Online Marketing During the Holiday Season

Newsletter to Batavia Chamber of Commerce
November 19th, 2008

Internet search engines make it very easy to spend your advertising dollars - especially during the holiday season. Keyphrase costs can double traditionally stable dollar amounts, starting in mid-november. In addition, the amount of searches of many keyphrases can skyrocket. This is a winning situation if you happen to be a search engine company, but a losing one if you are an advertiser. We want to share some thoughts regarding online marketing to help your organization be part of the winning scenario.

Let's start with a brief introduction into online marketing. In this case, we will be focusing on PPC (Pay Per Click) marketing on the major search engines. PPC marketing allows a website to be advertised on many websites through an auction style system. For example, the keyphrase "DVD Player" can be bid on with a link to an online store's DVD Player section. The bid can be anywhere from .10 cents on up. Different bids are placed, along with daily budgets, and rankings are place on the ad that correlates to the bid. The ad might state, "10% off all DVD Players".

For the sake of discussion, we will assume the following; the website in question is clear and easy to use, has a good call-to-action such as "Buy Now!" or "Call for Details", and has a checkout system that is intuitive and without obstacles that might impede the conversion to sale process.

If the assumptions are not all true, consider reworking the pages that are to be marketed before proceeding.

The first thing to find out is how much can be spent on any particular lead or product. For example, a DVD Player retails for $100, and is on sale for $90. If the gross profit is 50% of that price, then $45 is the maximum potential profit. In this example, the client states that the maximum amount to spend selling that product one time is $10.00.

Now that it is known how much can be spent on selling that one product, the information can be extrapolated to determine how many clicks and the costs associated with those clicks that are needed. A good conversion rate can be anywhere from 1% to 4%, which means that for each 100 clicks through to the website, an expected amount of sales would be anywhere from 1 to 4 products.

With that in mind, and assuming a 1% conversion rate, we know that we can spend no more than $10.00 on the 100 clicks. This equals 100 clicks at the rate of .10 cents in order to achieve the possible goal of selling one DVD player within the proposed budget.

If the goal is to sell 200 DVD players during the holiday season, the bid budget needs to be $2000 for the season. This equates to approximately $45 a day in online marketing. This is for one product only. A retail store with a large number of products, might expand the same logic to each of the products that they wish to sell online.

Because of the large amount of potential dollars spent on marketing, it is imperative that businesses are diligent in the following ways; choosing good keyphrases that are not too general, making sure that links from online ads go directly to the product in question whenever possible - at the very least to a category specific area of a website, and that the ad is wholly accurate and inviting.

Superlatives are not allowed in online ads. Saying "The Best DVD Player" is not a possible ad title on major search engines. This is OK, because that title would not be inviting, nor is it a good call-to-action.

Time-sensitive ads relating to discount offers work well. For example, "10% Off DVD Players until Dec 15" is potentially a more effective ad. It sets a timeframe and a sense of urgency for the viewer. In addition, people respond to sale offers.

The last tip that we will offer is to help advertisers fight the urge to be in the number one spot in a search engine's sponsored listing section. Whenever possible, set the bid at the number three or four position. This typically returns the same amount of clicks as the number one spot, but at a cheaper cost. Advertisers that try to stay at the top spot tend to get in "bidding wars" and unnecessarily use up their daily budget too quickly. Give visitors the opportunity to see an ad multiple times. People often search at work, and then at home again. Make sure that ads are shown all day long to capture these potential sales or leads.