March 3, 2011, 3:31 PM

Web shoppers are looking around more before buying, study suggests

Search marketing must be more precise because retailers are paying for more clicks, NetElixir says.

Lead Photo

Udayan Bose, CEO, NetElixir

Online retailers are spending more on paid search ads to generate a purchase, which means they must sharpen up their bidding strategies, says search marketing firm NetElixir.

Two facts lie behind the higher cost: Consumers are clicking on more paid search ads before making a purchase and the average cost per click was up 16% in January 2011 from January 2010, says NetElixir founder and CEO Udayan Bose.

Bose says on average consumers clicked on 3.1 paid search ads before making a purchase in January 2011 versus 2.7 clicks in January 2009. They’re also taking more time to shop around—the time between the first click on a paid search ad and the purchase increased 12% in that two-year period.

And they’re not just relying on information from paid search. In January 2011, 52% of shoppers clicked on a retailer’s display ad, a listing on a comparison shopping site, an ad on an affiliate site or social network, or on an organic search result before making a purchase—all after having first clicked on the retailer’s paid search ad. That was up from 30% of consumers following up a click on a search page ad by researching through another online channel in January 2009.

“It’s a sign of the times,” Bose says. “Consumers want to check out the best deal before committing their money to someone.”

These trends have several implications for retailers’ search marketing programs, Bose says.

The longer time period between first click and purchase means retailers should extend the window they look at when attributing a sale to various online marketing channels. For example, a retailer who looks only at clicks in the last 15 days may miss the fact that some consumers started their research 20 days before a sale.

That’s particularly important because a retailer looking only at recent clicks might stop bidding on more general keywords that consumers type in early in their research. A general term, such as “blinds,” is not as likely to lead directly to a sale as a more specific, transactional phrase such as “buy blinds online.” But if a retailer does not bid on the more general terms it will not be considered by a consumer early in the shopping process, and may ultimately lose the sale.

“If you only look at the last click you won’t be able to justify bidding on a lot of generic keywords,” Bose says. “They’re not usually the last keyword people type in, but they’re good assist keywords.”

The NetElixir study is based on an analysis of data from 32 large retailer clients that spend at least $75,000 a month on search engine marketing, Bose says.

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