10/13/2008 10:49:00 AM
The holiday period will soon be arriving and retailers want to know what to expect. Last year Hal Varian, Google's Chief Economist, provided us with data and analysis to better understand the trends relating to online consumer research and purchase behavior during this critical period. The information proved to be invaluable to our retail clients in preparing for the holidays and understanding the week by week holiday traffic and associated cost and click metrics. Therefore, we are once again turning to Hal to analyze the 2007 data.
Lots of people focus on CPC (cost per click) but ultimately the performance measure that really matters is CPA (cost per aquistion). These two metrics are tied together by the conversion rate:CPA = (cost/click)/(conversions/click) = CPC/CR.
The chart below shows median CPC, median conversion rate, and median CPA during the 2007 holiday season for US Google AdWords advertisers who use conversion tracking. The series have been normalized so they all start at the same point on October 1. Click on graph below.
It is also of interest to look at how the number of clicks changes during the holiday season. Click on graph below