Online Advertising and the Holidays: Should You Put the Freeze on PPC?

holiday shoppingIf you do a search for “holiday ppc,” you’ll be bombarded by articles just itching to help you optimize your online advertising efforts for the holiday season.

Titles like, “Holiday PPC Planning: Three Advanced Strategies for AdWords,” “6 Ways to Prepare Your B2B PPC Account for the Holidays,” and “How to Create a Winning PPC Strategy for the Holidays” are scrambling to get your eyes (and in some case your dollars) to help you figure out how and when to ramp up your PPC marketing efforts for holiday shopping.

But the question nobody seems to be asking here is whether or not holiday PPC campaigns are worth the time, money and migraines. Forget “How to Run a Last-Minute Holiday Campaign Using PPC,” here we’ll be investigating, “Is a Holiday PPC Campaign Worth It?”

4 Online Advertising Facts

To determine whether or not PPC marketing during the holidays with create the results that you want, we’re going to dive into four facts about PPC advertising during the fourth quarter:

  1. Advertisers are spending more on their PPC campaigns, therefore you’re going to be competing in a more intense market.

  2. Competition is rising, but so are impressions and clicks. Clicks are rising faster than impressions, making CTR (click through rate) the holy grail of metrics during the holidays.

  3. PLAs (Product Listing Ads) had massive success in 2013’s holiday PPC campaigns. If you can, employ the current incarnation of these ads, Shopping Campaigns.

  4. Tablets and Mobile devices are grabbing more and more of the online spending market. Your PPC campaign must be optimized for these channels to succeed.

Online Advertising Fact #1: Ad Spend is on the Rise

2012 was a record year for paid search, but 2013 surpassed even those numbers. According to SearchEngineLand, paid search spending jumped 34% last year.1

The Kenshoo Global Online Retail Seasonal Shopping Report: Early Edition, which was released on December 16, 2013, reported a whopping 48.1% increase in U.S. paid search spending year over year during the shopping season. 2

This means that those high competition terms that you’ve been struggling to get any ROI on are going to be even tougher to target during the holidays. The competition will most likely drive up CPC sharply on non-optimized campaigns, making any holes in your PPC campaign painfully obvious.

Online Advertising Fact #2: Clicks are Outpacing Impressions

PPC marketing is getting more budget, but it’s also getting more return. While impressions increased just 24% over 2012, clicks rose 42% .1 Marketers are getting better and better at ad targeting, landing page optimization and creative messaging, allowing them to gain a 13% increase in year over year CTR, according to the Kenshoo report.

This improvement in CTR translated to a 19% increase in revenue year over year.1

The chart below is an excellent summary of the four key metrics of paid search increases for 2013:

holiday search trends

Once again, the bottom line here is that without a thorough, systematic effort, your PPC campaign won’t be able to compete with these highly optimized competitors, driving your CPC (cost per click) way up and making a holiday PPC effort unprofitable.

Online Advertising Fact #3: PLAs, aka Shopping Campaigns, are Where It’s At

2013 was only the second year that PLAs (Product Listing Ads), were available during the holiday paid search season, and retailers took advantage: on average worldwide they spent nearly twice as much on PLAs in 2013 as they did in 2012.

Consumers are also getting more savvy with their use of PLAs, meaning they are more likely to click on these specialized ads. During the 2012 online shopping season PLAs saw a click-through rate of just 2.6%, while in 2013 it rose to 3.3%.

That 30% increase in CTR allowed the relatively few online advertisers who took advantage of PLAs to generate 116% more clicks from only 65.5% more impressions in 2013.2 Those additional clicks resulted in a monster jump in total global revenues from PLAs. These ads brought in 417.4% more revenue in 2013, netting a return of almost 9 to 1 for advertisers.

google shopping resultsThat’s the good news. The other news (good or bad, it remains to be seen) is that PLAs were phased out in October, 2014 in favor of Shopping Campaigns. There is an auto-upgrade tool available in Adwords to transition old PLAs to the new format, but there will be some settings and options that don’t translate.

If you haven’t already addressed this switch, stop reading and go do it now. If you have, remember that you can still access historical data for PLAs, so hopefully we’ll be able to do some apples-to-apples comparisons of the 2013 and 2014 seasons to determine if last year’s success for PLAs carries over to the new Shopping Campaigns.

Online Advertising Fact #4: Mobile Commerce is Vital

While the majority of online shoppers are still coming from desktops, the total share of ecommerce revenue from computers fell 14.4% in 2013 to just 77% of all online sales. Tablets were responsible for most of this decline; their share of revenue more than doubled, hitting 18.9% in 2013. Mobile phones still represent a fairly small piece of online revenue (just 4.1% in 2013), but that more than doubled compared to 2012. 1

Additionally, advertisers spent more on both tablet and mobile ads in 2013, and this trend is expected to continue into 2014.

Although spending more on mobile and tablet PPC, advertisers are still focusing heavily on desktop users for their PPC campaigns. If you’re looking for a relatively untapped space to devote your time and budget, consider mobile ads. However, your website, store and entire consumer experience must be completely mobile compatible for these campaigns to be successful. Nothing destroys consumer confidence or sours a shopping experience like trying to navigate a site that looks terrible on a phone or tablet.

So, is a Holiday PPC Campaign Worth My Time, Money and Migraines?

Based on the above data, the short answer here seems to be a strong “yes,” with some equally strong caveats.

Yes, your holiday PPC campaigns are worth it IF at least 2, preferably 3, of the following are true:

  1. You have a reasonable budget to commit to the effort, along with someone who can regularly manage the campaign(s). What a “reasonable” budget is will depend on your industry and keyword targets, but you should have a good feel for what daily budgets are currently making you competitive, or not.

  2. You can commit to a fully optimized campaign that can match the rising CTR across PPC marketing during the holiday period. Remember, your cost per click (CPC) is determined in part by how well your landing pages and ads are performing. So without regular tweaks you’ll be working at a disadvantage during this highly competitive time.

  3. You can deploy a mature PLA/Shopping Campaign strategy. Online retailers will miss out on a huge PPC opportunity if they fail to deploy these highly profitable ad types. B2B and other online advertisers can opt out.

  4. Your store/website is mobile compatible, and you can effectively advertise on phones and tablets. More shoppers are doing research and making purchases on phones and tablets, so if you’re confident that your site performs well on these devices, target those users for a little less competition.

If you’re striking out on more than half of the above conditions, there are a few things you can try to grab a smaller, but less expensive, piece of the holiday PPC pie:

  • Target campaigns to less competitive, but still much higher than yearly average, days of shopping. In 2011, for example, Tuesday, December 6; Sunday, December 28; and Tuesday, November 30 were extremely popular online shopping days.3 Take into account shoppers’ past behavior in your PPC campaigns and see if you can up your spend on days that will still net you good CTR without a massive increase in CPC.

  • Limit your spend to Shopping Campaigns and/or mobile/tablets. These two channels can offer relatively high ROI without as much investment in terms of budget, but both require effort outside your PPC campaigns to ensure an optimal consumer experience and therefore actual purchases/engagement.

  • Take on fringe keywords, e.g. “gifts for boss,” that you might not normally target. As with the above suggestion, this may require additional work in the form of custom landing pages to get the best results post-click.

What do you think? In your experience and in your industry, is holiday PPC worth it?


 

Sources:
1. SearchEngineLand
2. Kenshoo Global Online Retail Seasonal Shopping Report: Early Edition,
3. Statista: 5 Most Popular Days for Holiday Shopping

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Andrea Fryrear
About the Author:

Andrea Fryrear

Andrea loves to dissect marketing buzzwords and fads looking for the pearls of wisdom at their cores. Her favorite topic is agile marketing, which she believes holds the key to a more fulfilling (and less stressful) marketing career for individuals and a more powerful marketing department for business. When not scrutinizing the latest agile methodologies, Andrea can be found on the volleyball court, at the park with her two delightful kids, or baking “calorie-free” cookies. Connect with her on Twitter @AndreaFryrear, or on LinkedIn.




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