The Search Marketing Advisor Newsletter Article:
January 2005, Volume 4, Issue 1

Being in the Right Place at the Right Time: The Effect of Time on Pay Per Click Auctions - Part 1

by Brendan Kitts, Sr. Scientist, iProspect

Introduction

Okay, who got all of their online Holiday shopping done by October? No? November? How about December 21?

I’m absolutely the worst shopper in the world. My Holiday shopping strategy usually involves waiting until the last day and then rushing to the store to buy tube socks. But I got to thinking about how other people shop. Do other people wait until the last minute too?

Luckily, we have plenty of data here at iProspect. To answer this question we analyzed data from some of the largest online retailers in the U.S. The result is figure 1 below. It turns out that half of all online Holiday purchases were performed by the 11th of December this year. So next year when the calendar ticks over to December 11, just remember that the rest of the world is half finished.

search engine marketing during the holidays

Figure 1: The Holidays are the time to be merry, especially between December 7 and 21.

The busiest day for online sales was December 14th and from the 10th to the 21st sales went crazy. December 21st also happens to be about the last date for online orders to stand a chance of shipping in time for Christmas. I guess there were plenty of people, let’s call them the “Brendans” of the world, pulling out all stops to get their orders in by the shipping deadline, which they probably hadn’t noticed until the last day.

pay per click advertising during the holidays

Figure 2: People are more likely to buy during the Holidays.

This leads to an interesting question related to pay-per-click (PPC) auctions:

When purchases started going nuts between December 15 and 21, what was your PPC program doing?

If you weren’t using a bidding agent, the answer might have been nothing at all.

The Holiday season is an example of a period when consumer behavior changes radically. “Radical change” in this case, means turning sane, rational people such as myself into raving lunatics who are ready to buy just about anything. In statistical terms, radical change means that conversion rate, as tracked by a selection of retail clients, increased by 6 fold at the height of the Holiday period (figure 2) – meaning you were 6 times more likely to buy something.

However, the Holiday period is just one example of a larger phenomenon. Consumer behavior changes in periodic, predictable and measurable ways. Do you buy more gifts in December or July? Do you lodge more tax inquiries in March or September? Do you conduct more business at 10 a.m. or 3 a.m.? In all cases, click-through, propensity to buy, and profitability change as a function of time.

For example, figure 3 shows the conversion rate for a selection of retailers each hour of the day. 1.0 is the average conversion rate. Conversion rate dips as low as 0.3 during the early morning. Apparently caffeine-addicted, bleary eyed consumers aren’t interested in buying stuff. Who knew?

These examples make intuitive sense, but there are plenty of other weird, wacky and wonderful examples of customer behavior that you may not have heard of. For example, in the insurance industry Wednesdays have high conversion rates. (I’m as puzzled as you are about that one).

However these fun examples veil a deeper insight. What do you do if you know that conversion rates are higher on particular days? In part two of this article in next month’s issue of Search Marketing Advisor we will discuss how you can exploit these time effects.

pay per click advertising during the holidays

Figure 3: Conversion rates decline in the early morning.

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The Search Marketing Advisor Newsletter Article: January 2005, Volume 4, Issue 1

Being in the Right Place at the Right Time: The Effect of Time on Pay Per Click Auctions - Part 1

The Search Marketing Advisor Newsletter Article:
January 2005, Volume 4, Issue 1