the most dismal 4th quarter in nearly 40 years. Consumers spent cautiously this year worried about the U.S recession, job losses, and a sinking stock market.

This is a disappointment for companies that had hoped the holidays would offset a year when sales have been sliding steadily, draining profits and, in many instances, undermining the ability to pay down debt. No retail sector was spared. Some sectors hit the hardest were:

Luxury Items -35%

Electronics and appliances -26.7%

Women’s apparel -22.7%

Furniture -20%

E-Commerce -2%

E-commerce showed the most persistence, however it was disappointing compared with last year which showed an increase of 22.4% during the same period.

The season’s dismal results have left stores with mountains of inventory to clear, prompting many to move up their typical January clearance sales earlier to help salvage what they can of the season. Retailers like JCPenny are having door buster clearances starting at 5:30a.m with 70% discounts while luxury retailers like Neiman Marcus are trying to offset the 84% fall in its fiscal 1st quarter with 40% on already reduced merchandise.

200,000 stores are predicted to close this year, which some experts predict will be the most in 35 years, is likely to come across areas from electronics to apparel, shrinking the industry, taking advantage of the long tail of fewer niche players and suppliers. Moreover, retailers soon may face yet another blow. In recent years, they have seen a big lift in post-Christmas sales as shoppers coming back to stores to redeem gift cards often spent more than the card amount to buy full-price merchandise. This year however, shoppers expected to spend only $151 on gift cards this season, a 24% drop from last year. – IR

Is Your Pay Per Click Account Holiday-Ready?

{Editor’s Note: This is one of a set of articles on ways to approach and prepare for the traditional Holiday Shopping season. I’ve dubbed these articles as “The Marketer’s Perspective” and “The Analyst’s Perspective.” A smart online marketer will use both of these approaches. Here’s the Analyst’s Perspective — Michelle}

As the weather cools down, leaves change color and football takes over the television it is clear that Fall is here.This can only mean one thing to any Online storefront….the Holidays are near!!!Over the years I have experienced the Highs and Lows of proper planning for what can be the busiest time of year for any online business in retail.Are you Prepared?Will you see December come before you realize the missed opportunity?Not if you follow the 3 steps that have helped me to prepare my clients for the Holidays:

1.Know Your Trends

The biggest mistake that any business owner can make is not knowing the online trends for search volume.Tools such as Google Trends:http://www.google.com/trends can help you to prepare for the significant increase in traffic that comes with the Holidays.Knowing when the traffic picks up will allow you to make the following adjustments to your accounts:

  • Adjust Budget so that you don’t lose out on impression share
  • Keep an eye on the competition’s strategy for possible marketing advantages
  • Knowing which regions/cities to target for regional targeting strategy

Let’s use the term “video game” as our example for the holidays.Here is the results that I get when I use that term:

The immediate trends that you can see circled above are definite increase in traffic volume which starts in October for this term in the US.This traffic hits its peak throughout November and starts to fizzle out during December.If you wait until December to run more ad budget, you will have missed the boat. The top cities and states that search for this term are below which may help allow for a regional targeting test to focus on areas which have a bulk of traffic for testing. This would be especially helpful if you are working with a limited budget during the Holidays and want to maximize impression share.Now that we know the trend of our term, lets move on to the next step, preparing our account.

 

2.Prepare the Account

Now that we see our trending, we need to prepare the account for what’s to come.The first area that I would get started with is a Competitive Analysis to see if your competition is offering anything like FREE SHIPPING, SALES, MONEY BACK GUARANTEES which all may provide them with an advantage.Also look at their ad text and landing pages to see if they using any of these benefits to draw the visitor’s attention.

Once you have the Competitive Research done, look to prepare your Content and Search Campaigns. Start with the Content Network Campaign that targets people that are in the “researching” phase of their shopping. Remember to always “think out of the box” and not target keywords, but themes for the Content Network.Think about the type of traffic that would be interested in video games and where they would be likely to visit on the internet.I would recommend testing out the products with the term “review” as well as use the site/placement tool to find where your target, “parents” would be researching games that their kids are asking for.Early in the buying cycle is the “researching” phase where the Content Network can provide branding for your site, so use it to its full advantage and make it work with your Search Network.To prepare the Search Network, always review the following:

  • Keyword Refinement: Always look to see if keywords have changed to add new Negatives or Longtailed terms
  • Refine Ad Copy: Make your ads stand out based off what you found in the competitive analysis {this does not mean copy other people’s ads – make yours stand out — Michelle}
  • Landing Pages: Update landing pages with any sales or offerings that you are adding for the Holiday Season
  • Have Analytics implemented to collect the Interaction Metrics on your traffic

I would always recommend starting the Holiday rush with a big net and once you collect initial data, you are on to the next step… weeding out the unqualified traffic.

 

3.Weed Out the Unqualified Traffic

The holiday rush has started and you have the first7-10 days of data to review, it is now time to adjust quickly to the data.The first step is to run the following reports:

  • Ad/Keyword Reports
  • Placement Reports

Starting with the ad report, we are going to look to see which of our ad tests is performing best and run it with a new test based off the results.We don’t want to have an ad that is converting lower to be in rotation longer than necessary during the busiest time of year.Once you have made the adjustments to the ad text, look over you keywords to see which ones are performing well and which aren’t.Once you have that information, simply adjust by taking those that aren’t performing out of the mix and getting those that are performing more exposure.The placement report will show you all the sites that the are leading to conversions and those that are just costing you precious budget.The adjustments to this is quite simple as well; take out anything that isn’t performing and give the sites that are performing more exposure by creating an Enhanced Placement Targeted Campaign that focuses your spend on the sites that are converting well for the account.

The three steps above are just the ground work for being successful during the holiday season.Once the rush comes, the biggest factor will be the ability to adjust quickly to what is and isn’t working on your account using the tools available.

Christmas Time PPC for B2C

{Editor’s Note: This is one of a set of articles on ways to approach and prepare for the traditional Holiday Shopping season. I’ve dubbed these articles as “The Marketer’s Perspective” and “The Analyst’s Perspective.” A smart online marketer will use both of these approaches. Here’s the Marketer’s Perspective — Michelle}

In taking care of my nephew a few years ago I remember watching the movie, “The Lion King” and had one of my first Epiphanies in relation to PPC. The song “Be Prepared” is narrated by the evil Scar as a mantra for that which is to come. As non-intellectualized as this silly diddy may sound, it is the exact “Mantra” that should be used for PPC in relation to the Christmas Holiday Season as well as the other seasonal shopping cycles through out the year.

Christmas for most B2C retailers is by far their busiest time of year. Consumer impulse spending behavior, while it may slightly vary year to year, is generally highest for the Christmas Holidays. Because of this, intelligently designed PPC Strategies should take full advantage of the “shortened buying cycle” for consumers during this time. Not only is the buying cycle significantly shortened, but there is also a dramatic increase in online sales. In fact Christmas is the time that even “Grandma Janice,” who still doesn’t even understand what this whole “World Wide Web” thing is, will make online purchases for her grandkids! With this in mind, here are some suggestions for implementing seasonal PPC strategies:

1. Create your online campaigns early!

In measuring the effectiveness of PPC campaigns you need to be able to test, test, and re-test. Start formulating your Christmas Campaigns in September (seriously!) so that you have time to test out a couple of variables and hit them hard by mid-November. As the old saying goes, “The Early Bird Gets the Worm.” The same is true for PPC. Don’t let your competitors get a jump on you for the holiday season. Find out what works before they do so that you can capitalize and see the best ROAS!

2. Try out the Content Network

Many retailers, for whatever reason, run as fast as they can away from the Content Network. Sometimes this is due to poor experiences in ROAS and sometimes it’s just due to inexperience with the network itself. Realize that during Christmas EVERYONE is looking to buy something! This means that there will be a lot of shopper traffic that could be HUGELY beneficial to you. If you are wary of testing out the entire network, start with a very limited budget, find out which sites convert versus which ones do not, and go from there. Placement Targeted Campaigns can also show great results during this season as well.

3. Launch Image Ad Campaigns EARLY

Image ad campaigns are campaigns geared towards the Content Network in which you actually upload an image that will appear as an advertisement. Quite a bit of the time these are used for branding purposes. While I feel very strongly that PPC should not be used for branding itself, getting your name out there for the holiday season is EXTREMELY important. In fact investing a little in September, October on banner ads to get yourself recognized in your industry could definitely pay dividends at Christmas Time. You MUST be patient with this though. More than likely you are not going to see the return on your original investment until the Christmas season comes along. This strategy will not necessarliy work for everyone so really examine what type of market share and brand recognition your product enjoys currently.

4. Test New Strategies Early

Ever tested out dynamic text insertion? Try it out with a product list. Regional targeting? Try it out on a new campaign. Actually trying a few strategies you normally do not use could be VERY beneficial for you. The important aspect of this would be to test them early (once again) but give your test enough time to see statistically relevant data. You shouldn’t arbitrarily run a test for 48 hours and decide that you have relevant data. Realistic results can take weeks to realize depending on the share of the search volume you can gain during your test. Also, note that if you see a SLIGHT increase in conversion rate in October it could mean 500X in December

In conclusion, don’t let this holiday season sneak up on you. Get ready now by testing new strategies and get your Holiday Retail in order. Better yet, pull your statistical data from the last 5 years if you have it available.

Top 5 Tips for Winning in Retail Over and Beyond the Festive Period

Yes it’s that time already!

Following on from a post about the credit crunch, it’s time to think about the run up to the holiday season. Although this post is written from a UK perspective, most of the tips are applicable to most markets around the world.

The online UK retail landscape this year has seen steady growth with IMRG (Interactive Media in Retail Group) reporting 15.2% year-on-year market growth to July 2008. Despite there being challenges associated with a slowing economy and the credit crunch, UK shoppers spent over £26.5 billion online in the first six months of 2008, up 38% on the £19.2 billion recorded for the first half of 2007. Online sales accounted for around 17% of the total UK retail market during the first half of the year. (Source: The IMRG Capgemini e-Retail Sales Index – June 08).

So, challenges aside, early indicators look good for a merry online Christmas, with analysts predicting strong sales as savvy shoppers hit the web instead of the high street and out-of-town shopping centres for Christmas bargains.

1) Be like Red Robin: The Early Bird Catches the Worm

So when do people in the UK start to prepare for the festive season? According to Hitwise, a leading competitive search intelligence company, and Microsoft adCenter’s historical data the first tentative searches for Christmas-related keywords started as early as August! However, the first major rush coincides with when people get paid at the end of October.

The second and final push for the season coincides with when people get paid at the end of November. Searches reach critical mass in the first two weeks of December. Impressions begin to slow and click rates escalate as the postal deadlines for packages and parcels loom between the 17 – 19 December.

 

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2) Christmas Wish Lists: Supply and Demand

Christmas is a time for caring and sharing, and peace to all men on Earth. However, try telling that to the tearful six-year-old on Christmas morning who’s just realised that Santa wasn’t able to bring them the latest High School Musical toy they asked for.

Gather insights into what customers will be demanding this festive season and what you should be stocking. If you sell toys, keep an eye on the Toy Retailers Association website for the release of the 2008 Dream Toys on 15 October which is a comprehensive list of what’s hot and not for kids of all ages this Christmas.

Finally, encourage customers to pre-order and buy early to avoid disappointment through your ad copy.

3) Stand and Deliver: Money or Your Brand Reputation

Delivery is everything to Internet customers, and it’s even more important to get it right during the festive time of year. Undelivered gifts can spoil Christmas day, which could impact brand equity and even lose customers.

Ensure delivery is a priority in your Christmas copy. Be transparent about delivery costs and delivery deadlines. If you use a third party courier service mention these because they can usually deliver beyond the Royal Mail postal deadlines. If your website offers free delivery on shopping baskets over a certain spend then use this unique selling point to entice buyers.

4) Security Matters: Santa Claus is Coming to Town (And So Are The Credit Card Hackers!)

Christmas is also the time when people are likely to take to shopping online for the first time. However with recurring stories in the media that Internet fraud and identity theft are on the increase, how do you get a nervous first-time Internet customer to shop with you? If your website is accredited by ISIS (Internet Shopping Is Safe) or you use a secure, encrypted payment system such as PayPal or World Pay, mention this in your copy to reassure buyers that you take their security and custom seriously. For more advice on e-commerce security messaging visit: GetSafeOnline.org.

 

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5) Snowballing not Snowball Fights: Forget Christmas Past and look to the New Year Sales

Christmas past: before the web was a mere twinkle in the eye of Tim Berners-Lee, shopping was a 9 – 5 affair and Sunday opening hours a veritable sin. Christmas was the highlight of the shopping year. Small and medium size retailers went into hibernation between the Christmas and New Year lull as the high street giants did a roaring trade.

Christmas present: 24/7 shopping with no real geographic, calendar or time constraints. If you’re a customer, there are always a number of shops open and willing to do business. Christmas is still the highlight of the year, but so are the post-Christmas sales!

So why do a number of retailers still hark back to the methods of Christmas Past by shutting up shop and turning off their PPC ad campaigns? In Jan 2008, IMRG and Hitwise reported that the largest shopping days online were actually post-Christmas dates with 26 December (Boxing Day) and New Year’s Day setting new online traffic records.

See the example below of what happened when an adCenter account was turned off between Christmas and New Year last year versus one of their competitors who remained active for the same period. (Source: Microsoft adCenter Jan 08)

 

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So how do you make your accounts snowball and avoid the fights?

  • Optimise your accounts well in advance of Christmas and New Year. This is so that a strong history of data can be accumulated to give campaigns a competitive and robust footing in the auction environment in preparation for the peak shopping days.
  • Swop seasonal and Christmas copy for new sales copy when the postal dates have expired around the 2nd week of December.
  • Most importantly: Refrain from turning off whole PPC campaigns. Downtime equals loss of position and profits as rivals fill their boots at your expense by poaching customers and position.

 

Season’s greetings and may your cash registers ring like Christmas bells!