You may think you’re ready for Black Friday, but there’s a chance Google will have a little surprise for you. Before we examine why this holiday PPC (define) season might be different from years past, let’s survey the retailing portion of the search ecosystem.
Retailers Face a Holiday Perfect Storm
Retail represents the largest category of PPC search spend, and the fourth quarter is already coming to life. Offline stores begin preparing for the holidays almost immediately after Halloween, and in similar fashion online consumers start researching their preferred holiday purchases and wish lists earlier than ever.
The real fun starts after Thanksgiving, when visions of sugarplums (I mean iPhones, flat-screen TVs, and apparel) translate into purchase intent and searching begins in earnest. As has happened every year, this surge in searching and purchase intent drives increased clicks and CTRs (define). It also stimulates higher bids among many marketers managing their bids to an ROI (define) metric. After all, if conversion rates rise, the allowable reserve price on a click goes up.
The perfect holiday storm for retailers and search engines happens each year, and each year it seems CPCs (define) reach new heights. Perhaps the click inflation is due to the fact that marketers have gotten better at merchandising their online stores, improving user experiences, and understanding the huge factor that search-driven visits have in offline purchase behavior.
While you may feel prepared for the maelstrom already brewing, this year could be different in several ways.
In previous years, your competition may have underbudgeted for search marketing and therefore given you an opportunity to aggressively expand campaigns beyond the obvious brands into categories. This year, I’m hearing from many merchants that they’re prepared with budgets should the holiday shopping season be stronger than expected.
Even marketers at those retailers concerned with the macroeconomic impact of the credit crunch have set aside slush funds to participate in the market should there be an upside.
Google’s Premium-Priced Wild Card
Google has taken control of PPC pricing in a way it has never before and, thus, has a trick up its sleeve that it can pull out at any time. Simply by raising its minimum CPC for top placement as the holiday effect kicks in, Google has the option of giving us all a serious case of holiday depression. With Quality Scores rising (due to the improved CTRs and the efforts of advertisers looking to get consumers’ attention), Google has plenty of advertisers who qualify for top slots on commercial searches. These high Quality Scores also give Google the green light to raise the CPC minimums for top positions.
In most cases thus far, Google has, to our knowledge, been extremely selective in rolling out CPC minimums for keywords and industries. However, should it ratchet up its minimum CPCs for premium position on Thanksgiving, Black Friday, or at any other time during the holiday frenzy, there’s no way to know if the effects due to Google or your competition. The effect is the same, particularly if you’re already an aggressive bidder. The difference between your bid and your billed CPC may decrease, resulting in a bill much closer to your max. If you’re in the third position, your listing might move to the right rail unless you raise your bid.
For the first eight or nine years of managing PPC search (and in the early days when we pioneered bid alerts in GoTo.com), my response to clients’ complaints about PPC price inflation was always “don’t blame the engines: it’s your competition driving up price.” With Google’s algorithmic changes and the increasingly opaque bid landscapes, this is no longer true. Google sets overall minimums based on Quality Score, then sets a second minimum based on what it wants to earn on top listings (those above the organic and universal search results). CPC inflation can now be driven by both the competition and the publishers. For the first time, you might have a valid reason to complain to Google about your CPCs.
The Seasonal Campaign Quality Score Trough
Every time you make material changes to a campaign in Google, the system attempts to estimate the Quality Score of these ads, keywords, and landing pages. This makes it difficult to launch seasonal campaigns on a frequent basis. Each campaign starts off in a Quality Score trough until it proves to Google the ads are relevant. This means higher bids are needed, at least for the short term.
This same effect has an impact on your ability to run promotional sale ad copy. At least in Google, your ads will generally get back into rotation fairly quickly (perhaps at a higher CPC). The other engines and their editorial processes hinder the ability of promotional ads and slow down ad deployment.
The search engines will have a happy holiday. To guarantee yourself a prosperous holiday (resulting in raises and promotions in the New Year), make sure you approach this holiday PPC search season with a strong understanding of the ecosystem and the tools and techniques to make the most of the perfect storm of searchers.
Meet Kevin at SES Chicago on December 3-6.
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