Retailers understand that different products have varying levels of demand depending on seasonality. It’s important to be able to anticipate when and where these trends occur to avoid missed revenue opportunities and plan an appropriate bidding strategy.
One of our clients is a very seasonal account with the biggest revenue peaks occurring in March through May as winter weather subsides and gardeners start planting their spring and summer gardens. We see a strong correlation between increased conversion rates and temperature increases across regions in the U.S in the spring. It’s important to be able to identify when and where demand picks up during this period to know how aggressively to bid within specific time periods and geographic areas.
We compared weekly conversion data and regional weather data and were able to identify some general trends. The client has an initial spike in revenue and CVR when the southern states heat up to mid 70s/low 80s followed by a more sustained spike once the northern states get into the 50s and 60s.
This helps set the basis of our bidding strategy - bid more aggressively in regions that start hitting these threshold temperatures. Since these higher temperatures translate to higher conversion rates we should be able to improve our efficiency by allocating more spend to higher converting areas.
It’s also important to think about these trends on a product level. We leverage our client’s expertise on growing seasons and gardening activity trends to predict what products will see increased demand in different temperatures and regions. One way we utilize this data is by looking at optimum planting temperatures. For example, we know that the practical planting temperature for tomatoes is 50-60 degrees and that gardeners will start purchasing several weeks in advance to get the supplies they need to plant. To capitalize on the increased demand bids are increased on tomato growing related campaigns in the Midwest once that region reaches temperatures in the 40s. As you can imagine, mapping the effect of temperature on each product in each region requires a high level of sophistication and control to implement the recommended changes.
This geo bidding strategy has helped us improve the overall efficiency of our clients PPC program. In the three month period from March-May in 2014 paid search revenue grew 9% and ad spend decreased 27%.
There are a few things to think about before coming up with your own geo parting strategy. You can break this into four parts: When, Where, What, Why and How.
- When - Know when your highest (and lowest) revenue and traffic periods occur throughout the year. Look at monthly reports for both organic and paid traffic year over year to find patterns.
- Where - Once you’ve identified when these trends occur, you’ll need to identify what regions are contributing to these trends. Google analytics can provide detailed reporting on regional traffic and conversions.
- Why – This can often be the hardest variable to identify because there are many forces which influence purchasing behavior. First think about what the biggest seasonal factors are in your industry. Can you correlate these factors with increased or decreased traffic and revenue in certain areas? Weather is just one example. Most retailers see an increase in conversions around the holidays. For a retailer selling sporting equipment, the beginning of a sport’s season could be the primary factor driving increased traffic and revenue.
- What - Think about seasonality and customer motivation on a product level. A few products or product categories could be the driving force for a seasonal spike. For example, in the early spring, we have found that “seed-starting” related campaigns see a spike in traffic and conversion rate as gardener’s start planting, while “season extending” products see this trend as the temperature cools down.
- How – Once you’ve identified these factors it’s time to execute a bidding strategy. The aggressiveness of your bidding will depend on how strong the seasonal factors are in geographic areas during these seasonal periods. For example, if we saw last year that CVR increased by a much higher percentage in Ohio than it did in Pennsylvania once these regions reached 50 degrees, we would use a higher bid modifier in Ohio.
The key to this strategy is really being able to anticipate when these trends occur so you can be proactive rather than reactive.
Stay tuned for a case study on this topic soon!