There are a number of levers in search but they primarily boil down into three things: how many people search for something (volume), how many people end up buying straight after and how much they spend (the latter two translating into pricing or CPC).
Rimm-Kaufman, an agency who maintains one of the best blogs in the search industry, has dug down deeper into what exactly has changed since the first quarter in online retail. They fully acknowledge that their sample is biased (representing 40 large retail accounts) but that is by the by: Simply there isn’t anything better out there.
Their Q1 benchmark data released recently digs down into the three basic levers of search and comes to a startling conclusion: People convert and buy a similar amount of stuff but there are a lot less people now doing it. Quite simply, the macro-economic factor of consumers buying less is absolutely playing out.
To understand their sample more, Q1 seems to indicate that sales from search is down roughly 20% year on year and costs are down slightly less, indicating ROI on search or efficiency declined (represented by blue line being above pink line in first chart).
While it seems conversion rates and average order values disconnected in the first two months of the year (more people bought cheaper, lower total value stuff), the trend year on year seems to have stabalized of late.
And that leaves the final fact: There are a lot less people searching for stuff. By looking at brand related terms only (to get a better sense for apples on apples comparisons since total search volume is so hard to measure with millions of keyword phrases) they are seeing sales stemming from brand related keywords at two-thirds of their levels in Q1 (i.e. one third less people are searching for the keywords they did in the first quarter of 08).
That is quite simply huge. There isn’t a lot the scores of PHDs in Google can do about that. The one factor outside their control, seems to be spiraling out of control.
