Retailers Increase Paid Search Spend

    January 7, 2009

Multi-channel retailers increased their U.S. paid search spend in Q4 08 by 12 percent compared to Q4 07.

Consumers continued to convert online at a steady rate, although they spent 10 percent less on average per transaction compared with the prior year, according to a report from SearchIgnite.

Retailers Increase Paid Search Spend

Paid search spend by retailers is up on average for all of Q4, but a closer look at intra-quarter trends shows differences in retailer’s allocation of spend through out the quarter compared to 2007.

Retailers increased their paid search spend by 15 percent in October and 43 percent in November compared with the same months in 2007. This growth was reversed in December when retailers cut their search spend by 14 percent from December 2007.

Consumers also showed different spending behavior during Q4 as compared with a year earlier. Online transactions increased by 11 percent in October compared with October 2007. Even with heavy promotions by retailers around Black Friday/Cyber Monday, conversion rates fell slightly in November (-2%) before rising again in December (4%).

Retailers Increase Paid Search Spend

"Retailers were more aggressive with their paid search spend in the first half of the quarter compared with a year earlier in an effort to capture more consumer dollars ahead of the holidays," said Roger Barnette, President of SearchIgnite.

"This is evidence that the challenging and changing economic environment is requiring retail marketers to adjust their online marketing strategies accordingly. As such, tools for testing and understanding how both search and other online media are performing together will become increasingly important for retailers as they look to make more nimble, data-driven decision about where to allocate their media spend."