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When we talk about SEM strategy for retail business, the first thing that comes to mind to most business owners and online marketers is search seasonality. Product seasonality is of course one of the major factors that affect retail SEM campaigns, but it should not be the only metric you base your strategy on.

There are other areas that you should be aware of when planning your annual strategy. Among these areas are: the retail business model, local sales, competitors, weather shifts, local law & regulations. All of these areas influence your SEM strategy, and should be considered.

Understanding the retail business model

Retailers are at the end of the supply chain. It is important to communicate with your merchandizing department to ensure that advertised products are on the shelves before you launch your campaign, and that there is enough of the product in stock to meet the demand generated by your SEM campaign.

Understanding the impact of search seasonality:

Search seasonality has a major impact on conversion rate, and average order values which always increase dramatically when traffic spikes occur. Research shows that increases in conversion rate for some categories can be as high as 300%.

Drastic changes in online search could be caused by several factors, here are some examples:

• Customer urgency: For most of the year, demand for products is relatively constant, and driven by individual purchase decisions. Here is an example for a regular search spike: “winter tires” search seasonality in Quebec – it’s known that every vehicle must have winter tires during the winter season in Quebec (it is the law). View Google insights for search – “winter tires” in Quebec.
  
  Notice the spike in search caused by customer urgency to have their winter tires on before Dec every year.

• Holyday spirit: Special occasions not only impact search spikes, they also have a major impact on the average order values. Research shows that customers are more willing to add different types of products to their basket in order to check off gifts for everyone on their list. They are also more likely to follow up-sells, cross-sells, and other point-of-sale recommendations. View Google insights for search – “coffee maker” in Canada.
  
  Notice the steady demand during the year for coffee makers, and the dramatic change during the Christmas season because coffee makers are one of the top Christmas gifts. Holiday discounts (that are much less than what people would normally pay) play a role here too.

Understanding other factors that could impact search trends

• Changes in law: In October 26, 2009; a new law banned hand-held devices for drivers in Ontario. Customers were urged to buy wireless car headphones. Notice how the search trend changed for “Bluetooth headphones” in 2009 compared to 2010 and 2012, it is also worth noting that the search spike occurred 4 months before the date the new law became effective. View Google insights for search – “Bluetooth headphones” in Ontario.
  
  Be aware of upcoming changes in regional or provincial laws; plan and launch your campaigns accordingly.

• Weather shifts: Global warming also has an impact on retailers, even though historical data shows that “snow blower” season starts in October and goes strong until January; the warmer winters in Ontario have impacted sales negatively, and made the spike a lot softer and shorter. Based on the graph below, “snow blowers” search demand was 2 months shorter and 50% less than the last 2 years. View Google insights for search  – “snow blower” in Ontario.
  
  Be aware of local and national weather shifts, and be willing to adapt and switch budget allocation to other lines of business that are in demand.

• Local events: Big sports and entertainment events have a major impact on not only sales, but also online brand awareness. Notice the sharp and unusual spike in searches for “HBC” (one of the sponsors of 2010 Vancouver Olympic Games in British Colombia). View Google insights for search – “HBC” in British Colombia.
  
  Make sure to adapt to local or national events and use them to your advantage by using branded or specific related product campaigns.

• Days or numbers: YOY data does not always refer to the same date of the calendar year. For instance, Thanksgiving and Victoria Day long weekend sales are not on the same calendar date every year. It is important to have big sale dates lined up correctly, since average customer basket values vary by calendar dates, and conversion rate increases during the holidays as sale dates end, and shipping deadlines approach.

• Economy: there is no doubt that the economic financial crisis has impacted us all. In 2009, “70% of Canadians will reduce impulse purchases, shop during bonus events and or shop at discount stores” according to the counsel of Canada.

Yes, it is harder than it sounds

Effectively managing seasonality (and trends) requires a solid understanding of both retail and consumer habits. As a large website or retailer with thousands, or even millions of products, it is not a stretch to say that managing seasonality without automation is impossible, because of the challenges discussed earlier, it is important to:

• Get integrated with the business merchandise team
• Research and map out the seasons and micro-seasons for all products
• Be aware of local events, weather shits and law changes
• Increase CPCs prior to forecasted search spikes

Automate your SEM campaigns

Keeping up with new products, promotions and staying ahead of seasonal changes is definitely time-consuming for online advertisers with large product inventories. A SEM automated tool could not only help run an efficient campaign, but also include automated bidding, quality score optimization and advanced analytics.

• Marin’s (Retail)
• Acquisio
• Google Adwords Automate (Beta)