The National Retail Federation (NRF), the industry’s largest trade group, still estimates that total holiday sales will grow 2.2% this year, which may prove optimistic and would still represent the weakest gain in six years. However, several other retail experts expect a worse performance, and are even forecasting the first-ever decline in overall retail sales. Since online sales are down, I personally fear overall sales will follow suit this holiday season. Here at JumpFly, we are hearing clients citing economic concerns with increasing regularity.

Following a strong week for online sales after Cyber Monday, driven by large discounts on consumer electronics products, comScore said sales slowed significantly in recent weeks. The softest categories included music, movies and videos (down 24%); office supplies (down 19%); jewelry and watches (down 17%); and home, garden and furniture (down 16%). Some bright spots included sport and fitness (up 31%); books and magazines (up 18%); and video games, consoles and accessories (up 17%).

A recent NPD survey conducted earlier in December indicated that 31% of consumers said they were concerned about their job security and had cut back on their spending. Fear is a powerful motivation to curb spending, as witnessed by this year’s dismal holiday sales season. Let’s hope that 2009 brings better times for our struggling economy.

Happy Holidays to all. May 2009 bring you all great health, wealth & happiness.

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About JumpFly:

JumpFly professionally develops, implements and manages Google AdWords, Yahoo! Search Marketing and Microsoft adCenter Pay Per Click (PPC) Advertising accounts, JumpFly is a Google AdWords Qualified Company, Yahoo! Search Marketing Ambassador and Microsoft adExcellence Member. JumpFly was recently named the #1 PPC Company in the country by TopSEOs.com.

Post-holiday sales – those two or three days after Christmas when people are looking to return their ill-fitting or “dud” gifts and spend their Christmas cash before they go back to work – can really be a boost to your business, if you are ready. Start looking now at what items you have quite a bit of. What do you need to move in order to make room for new lines or product? What has a great mark-up that you can easily afford to mark down and still make money on? Start thinking now about what you can mark down or offer as a BOGO (Buy One, Get One Free) or Buy One, Get One 50% off.

Consumers are trained to think of those days after Christmas as super-discount days. I know people who don’t do their Christmas shopping until after Christmas, just to save the cash or buy more for less. One of my clients already knows that anything Christmas related – from ornaments to tree toppers to nativity sets to Christmas dolls, decor and figurines – will be deeply discounted starting the day after Christmas. They don’t want to have to store it, and they need to make room for Valentine’s items.

So do your post-holiday sales strategy thinking now, before you hit the holidays yourself. You just might find that Christmas 2008 was better than you thought it would be.

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JumpFly PPC Management Specialist

Case in point: one of my retail pay-per-click (PPC) advertising clients that I manage here at JumpFly offered free shipping on any size order for the last 10 days. Business was brisk, to the point that they were running out of the small free gift they were offering on certain size orders. Their free shipping on any order offer ended at Midnight on December 1st, and they went back to their regular shipping offer (free shipping on orders greater than $75). How did sales do on December 2nd? Dropped by 50%.

According to Ken Cassar, an Analyst at Nielsen Online, “Free-shipping deals is a minimum cost of entry.” What does that mean? Unless you are the only retailer in your niche, if your prices aren’t the lowest of all your competitors, and you’re not offering free shipping, you have absolutely no enticement for someone to order from you. The Internet is all about comparison shopping. It takes one click to leave your site, and without a reason to come back, you’ve probably lost the sale.

Another case in point, I did an A/B test in Google AdWords for another PPC advertising client where we compared a free shipping offer versus a percentage discount. The dollar savings of the percentage discount was more than the free shipping offer; an end customer would have saved more money with the percentage discount. Surprisingly, at the end of the test, the free shipping offer outconverted the discount by a pretty hefty margin.

So what can you do if you can’t offer free shipping on any order? Offer free shipping on orders over a certain amount. If you already do that, like my client above who normally offers free shipping on orders over $75, than reduce that minimum dollar amount. One option is to figure out your average order size, than make the free shipping offer just a few dollars higher than that. (Think about Amazon.com and their Free Super Saver Shipping. I know that I’ve added another item to an order, just to qualify for that $25 minimum. How about you?)

And if you do offer free shipping, whatever the deal, make sure you highlight it everywhere on your site and in your ads at Google AdWords, Yahoo and Microsoft. Remember that it does no good to have it only on the home page if you’re sending your ads to an internal landing page. Make sure the offer is displayed everywhere, on every page, and on your shopping cart. You still have roughly eight more days of online shopping, depending on when your cut-off is for guaranteed Christmas delivery. Use that time wisely.

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Here are some tips to making the most of your PPC Ads at Google AdWords, Yahoo Search Marketing and Microsoft adCenter:

1. Highlight Your Holiday Specials

In your ads, be sure to mention any holiday specials you are running.  From price reductions to coupons to free shipping.  Include it in the ad.  People are looking for bargains this holiday season.

2. Set Your Budgets Higher

This time of year there will be more traffic on all of the product search terms.  Make sure your ads are showing consistently all day by setting the right budget and the right keywords bids. 

You should double-check your positions as well.  There are some terms that become highly competitive this time of year.  You may have been running happily at positions 2-3 for the last few months and all of a sudden drop to 10 because of increased holiday competition.  Keep an eye on this through the end of the month. 

For most B2C retail businesses, the holiday makes up as much as 60% of their total revenue for the year.  Your advertising spend should reflect this.

3. Consider Gift Terms

Be very cautious with the vague, generic gift terms.  However, you may find that gift terms specific to your product line will help you.  For example, if you sell coffee, consider “coffee gifts”, “coffee gift ideas”, etc.  As with everything, watch your cost per conversion on these terms.

The Google AdWords Team talks about some of these tips in their Inside Adwords blog. Applying proven PPC Management techniques is always critical, but especially during the holidays.

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