Posted on March 24th, 2009
Searching for a Solution: Impact of Today’s Economy on the Search Landscape Moderator: Introduction by: Andrew Goodman, SES Advisory Board, Principal, Page Zero Media, Speakers/Panelists:Â Solo Presentation by: Jack Flanagan, Executive Vice President, comScore Inc.
Jack Flanagan EVP of comScore analyzed the current state of the U.S. online economy, with a particular focus on the search landscape. The presentation included an in-depth analysis of consumers’ online behavior as well as insights from recent comScore research, helping Search Marketers to gain a better understanding of what they can do to maximize their business during these challenging times.
Moderator Andrew Goodman welcomed everyone to the sounds of classic rock (Boston) and quickly got any corporate and personal plugs out of the way.Â He set the tone for the session by asking the audience : How gloomy should we be? What are the real numbers beyond economic statistics? Where are we headed in 2009 and beyond?
And with that he introduced Jack Flanagan, EVP comScore Inc.. Jack’s presentation tackled 3 areas
1.Window into the mind of the consumer
2.A year in review of eCommerce trends
3.The Role of Search in todays economic environment
All of the data presented was compiled by comScore and provided a 360 degree view of how people use search worldwide.
1.Window into the mind of the consumer
â€¢Â A new year a new outlook: Consumer confidence is at an historic low point. The pessimism of 2008 has definitely carried over into 2009
â€¢Â 80% of consumers are afraid of their economic future.
â€¢Â Unemployment and job security has become the top consumer search concern in 2009.
â€¢Â Concern over Financial markets and prices has declined year over year (08/09).
â€¢More consumers are cutting back on overall spending. Especially dramatic in the income bracket of $50,000 and under.
As the economy worsened in 2008 there was a dramatic increase of people conducting financial/economic related searches across the Web. The largest growth categories were related to unemployment and coupons.All income segments have seen an increase in the use of coupons. 46% increase year to year (09/08)
â€¢Â 50% of consumers are using Coupons on a consistent basis
â€¢Â 40% of consumers consistently utilize the weekly Sunday coupon Fliers.
â€¢Â 29% regularly use online coupons.
â€¢Â 40% of the US population are now using Comparative Shopping sites as a regular part of their purchase cycle.
Approximately 52% of US consumers are utilizing the internet as a way to reduce and deal with stress. Slightly more than those who utilize television for the same purpose (50%).
2. The Year in review
â€¢Â eCommerce growth was substantially lower in 2008 than in the preceding years.
â€¢Â Online sales growth decelerated throughout 2008 while retail sales were held up by inflation until the 4Q.
â€¢Â Q4 2008 online spending was especially dramatic (down 17%) in the mid to low income ($50,000 and under) consumer bracket.
â€¢Â eCommerce has grown by 2% in Jan 2009 (yr over yr 08).
â€¢Â Spending growth has slowed significantly in the upper income bracket, but has subsequently stabilized in the mid to low ($50,000 and under) consumer group.
3. The role of search in today’s economy
â€¢Â The internet is important to at least 60% of all US consumers. With 50% citing an increase in use yr over yr.
â€¢Â Jack identified 3 key components to current online conversion trends (based on a 60 day purchase continuum)
1.Â Direct online effect (conversion/sales) – 16%
2.Â Latent online effect (subsequent action upon return to site) â€“ 21%
3.Â Latent offline effect (People purchase at Bricks and mortar) â€“ 63%
Interesting tidbit #2:
Only 7% of retail purchases currently take place online.
Jack’s adviceÂ to retailers going forward:
â€¢Â Online sales can fuel in store sales.Â Retailers should focus on targeting those consumers who are more inclined to look online as part of there purchasing regimen.
â€¢Â There is a appreciable impact of online advertising/marketing to boost instore (Bricks and Mortar) sales.
â€¢Â There is a dramatic conversion lift (online) when both online display ads and search ads are used in conjunction to drive sales. It is clearly advantageous to use both.
The presentation then shifted gears with a case study of DSW (shoe retailer).
These shoes were made for Clicking
Jack Flanagan explained that even in a soft economy the online Apparel/Accessories category had grown traffic by 2% Jan yr over yr (08/09). DSW experienced a traffic growth of 238% Jan yr over yr (08/09)
How was this possible? What was the strategy?
â€¢Â They migrated their online approach from SEO to SEM in 2009. in 2008 virtually none of their clicks were paid. In 2009 52% of their clicks were paid.
â€¢Â They centered there 2009 bidding on a mix of both branded and non branded terms. 2008 100% of their bidding was for branded clicks. 2009Â they achieved a balance of 71% branded and 29% non branded clicks.
â€¢Â In January 2009 DSW had 1.8million paid ad impressions that netted over 270,000 paid clicks and resulted in a 14.9% click through rate (skewed heavily by the DSW branded click strategy).
DSW also implemented a clear display advertising strategy to work in conjunction with the bidding strategy. Jack Flanagan called this their “Move from nothing to everything”.
â€¢Â In January of 2008 DSW utilized a nominal amount of online display advertising.
â€¢Â With the application of a strong display advertising program in 2009 they experienced 57 million ad impressions.
â€¢Â They deployed strong Call to actions (“Free Shipping” ,”Shop now”) and adhered to a system of consistent messaging throughout their search copy and content.
â€¢Â The result is that DSW has doubled its search traffic yr over yr.
â€¢Â The impact of the aggressive display advertising strategy has had a dramatic affect on their overall business.
Mr. Flanagan’s Closing thoughts, “It’s a tough market out there.”
â€¢Â Know your customer
â€¢Â Know your marketplace
â€¢Â Don’t underestimate the power of paid search
â€¢Â Paid search and online display advertising are a powerful combo.
â€¢Â Be consistent
â€¢Â Be patient
The session was followed by a quick Q & A. Overall a high quality presentation by an excellent presenter. .