The only constant in the world of retailing is change. Economic fluctuations,
unexpected weather events, swift deviations in consumer behavior, and much more
keep retailers in a perpetual defensive stance.
At no other time is this change more evident than during the traditional holiday season
that runs from November through the New Year. While some retailers experience
various seasonal peaks throughout the year, the entire retail industry can benefit from
the lessons learned over the Thanksgiving through Christmas holiday.
Let’s take a look at the biggest themes to emerge this year, their impact on retail,
and how they will influence your 2014 strategies—and beyond. Learn the secrets of
successful retailers who are taking an offensive position and capitalizing on key trends.
A Look Back at 2013
As the United States economy recovered, consumer confidence followed suit.
Shoppers began opening their wallets and it showed―retail profits were up 10%
through the first nine months of the year. Although spending was up, the scars of the
recent economic recession were still visible as consumers remained price conscious
and sought discounted products.
Going into the holiday season, the National Retail Federation predicted holiday sales
would grow 3.9% over 2012. According to SpendingPulse, retail grew by 3.5%, falling
just shy of expectations.
A mix of inclement weather, great shipping offers and increased mobile usage led
to a rise in online sales, growing 10% year over year (ComScore). Unfortunately for
brick-and-mortar stores, this ate into their traffic, but it didn’t stop multi-channel
retailers from developing unique promotions and in-store-pick-up offers to try to drive
shoppers out of their homes and into shopping centers.
Shopping at Work
Week of Dec 9th: first time ever
that each day of the workweek
saw online sales top $1 billion.
Cyber Monday Explodes
Biggest US online spending day ever.
Sales = $1.735 billion.
Holiday spending reached an all-time
high as it increased 10% from 2012.
What the 2013 holiday season says about the future of retail
Brick-and-mortar stores typically see an influx of store visitors when the online shipping
deals expire as Christmas approaches. Unfortunately for them, this pattern did not hold
true as store traffic fell 21.2% in the final week before Christmas (ComScore). Shipping,
however, was up during this time, with a 54% increase in “last minute rush” orders over
2012 (Custora) which crippled UPS and FedEx’s ability to deliver.
In this report, we’ll highlight three holiday retail trends that will have the biggest impact
on your future strategy.
The biggest story this holiday season belonged to mobile. Smartphones and tablets have
become the key to linking online and offline. Prior to the holidays, mobile only accounted
for one percent of all commerce, but it continues to play a critical role in influencing
sales as consumers use their mobile devices to research products, read reviews, solicit
feedback from their social networks, locate nearby stores, find promotions, and more.
In fact, 90% of consumers admit to using multiple devices before making a product
decision (Google and IPSOS), but our analytics fail to show the full picture.
During the holidays, sales on mobile devices represented 16.6% of all online sales,
up 46% over 2012. Mobile also accounted for an estimated 35% of web traffic (IBM).
Retailers responded by shifting more advertising dollars across devices. Adlucent saw
CPCs increase slightly on computers, significantly on tablets, and decline on mobile.
As advertisers continue to grapple with mobile attribution and the impact of their mobile
investment, along with rising inventory, mobile CPCs will remain lower. In the next
year, there will be more mobile devices connected to the Internet than computer. In the
next two years, 50% of Internet traffic will come from mobile devices (Millenia Media).
Adlucent clients invested 60% more into mobile search over 2012 and received 132%
more revenue and a 45% higher return on ad spend over last year.
If mobile isn’t working for you today, it will be a growing issue for you in the future.
Retailers must figure out how to invest, measure, and optimize mobile, and it starts
with understanding consumer behavior.
YOY Mobile Performance
Cost per Click
The Rise of Mobile
During the holidays, sales on mobile devices
represented 28% of all online sales, up 40%
over 2012. Mobile also accounted for an
estimated 48% of web traffic.
90% of consumers admit to using
multiple devices before making a
– Google and IPSOS
Mobile Sales Mobile Traffic
% of Consumers
Here are a few ways to improve the mobile experience
for your shoppers in the year ahead:
1. Make it easier to check out
The average mobile device requires 24 clicks or form entries to complete
a transaction. This poor customer experience has resulted in a 97% cart
abandonment rate for mobile (IPSOS/Google). The main culprit here is the credit
card and account creation process. The biggest improvement we’re seeing is when
people implement a third party payment system like Paypal Express and Google
Instant Buy. Retailers like Crutchfield are reporting a 20-30% increase in CVR when
offering Paypal (PayPal study). A second option is biometric checkout which allows
for fingerprint and voice authentication.
2. Help facilitate the movement between devices
Retailers must make the shopping experience easier for the 40% of consumers who
browse on a mobile device but make a purchase on a computer (ComScore). Try
adding an “email me this” link and social sharing buttons on each landing page to
make this transition easier. Also a tracking code should be added to each email
that’s generated so you know which mobile ad led to the sale.
3. Change analytics from device and channel view to customer view
In October 2013, Google rolled out Estimated Total Conversions to deliver a better
picture of how Adwords drives conversions that take multiple devices to complete.
In one Google study, advertisers in the travel industry were able to measure 8%
more conversions than they were able to before, and 33% more conversions that
originated on a mobile phone.
4. Use geographic parting to test the impact of mobile on online and offline sales
At Adlucent, we use geographic parting to run a variety of tests for our customers,
and it’s especially useful for measuring the value that mobile advertising has on
online and offline sales. We split the United States into segments and measure
performance based on direct sales on mobile and indirect lift on online and offline
sales by region. Watch the impact mobile advertising has on other parts of your
business―online sales, offline sales, catalog, telephone purchases, and more.
5. Expand the definition of success
Instead of focusing purely on driving sales on mobile devices, retailers can use
other measures of success such as new registrations through mobile ads, calls
to a unique phone number linked to an advertising campaign, or number of app
One apparel and accessory etailer (and
Adlucent client) took advantage of the
pre-holiday rush by testing new mobile
pages. The winning pages were used
during the holiday rush, and the retailer
saw mobile revenue increase 89% over
the Thanksgiving holiday weekend as
more consumers ventured away from
Product Listing Ads
2013 is the second year that retailers have leveraged Google’s Product Listing Ads
(PLAs) as part of their overall advertising strategy. In fact, they were #2 on retailer’s
top priorities going into the holiday season. Adoption, and competition, has grown
significantly in the last year. The number of PLAs displayed in the month of November
doubled over 2012 and the number of advertisers grew 55% to 8,700 (Jefferies). eBay,
who refused to participate last year, accounted for 4% of all PLAs in 2013.
On average, retailers spend between 30-50% of their search budgets on PLAs, and
it’s paying off. Adlucent’s clients saw PLAs outpace text ads in clicks (3X), ad spend
(10X), conversion rate (10X), and revenue (5X), while CPCs increased as competition
While many retailers enjoy the revenue generated by PLAs, there is a lot still left on the
table due to un-optimized feeds, poor matching (or no matching at all), mismanagement,
and more. PLAs require a solid strategy and dedicated resources. Adlucent’s BuyerPath™
for Product Ads technology helps leading retailers maximize their PLA return on ad
spend by ensuring their products are matched based on a consumer’s intent, expanding
their reach so they are seen by the right consumers more often, and provides automated
reports with recommendations for improvement.
Because of our extensive knowledge of PLAs, we’ve provided a few best practices
employed by our retailers to ensure you’re on track for 2014.
1. Lead with your best products
PLAs are like shopping windows: you want your highest performing products on
display. Adlucent has found that only 56% of PLA orders include the product listed in the
original PLA. Since Google determines which product—if any—will be matched, special
attention must be paid to how you structure your PLA program. A best practice is to use
intent information from your paid and organic search programs, site search, and sales
information to help organize product feeds into highly performing categories, or segments.
From there you can select the top converting products per category to promote.
2. Test the impact of price and promotions
Create price buckets based on the average price at which a customer converts. This
data should be pulled by category and for further granularity, segmented by new versus
3. Retire or liquidate inventory
Make sure to note where each product is within its lifecycle. Your hot selling electronic
item today will be a dud in no time, so why would you pay to continue to promote it?
PLAs are useful for liquidating excess inventory, but remember your conversion rate
may not be as high for shoppers who are looking for the newest model.
Emerging Ad Format
The number of PLAs displayed in the
month of November doubled over 2012.
Across the Board
Retailers are spending between 30-50%
of their search budgets on PLAs.
PLA Ad Spend
4. Understand consumer intent
Information such as level of expertise, price point, and sense of urgency are located
within each search term. One useful trick is to analyze general versus specific queries.
Creating groups aligned to customer intent will provide you with the greatest opportunity
In a season that typically generates 30 percent of sales and 40 percent of profits
(SpendingPulse), retailers used a variety of promotional strategies to lure customers. In
order to spur demand, discounts started as early as Halloween. Consumers enjoyed an
average 30-50% mark down on products during the 2013 season.
While steep discounts were certainly an attractive offer, one promotion was the clear
winner with online shoppers—free shipping. Over the Thanksgiving weekend (Nov
28—Dec 2), the most popular promotions on search ads contained a free shipping
offer (38%), followed by a sale (34%) and free shipping with a minimum purchase (12%)
(Search Monitor). In addition, over 800 retailers participated in Free Shipping Day on
December 18th with one-third of retailers offering free or expedited shipping in the week
leading up to Christmas (NRF).
Here are a few tips on how to test promotional strategies in the coming year.
1. Add promotions to your search ads
For paid search, Adlucent data has shown that a lower sales price will typically
outperform a free shipping offer for PLAs, with the opposite holding true for text ads.
A free shipping offer can provide a significant boost to click through rates when placed
in ad text. If you’re offering free shipping for products appearing in your PLAs, try a test
where you lower the product price by the shipping amount, and saving the offer for your
2. Buy online, pick up in store
Many retailers have begun testing strategies to drive online shoppers into stores.
During the holidays, only half of consumers had completed their shopping list by mid-
December, so retailers who offered “buy online, pick up in store” promotions benefited
immensely―ultimately saving shipping costs and driving more people and increasing
average order value. This year, GAP enabled shoppers to reserve items in store, and
Sears went as far as to provide curb-side delivery to those who bought online. In one
survey by Reuters, 40% of those surveyed stated they want this type of service option
‘Tis the Season
The holiday season typically generates 30
percent of sales and 40 percent of profits.
Annual Sales Annual Profits
Words that Move
With six fewer shopping days in 2013
over 2012, one Adlucent client knew they
had to instill a sense of urgency among
shoppers earlier in the season.
For one client, we tested three variations
of paid-search ads that each had a “shop
early!” theme. Not only did these three ad
variations have a click-through-rate that
was 20% higher than the historically best
performing ads for the account, they also
had a 14% higher CVR.
This strategy also worked for clients who
don’t experience seasonality around the
Thanksgiving and Christmas holidays so
it’s worth testing by all retailers. Keep
an eye on the shopping trends over the
next year and look for phrases that will
The Big Deal
One major apparel retailer used paid
search to test how their shoppers would
respond to a free shipping offer versus
a % discount. We used the ad copy “get
free shipping on any purchase” and
“save up to 25%.” While the % discount
offer had a 23% higher conversion rate,
the free shipping offer had a much
greater return at a lower cost, with 125%
more clicks and a 70% higher return on
ad spend. In this example, consumers
preferred free shipping over a discount.
3. Local search
Buyers are looking for you―be there, every time. According to Google’s Ed Parsons, one
in three queries a person types into Google’s search bar is about places. Google also
found that 88% of clicks from mobile search are incremental to organic links, meaning
shoppers would not otherwise click on the business’s organic listing when ads are
paused. There are a variety of extensions that can be used―click to call, reviews, app,
automatic offer―so test which ones are best for your business.
2014 and Beyond
While the biggest holiday is behind us, the retail sales push will continue through
January as consumers venture into stores to use their gift cards, exchange gifts, and
take advantage of deep post-holiday discounts.
The 2013 holiday season wasn’t a monumental success for retailers, but it was still an
improvement over 2012. While mobile, PLAs, and promotions were the biggest winners
this year, their success is simply the result of changing consumer behavior.
In the future, the retailers who will succeed will be those who meet the needs and desires
of each individual consumer, develop an understanding of their Buyerpath™ and create
unique ad experiences along the way. By collecting and applying advanced shopping
analytics, retailers are better equipped to solve their biggest challenges―understanding
how consumers move across devices, which ads they will respond to, and what will
make them convert.
Over the years Adlucent has developed, refined, and extended its Applied Shopping
Analytics platform, BuyerPath,™ to help retailers learn more about their customers and
apply these insights to today’s modern online advertising infrastructure, delivering
greater revenue and a higher return on ad spend. How much? Adlucent clients averaged
40%-190% growth in online revenue as opposed to the industry average of 15%-18%.
Contact us today for a free assessment of your online ad programs, and ideas on how
you can leverage applied shopping analytics to create unique advertising experiences for
The fact is, the more you know, the more they buy.
Plot includes client revenue growth after
taking over account from competitive
a b c d e