Halloween: The Kentucky Derby of Retail Seasons

If the Retail world sees the end of the year as the Triple Crown, Halloween would be the Kentucky Derby. It is the initial measure of shoppers’ purchasing power leading into the holidays, and companies are quick to be the first out of the gate with sales of costumes, candy, and decorations. Search behavior offers a unique perspective on how consumers use the online channel for Halloween shopping; being relevant one month out of the year, Halloween shoppers do not have an obvious go-to place to find the necessities, and thus they turn to search as a discovery tool.

One fact is clear: the spectrum of destinations for Halloween searches is highly fragmented. Surprisingly, it isn’t Amazon (AMZN), Target (TGT) and other major online retailers with the largest Halloween search share. Enter small-time sites such as buycostumes.com and halloweenexpress.com – those that hardly manage a blip in traffic 10 months out of the year (each receiving less than 1MM visitors a month), only to quadruple or better in September and October. These sites actually acquire more “Halloween” search traffic (searches containing such keywords as halloween, costume, mask or candy) than dominant retailers, demonstrating that niche retail can assert itself over the usual suspects in special cases.

More good news for these smaller sites is that seasonal visitation rose over last year, both in search and general traffic. Given that “Flat is the new up” became the token economic slogan in the intervening months, that rise is telling in a couple ways. First, it suggests that an annual season can be a convincing reason for consumers to spend, despite day-to-day budget constraints. Halloween only comes once a year, the thinking goes, so why not pony up at least on par with last year? In a sense, this freshness of the season works in favor of the retailers. Second, the two niche sites at the top of the traffic distribution have a common trait: an emphasis on paid search.

While the latter three sites see a majority of search through natural links and a decrease in the share of sponsored links from 2008, both buycostumes.com and costumeexpress.com invest considerably in paid search (respectively, 54% and 80% of searches come through paid links). In fact, paid search share on buycostumes.com became the majority of its Halloween search this year, as that share increased by 10 points over last October. Likewise, costumeexpress.com emerged just this year, and with an overwhelming leverage of paid search as part of an overall plan it captured the second largest share of Halloween searches.

Emphasizing paid search as part of the strategy to expand market share, these two sites both grew in size and diverted traffic from the competition. In an online landscape as narrow as this one – short timeframe, many players – any advantage can mean the difference between success and failure. The observation that search investment correlates directly with higher traffic is key to implementing a tactical acquisition plan, in particular for small to moderate sites that rely on a search tool to get noticed. Moving into Thanksgiving and Christmas, these lessons about narrow-window, high-volume retailing should inform how to build a better strategy that will draw in consumers online.