Online Ad Spending Steady While Holiday Sales Are Not

NEW YORK There are plenty of shoppers online. The only problem is they’re not pulling the trigger on purchases. Still, marketers are doing their best to coax them, particularly though direct response methods like search ads.

“Marketers have constraints,” said John McAteer, retail director at Google. “They’ve already allocated money for the inventory. There’s fixed capital on shelves. The only lever they have is marketing.”

For that reason, spending on online marketing is holding steady. SearchIgnite, a provider of search marketing management tools, said search spending from retailers rose 33 percent over the first half of the fourth quarter.

“The performance online pieces are marketers’ highest ROI right now and that’s where they want to invest money because that’s where they’re moving inventory,” said Roger Barnette, president of SeachIgnite. “For search it’s a good story right now.”

SearchIgnite found flat conversion rates and a 6.25 percent drop in average order size. This tracks with what Google’s largest retail customers in the early part of the season have told McAteer. “I’m hearing traffic from Google was way up but conversions were not,” he said.

Retailers have reported better conversions recently, however, which McAteer attributed to steep discounts now offered early in the shopping season.

Coupon-related searches on Google are up significantly, McAteer said. This has been a continuing trend at CoolSavings, an online coupon site.

Users have printed an average of nearly 500,000 coupons per month since July, up 33 percent from the first six months of the year. Other savings-related searches that have been popular on Google: buy one, get one free; discounts; and free shipping.

The bad news: consumers maybe be clicking, but they’re not buying as much. Research firm eMarketer last week lowered its forecast for the holiday season. It now expects consumers to spend $30.3 billion in November and December, down from the $32.1 billion it originally forecast. This still represents a 4 percent increase from 2007.

ComScore’s forecast is less rosy: It said last week online holiday shopping is down 4 percent from last year. That would be the first contraction since retailers started selling online.

Either way, “it won’t be a stellar season,” McAteer said, “but it won’t be the doom and gloom everybody predicts it to be.”