Retailers May Spend More on Paid Search This Holiday Season

The retail category may see a significant increase in paid search advertising spending this holiday season, according to new research by AdGooroo.

In a study of U.S. Google desktop text ad activity on the top 150,000 retail keywords by paid search spend, AdGooroo found that retailers boosted their year-over-year spend by 24% last holiday season, spending $1.44 billion in Q4 2015 compared to $1.16 billion in Q4 2014.

Holiday 2016 Q4 spend increases 24%

What’s more, year-over-year spending in the category increased by 31% in the first eight months of 2016, jumping from $2.35 billion spent on the 150,000 keywords from January through August 2015 to $3.08 billion spent during those same months this year.

Should this trend continue through the remainder of 2016, the retail category will likely see a double digit increase in paid search advertising spending this holiday season for desktop text ads.

December is the Top Month for Paid Search Spend

Conventional wisdom may lead to the assumption that November is the top month of the fourth quarter for paid search advertising (and online advertising in general), considering that the Thanksgiving-Black Friday sale weekend falls in November and that online shopping in December is truncated by the need to ship in time for Christmas.

However, AdGooroo’s examination of Q4 spending patterns on the top 150,000 keywords found that December is actually the top month of the fourth quarter for paid search spend, followed by November and October.

Holiday 2016 December Top Month for Spend

Retail advertisers spent $543 million on U.S. Google desktop text ads in December 2015, $510 million in November and $391 million in October.  This spending pattern is consistent with Q4 2014 as well, as detailed in the above chart.

Retailers should take notice and plan their Q4 paid search budget accordingly.

Overall, AdGooroo has found that retail advertisers spent 36% of their total annual paid search budget in Q4 2015 and 34% of their annual paid search budget in Q4 2014. However, we’ve also found that the top advertisers in the retail category have spent up to 45% of their annual paid search budget in the fourth quarter, while some seasonal retail advertisers have spent as high as 85%.

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