New Report Shows Decline for PPC Advertising in Q1

Posted on March 2, 2009. Filed under: Internet Market | Tags: , |

By Peter Young

The first part of 2009 has been interesting, very interesting. The global recession shows no current signs of recovery in the short term, and much of this has been reflected in advertising budgets worldwide. In particular, the retail sector has been one of the hardest hit, and this has been reflected in Rimm-Kaufman’s early first quarter 2009 PPC data.

The report took data from around 40 of their largest retail clients, and compares the first part of Q1 against performance data from the preceding 7 months or so. For summary purposes, we have included a number of the key points below

• Sales from search ads have declined by around 20% since week 27 2008 (around July last year)
• Around a 20% reduction in costs from search ads for the same period
• Whilst AOV remained fairly constant until the holiday season, these have subsequently declined by around 10% since last year despite conversion rates being fairly similar to the early part of 2008.

In the report, a number of potential reasons for decline were explored, many of which could be reflective of current trends, namely

1. Decline in sales per click – If it is taking more people to convert, this could potentially result in a higher CPA (depending on acquisition costs), which is likely to impact considerably on ROI – which ultimately is a factor when undertaking channel evaluation.
2. Competitive pressures – Are competitors bidding more (or are you bidding less), which may result in lower visibility. Are competitors creatives and promotions more compelling than yours – certainly in the current climate this appears to more important than ever.
3. Fewer searches – Are few searches taking place, certainly this is one key metric that is going to be interesting to keep an eye on.

Source: marketingpilgrim


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