ComScore has been the most active research firm in searcher behavior studies. This week, it released a study, funded by Google, that offers some amazing stats regarding search. The results show 25 percent of searchers purchased an item directly related to their query. This average was across six categories but wasn’t weighted by the relative revenue or popularity of the categories. Diversity of conversion across categories was significant:
|Buyer Conversion for Select Product Categories, November 1-December 31, 2005 (%)|
|Category Searched||Buyer Conversion||Buyers Converting Offline||Buyers Converting Online|
|Average, all categories||25||63||37|
|Apparel and accessories||43||65||35|
|Toys and hobbies||42||88||12|
|Music, movies, and videos||28||83||17|
|Video games and consoles||17||93||7|
|Jewelry and watches||15||75||25|
|Source: comScore Networks, 2006|
The study observed searches and related purchases occurring from November 1 to December 31, 2005. It finds of those 25 percent of buyers, 37 percent completed their purchases online. Therefore, a much greater segment of completed purchases occurred offline (63 percent). (Of course, the question remains whether offline purchase behavior was actually influenced by search and Web interaction or whether the local stores would have received the business anyway.)
In addition to being very bullish on SEM (define) in general, this study offers some major implications on the SEM landscape’s likely evolution over the next several years. Pre-product research in many industry categories used to be conducted at the local library, through conversations with friends (seeking recommendations for products), or interacting with the sales staff at the retail location.
Within just 15 years, the Internet has become the dominant source of product information, including pricing. Concurrently, multichannel retailers have joined pure-play Internet retailers in selling products directly. The Web, therefore, has become a glorified catalog that includes reviews, ratings, testimonials, popularity scores, and availability all at the consumer’s fingertips.
The comScore study attempts to get at the relative value of search and local stores: “More than 80 percent viewed search as helpful for purchasing gifts, seven in ten claimed search was influential in helping to find gifts and more than three out of five indicated they would be likely to use search the next time they intended to purchase a gift. Search ranked closely with online retail stores as well as friends and family on each of these attributes, and only physical stores exceeded search on each of these attributes.”
The overall buyer conversion percentage indicates two things:
- The level of investment the searcher has in making an eventual purchase
- The short window of time between research and purchase
The study doesn’t rank the relative conversion types by price or shipping weight/cost, both of which may have been factors. Some shoppers may feel more comfortable purchasing more expensive items locally, or they may choose to purchase expensive items online to get the best price and avoid sales tax. My review of the results, by industry:
- Apparel and accessories. Overall conversion (43 percent) really isn’t surprising. Any shopper preparing for the holiday season who’s considering clothing is highly likely to make an apparel purchase, online or off-. Yet that 35 percent of those making apparel purchases did so online bodes well for multichannel merchants such as JC Penney, Sears, Target, Wal-Mart, Federated, and Nordstrom. Regardless of where the shopper chooses to purchase, merchants with large retail footprints can potentially influence whether the shopper chooses them or a competitor. More often than ever, apparel Internet pure-plays and catalog merchants are bidding against retailers and multichannel merchants that can leverage multipronged business models.
- Toys and hobbies; video games and consoles. Overall conversion on toys and hobbies is very high at 42 percent (it’s the holidays, after all). Yet, online conversion is low at only 12 percent (only video games and consoles had a lower online conversion percentage: 17 percent for overall conversion and 7 percent for online). Several multichannel apparel merchants are also active in the toy and video game categories. Again, search may have the ability to influence which of the retail locations gets the sale, as well as which purchases are consummated online. The hobby industry doesn’t have any national retail players to my knowledge, so there may be an opportunity for online merchants to compete with smaller local hobby shops that are just discovering SEM and don’t have the budgets for elaborate sites.
- Music, movies, and videos. Music, movies, and videos are making a transition from delayed gratification buys to on-demand media. In 10 years, the offline purchase percentage of 83 percent of buyers, even for gifting purposes, will likely be much lower. In the meantime, retail marketers would be smart to compare their footprints with their competition’s and to model search to determine if they can take an unfair share of the 83 percent of buyers who purchased offline.
- Consumer electronics. Like many other categories, consumer electronics has many products that benefit from trial and from the ability to have a tactical, visual, or auditory experience. The experiential nature of consumer electronics will continue to give Best Buy and Circuit City an interesting advantage over the pure-play electronics stores with 84 percent of buyers purchasing offline.
- Jewelry and watches. Perhaps my favorite category within the study, the jewelry category contains two huge barriers to purchase: price and, for the holiday season, risk. Although only 15 percent of those searching for products within this category made purchases, 25 percent made their purchases online. This is surprising, given the high price points within the category and the risk the gift may not meet the recipient’s approval. Perhaps as more national chains get into the online business, we’ll see these marketers spending more heavily on keywords to reflect the large percentage of offline purchase.
For the next holiday season, we may see a different mix of marketers at the top of the search results as the multichannel and retail marketers recognize the true value of search advertising to their businesses. Or, if those retailers have the only stores in their regions and don’t have to worry about losing the offline sale, they may just wait for their customers to walk in with product printouts from their online competition. Time will tell.
Want more search information? ClickZ SEM Archives contain all our search columns, organized by topic.
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