By Ariel Rosenstein

Keeping up with change in digital marketing is never easy, but the emergence of social advertising as a widely accepted marketing tactic, the power of tablets and their users, and the increasing sophistication of search marketers has accelerated change even further.

With some powerful trends taking shape over the last year, opportunity abounds for marketers who proactively embrace change to lead the pack.

Multichannel merchants should put the following three tips at the top of their priority list:

Cater to tablet owners
According to the Pew Research Center, 11% of Americans already own a tablet, and there’s little doubt that number will continue climbing. Even more importantly, tablet users represent some of the most sought after shoppers.

Consider an interesting set of findings from the Kenshoo U.S. Online Retail Holiday Shopping Report, which focuses on tablet users. Among paid search activity tracked in the study, tablets accounted for nearly 8% of total retail traffic and 7% of total revenues. Tablet users spent more per transaction ($149.84) than smartphone and desktop users.

Marketers should customize ads and offerings to tablet users to increase conversion rates and revenues. In paid search, consider nuanced differences in bid strategy, copy and more and set up standalone keyword portfolios for PCs, tablets and smartphones. When mobile social advertising becomes more widely available and scalable, account for these same differences and approach the mobile channels independently for optimal results.

Get better at Facebook advertising
The L.A. Times reported that TV ad revenues in 2011 increased only 2% from the year before, well below expectations of a 6% rise. So where are the dollars going? Facebook for one has benefited from significant growth in ad revenues.

With the bulk of Facebook’s revenues still coming from advertising, the world’s largest social network saw its revenues grow from $1.97 billion in 2010 to $3.71 billion in 2011. As leading advertisers get more sophisticated with their social media ad campaigns, they also dump more dollars into the channel as it proves its worth to the C-suite. This only makes it more difficult for marketers on the Facebook sidelines to get in the game.

With the 2011 Facebook successes of big brands and the increasing quality of Facebook advertising as a whole, you can count on significant budget increases in the year ahead. Consider these trends, based on analysis of more than 100 billion Facebook ad impressions served in Q3 and Q4 2011:

  • Facebook ad budgets are growing much faster than paid search, reflecting a rapidly growing investment in Facebook advertising by big advertisers (109% growth from Q3 to Q4 2011 v. 27% growth of paid search budgets)
  • Volume of Facebook ads on the rise: ad impressions grew 47%, indicating growth in advertiser competition on the social network (adjusted for seasonality)
  • Facebook ads are gaining acceptance: clicks grew 104%, more than double that of impressions (adjusted for seasonality)
  • Facebook ad quality is improving: click through rate in Q4 was 27% higher than Q3

With performance improving, advertisers will no doubt increase their investments, and advertisers looking to take advantage of a relatively young ad marketplace had better move fast. Like paid search before it, Facebook advertising will continue to attract more advertisers, and the costs and quality requirements for advertising on the social network will climb in stride. When allocating budgets for social, marketers should emphasize successes and consumer demand, not a fixed% of sales or media spend.

Factor channel growth into budgeting
The Kenshoo U.S. Online Retail Holiday Shopping Report revealed record revenue figures from paid search in 2011. Consumers have clearly come to rely on the Internet and search engines in particular as a preferred mode of commerce. During the holidays, consumers spent more money online than in 2010, and total sales revenues for retailers driven by search advertising rose 22%.

Research from comScore and IBM also showed significant increases in e-commerce activity. Total shopping numbers tend to rise and fall with economic indicators, but online shopping has yet to reach full market penetration. So look for growth to continue.

Marketers can prepare for this by understanding that online media in general and search in particular, is driven by consumer demand and that forward-looking budgets based on past data should account for this growth in demand instead of simply replicating last year’s budget. Failing to account for the variable growth driven by consumer demand can result in merchants leaving money on the table or worse, putting money into competitors’ pockets.


Ariel Rosenstein is director marketing research for digital marketing software provider Kenshoo.


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