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Online Advertising Actually Works, Report Finds

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OnlineAdsWorkAs we continue to report our series on how personal data is used to track consumers online, a new report demonstrates the new reality of Internet advertising: It works. People who clicked on search ads – the ads that appear at the top of search results on Google, for example – made 86% more purchases during the 2010 holiday shopping season than they did in 2009. And the vast majority of online sales, 69%, came from search-based advertising.

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The study was released recently by Kenshoo, a not-entirely unbiased source, since the company makes search engine-based marketing software. The report was based on three million online transactions, mostly with large retailers.

Advertisers appear to be catching on. They increased their spending on search ads by 52% from 2009 to 2010.

“In 2010, retailers ramped up their budgets dramatically about one week before Thanksgiving, whereas, in 2009, budgets started to climb significantly only in the last few days before the holiday,” Kenshoo found in the report. “These heightened levels of activity were sustained through the weeks leading up to Christmas with dramatic increases in retail search advertising budget recorded in the final shopping weeks of the season.”

More people than ever clicked all the way from search to ad to purchase. The click-through rate grew by 54% last year (but still remained relatively low, with just 2.25% of people who received ads going on to make a purchase). And when they were done shopping, the average cart had 10% fewer items this year than last. That seems to indicate that people are shopping more online but spreading their purchases across more sites, Kenshoo found.

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© Tyler Olson | Dreamstime.com

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