Paid search ads strategy – Consumers do more research before purchase

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Is paid search part of your advertising strategy to generate sales? Then, you better think about your paid search bidding strategy, if you don’t want to spend too much as a retailer.

According to a research by NetElixir -done amoungst 32 large retailer clients that spend at least $75,000 a month on search engine marketing- consumers are clicking more on paid search ads before buying products. The problem is that the cost per click went up by 16% in a period from January 2011 to January 2010, explains Udayan Bose, NetElixir founder and CEO.

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

Some key insights…
– Consumers click 3.1 paid search ads before purchasing products (January 2011). Two years ago, it was 2.7 clicks.
– Consumers take more time to shop around (time between first click on a paid search ad and final purchase). This is a 12% increased in two years
– Consumers (52%) clicked on 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. The interesting part is that all the activity came after the first clicked on the paid search ad from a retailer. This equals an increase by 30%.

Spot On!
We know that the time period between first click and purchase is long. The study and another one by GroupM and Comscore shows that brands and retailer need to extend their expectation for the time period from promotion to sales to 20 or 30 days, not only 14 days. It is not the last click we should monitor when bidding on generic keywords. Ideally companies and brands should not stop bidding on more general keywords that consumers type in early in their research. It is the best way to get consumers early in their purchasing process to meet the latency effect, and to become an evaluation partner for the later sale.

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