Seasonality and its impact on your EPC

We all know that sales across the whole of the retail sector tend to be stronger in the run up to the Holiday season, when people are in the hunt for presents, and again at the beginning of a year, when they’re trying to bag a bargain in the January sales.  Sales also tend to be slower throughout the summer months, especially for online retailers, because that’s when vacation is traditionally taken and most people would rather be outside in the sun than sitting on the internet! eBay is no exception to this and just as clicks naturally decrease across the year before ramping up in time for the holiday season, so does the conversion rate from click to sale, because although people still browse the internet, they buy less outside the peak buying periods.  And as the conversion rate plays a big part in determining your EPC under the QCP algorithm, this means that you will more than likely see seasonal fluctuations in your EPC, just as you would have done under the old CPA system.

Seasonality graph

Bid/Bin Rate per Visit as an Index for US site in 2009

Seasonal trends also vary by country, especially in the summer time.  Whereas the lucky people in France, Italy and Spain tend to take very long summer vacations across July and August, this is less true for the US, the UK and Germany, so the dip in sales and the conversion rate in those countries is less pronounced.  However, one of the good things about summer (apart from the weather!) that we know from our own experience in other Internet Marketing channels and from what we’ve heard from publishers, is that buying traffic often costs less across this period, as demand for advertising is lower, so although your EPCs may drop, margins are often stable.

Seasonality also depends on what type of products you promote on your site.  For example, if you have a site about fishing, a predominantly summer pastime, your metrics would look very different to those from a site about the year’s “must have” Christmas gift, with Zhu Zhu Pets (or GoGo Hamsters as they were called in Europe) being a good example from 2009, just as Wii Fits were in 2008.

Finally, when assessing changes you have made to your site, remember to take seasonality into account.  For example, if you made a change to a campaign at the beginning of January, it would not give you an accurate picture to compare your EPC in the period before Xmas to the period after, without making an adjustment for the natural drop off in sales.  To adjust for seasonality, you can either use the graph above or if you have been a member of eBay Partner Network for over a year, take a look at your own 2009 seasonal trends and apply the same trends to this year’s data.  Alternatively, if you have the capability to AB test, it will get around this problem by allowing you to compare like with like.  Another method to try if you have multiple sites, is to only make changes on one site and then compare results to those of the rest of your portfolio.

To sum up, there is a chance that you will see your EPC gradually decrease from March onwards, until it starts increasing again in September, though seasonal trends do vary by program and by the type of product you’re promoting.  Remember, there is always seasonality, whether with the old CPA model or QCP and the important thing is margin stability or improvement, so if you continue to optimize your campaigns, you could always buck the trend, so try looking at some of our articles on best practices for some ideas!