Ice.com turns a cold shoulder to holiday pay-per-click
After disappointing results, Ice.com will reconsider its use of paid search for the 2007 holiday season.
For the 2006 holiday shopping season, Ice.com, No. 193 in the Internet Retailer Top 500 Guide to Retail Web Sites, spent about the same amount of money on paid search as the prior year – about 10% of its monthly marketing budget.
But the company is reporting sharply lower conversion rates based on about the same amount of redirected traffic. In November and December of 2005, Ice.com averaged a conversion rate of about 0.75% from its holiday pay-per-click campaigns. But for the 2006 Christmas shopping season, Ice.com only averaged about a 0.50% conversion rate using a keyword inventory of several hundred words and phrases.
“Considering the strength and size of the Internet’s largest search engines -- Google and Yahoo -- they both proved to be extremely poor marketing tools for Ice.com,” says CEO Shmuel Gniwisch. “Traffic from these portals was up; cost-per-clicks were up, but conversions were way down.”
For the recent holiday shopping season, Ice.com paid about 20% more for jewelry-related key words and phrases which frequently resulted in lower positions on the major search engines than in 2005, he says. “Although Ice.com reported an increase of 70% in sales during the season and increased its overall holiday conversion rate by 50%, it was without the help of Google, Yahoo or Overture,” Gniwisch says. “In fact, they failed quite miserably.”
Year over year, Ice.com’s holiday traffic increased by 42% while the average order value was up by about 8%, Gniwisch says. But the disappointing search results will cause Ice.com to reconsider how much pay-per-click marketing the company will use next November and December. “I heard it from other retailers that the cost of search keeps going up, but the conversions keeping going down,” he says. “There’s too many retailers paying too much for paid search and the situation has a number of retailers looking for different alternatives.”
After paid search failed to deliver anticipated results, Ice.com concentrated on other forms of marketing, including e-mail and social networking, to hit sales targets. “I spoke to a lot of people who told me that their holiday pay-per-click results are getting worse and not better,” Gniwisch says. “If the next holiday season happened right now, I would be looking at spending money elsewhere.”
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