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Friday, February 15, 2008

Paid and organic search trends

One of the most powerful Hitwise tools is our paid and organic search data. We’ve been analyzing this and have come up with some interesting trends for the travel and retail industries. Before I get into the analysis; a quick note on the methodology. This paid search data represents a weighted average of the proportion of upstream traffic from paid search to twenty leading sites in our Travel and Shopping & Classifieds categories – i.e. it illustrates the percentage of each industry’s traffic come from paid search. The chart below illustrates the proportion of upstream traffic that these two industries receive from paid search over the 15 months to last December.

So what does the data say? The first thing that jumps out that is that the travel industry is more reliant on paid search than the retail industry. The retail industry actually receives more traffic overall from paid search, but this is simply because it receives more visits full stop. Proportionally, travel websites receive on average 50% more traffic from paid search than Shopping and Classifieds sites.

The second interesting conclusion relates to peaks and troughs in paid search traffic, which I’ve summarized in the table below. As you can see from the chart, the level of paid search activity in both industries is anything but consistent during the year. Naturally, traffic to sites in our Shopping and Classifieds category peaks during November and December, and this is also the period when search traffic in general to the category peaks. However, paid search activity peaks slightly earlier – the two biggest months are November and December – implying that retailers rely more on paid search during the pre-Christmas browsing / research period than during the peak purchasing weeks in December. On the other hand, paid search activity is at its lowest in the summer months, which coincides with the quietest period for the retail sector.

The travel industry experiences two peaks in traffic. Its busiest period is after Christmas, when people flock online to book their summer holidays, while there is a second peak during the summer months as people visits sites for information, check-in facilities and last minute travel. What the paid and organic search data reveals for this sector is very interesting. Search drives most traffic overall during the summer months, but this peak is primarily driven by organic (or natural) search. The peak for paid search happens during the Autumn as people return to work after the summer, and their thoughts again turn to the prospect of warmer climates.

So, although the travel and retail industries experience peaks and troughs in paid search at different times, there is actually a common theme. Paid search activity peaks during the key ‘research’ period in the buying cycle – i.e. in the months before the surge in visits and purchases. This would imply that paid search is more effective if used earlier in the purchasing cycle.

The other question we wanted to answer in this analysis was: is paid search becoming more or less important? As the chart below illustrates, the answer to this question depends on which industry you’re talking about. The travel sector received significantly more traffic from paid search in the last three months of 2007 than in 2006. This is driven by two factors: a growth in the amount of traffic that the category receives from search overall, and the fact than an increasing proportion of this search traffic (40% in December 2007) comes from paid search.

As you can see from the chart, the opposite is true for retailers. The amount of traffic that sites in our Shopping and Classifieds category receive from paid search decreased during the final quarter of last year. The interesting thing about this trend is that there was actually an increase in traffic from search to the sector during December, implying that retailers are switching from paid to organic search strategies. 29% of search traffic to our selection of 20 top retailers was paid in December 2007, down from 31% in 2006.


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