UK CONSUMER ELECTRONICS INTELLIGENCE REPORT

September 2012 - September 2013

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WHAT WILL YOU GET FROM THIS REPORT?

• A ‘who’s who’ in consumer electronics.

• In-depth market analysis covering the period between September 2012 and September 2013.

• More than 200 individual pieces of key insights & over 77 pieces of statistical interpretation.

• Analysis of the top retailers, manufacturers, aggregators and reviewers, using the top 200 consumer electronics keywords.

TOP INSIGHTS

‘Click and collect’ forms a fundamental part of the purchasing cycle for offline retailers.• The growth of ‘click and collect’ services are allowing traditional High Street retailers to offer a holistic consumer

experience, of which online is often the initial customer touch point. The growth of this service looks set to continue with 14% of consumers planning to use click and collect for their next purchase, compared to 8% previously (Source: YouGov, Rise expected for devices bought through ‘click and collect’, 14 June 2013).

• The popularity of click and collect is fuelled by the desire to avoid the £792m cost of missed home deliveries in 2011 (Source: IMRG figures, Internetretailing.net, 5 August 2011).

Digital content is driving the development of new product areas within the sector.• The newest and fastest growing market in the consumer electronics sector is in ‘tablets and eReaders’, with the market

being dominated by Apple and Amazon.

• The drive towards tablets and eReaders is driven by a concerted push towards digital content. This is driven by opportunities for additional revenue (through the sale of applications, books and other content) as well as long-term customer retention, through the use of digital rights management and platform specific applications.

• This is a trend that is also being seen in the PCs and laptops market, through the promotion of direct-download applications and the video games market, through the purchase of in-game content.

A clear consumer demand for expert opinion and product information allows review sites and aggregators to take considerable click share from retailers.• The presence of review sites in the organic click share index demonstrates a key demand from consumers for reliable, expert

product advice and knowledge.

• Throughout the sector, review sites account for 13.78% of the overall organic click share but in some markets, this increases to more than 40%. This represents a clear opportunity for retailers to engage with key review publishers to connect with users in the early stages of the purchasing process, and to increase the levels of consumer focused content on their own digital properties.

KEY FINDINGS• There is a higher search impression volume for ‘Tablets & eReaders’ (45.56%) than for any other keyword market, reflecting

the fact that this is the fastest growing consumer electronics sector.

• Manufacturers hold 72.51% of brand search impression volume, only challenged by review sites which hold 21.11%.

• There are high unit search volumes for iPad mini (19.11%) and Kindle (15.11%), with most keywords based around either consoles or tablets and eReaders.

• The most visible brand across all ten sub-verticals is Amazon, but this is enhanced by its use as an order platform by third-party retailers. It ranks first for the highest keywords by volume including iPad mini, iPad 4 and iPad 3.

• Argos (13.93%) ranks highly due to its high visibility for keywords such as iPod and cameras. Its own click and collect service grew share of sales from 28% to 31% in Q4 2012, with 42% of sales now online.

• PC World manages to outrank Amazon in the ‘Laptop & PCs’ sub-vertical for keywords such as computers and desktop.

• Apple performs well as both a leading retailer and manufacturer, with the highest search impression volumes based predominantly around its products, such as iPod and iPad mini.

• Currys with 11.59% of the leader board owes its performance to keywords such as sat nav and digital camera. They also saw sales grow 8% in the eight weeks to January 2013 due to both the click and collect model and the collapse of Comet, HMV and Jessops.

• Phones4U lead the aggregated click share index for mobile phones. While they have a respectable second place in paid search their domination of the organic index has allowed them to be a leading brand within the market. This is even more impressive when we consider the high competitive nature of the mobile phone market and types of brands that they are competing against i.e. Apple, O2, Samsung and 3.

• eBay, the world’s largest online auction site performs poorly with just 2.33% of aggregated click share. This is due to the brand ranking poorly across all verticals. It is also set to increase its dealer fees for electrical accessories in September 2013 from 6% to 8%, missing out on much of the third-party traffic that Amazon benefits from.

• Halfords introduced a click and collect service two years ago and 86% of its online sales are through this service. It comes second only to Amazon in the ‘GPS, Sat Nav & Car Accessories’ aggregated click share.

“THE GROWTH OF ‘CLICK AND COLLECT’ SERVICES ARE ALLOWING TRADITIONAL HIGH STREET RETAILERS TO OFFER A HOLISTIC CONSUMER EXPERIENCE, OF WHICH ONLINE IS OFTEN THE INITIAL CUSTOMER TOUCH POINT”

EXECUTIVESUMMARY ONLINE CONSUMER

ELECTRONICS IS MADE UP OF A DIVERSE SET OF KEYWORDS THAT ARE DESIGNED TO REFLECT THE DIFFERENT STAGES WITHIN THE CONSUMER LIFECYCLE. SUCCESS IS CENTRED ON BUILDING A BLENDED SEARCH STRATEGY ACROSS ALL TYPES OF KEYWORD CATEGORIES, INCLUDING GENERIC AND BRAND TERMS. WITHIN THIS SECTION WE REVEAL THE MOST VISIBLE BRANDS ACROSS BOTH PAID AND ORGANIC SEARCH.

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% Split

Tablets & eReaders

Video Games & Consoles

Mobile & Home Phones

Personal Audio Units

Cameras & Camcorders

Laptops & PCs

Televisions / Digital TV

Home Audio

DVD / Blu ray / Home Cinema

Sat Nav, GPS & Car Accessories

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Unit Keyword % Split

ipad mini 19.11%

kindle 15.11%

ipad 4 13.85%

kindle fire 9.22%

wii u 8.34%

ipad 3 8.21%

ipod 7.66%

xbox 720 7.28%

mobile phones 5.81%

playstation 4 5.43%

EXECUTIVE SUMMARY

Figure 1: % Split of search impression volume by keyword market

Figure 2: % Split of search impression volume for the top 10 Unit phrases

INTRODUCTION TO THE CONSUMER ELECTRONICS MARKETThe consumer electronics sector is made up of a diverse array of keywords that are designed to reflect the different stages within the customer lifecycle. These include unit phrases such as computers and desktop PC, as well as accessory specific terms such as laptop bags and pc speakers. Unit terms are typically used to develop search exposure and help initiate the search journey, while accessory terms are more niche and are often the direct result of a previous unit purchase.

45.56% of search impression volume is based around the vertical ‘Tablets & eReaders, closely followed by ‘Video Games & Consoles’ (see Figure 1). There are also high unit search volumes for iPad mini (19.11%) and Kindle (15.11%), with most keywords being based around either consoles or tablets and eReaders (see Figure 2).

For simplicity, the report focuses its analysis on the top unit terms. Unit keywords are based around a primary device such as a console (PlayStation 3) or an entire entertainment system (hi fi systems). Accessories terms are usually the secondary device that a consumer will either purchase with a unit or add at a later date; examples include headphones or digital audio cable. As a result, unit terms are highly influential to the visibility of accessory keywords, as interest in the latter assumes ownership of the former. This symbiotic relationship can be seen between the terms iPod and iPod docking station.

It is important to note that the consumer electronics sector encompasses a wide range of long tail phrases within each of these verticals. Therefore, the keyword terms within the report are by no means exhaustive. It is also important to note that more specific keyword coverage is dependent on whether an individual brand manufactures a particular product.

The consumer electronics market comprises 10 primary sub-verticals, including:

1. Tablets & eReaders

2. Video Games & Consoles

3. Mobile & Home Phones

4. Personal Audio Units

5. Cameras & Camcorders

6. Laptops & PCs

7. Televisions / Digital TV

8. Home Audio

9. DVD / Blu-ray / Home Cinema

10. Sat Nav, GPS & Car Accessories

Our findings will detail tactics and strategies, as well as revealing the most visible operators within organic search and PPC (Pay Per Click).

Source: Google keyword estimation tool

Source: Google keyword estimation tool

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Aggregator - 0.36%

Retailer - 6.02%

Reviewer - 21.11%

Manufacturer - 72.51%

Figure 3: Brand related search impression volume by constituent service offering

Manufacturer Brand % Split

Apple 32.43%

T-Mobile 26.49%

Dell 11.92%

Samsung 9.74%

Garmin 5.33%

Sony 4.36%

Bose 2.91%

Nintendo 2.91%

Panasonic 1.95%

HTC 1.95%

Reviewer Brand % Split

Ign 57.53%

Cnet 38.81%

T3 1.40%

Geek 1.05%

Eurogamer 0.38%

Slashgear 0.31%

Techradar 0.21%

VG247 0.17%

Oxm 0.09%

Pocket-Lint 0.06%

Retailer Brand % Split

Game 28.90%

Mp3 19.26%

Play 15.85%

Sky 12.96%

Comet 7.09%

Tesco 4.75%

Argos 4.75%

Asda 2.59%

PC World 2.12%

Debenhams 1.73%

Aggregator/Specialist Retailers % Split

Mobiles 32.29%

Pixmania 21.16%

Moneysupermarket 14.48%

Pricerunner 14.48%

Phones4U 9.80%

Carphonewarehouse 3.56%

Dialaphone 1.89%

E2Save 1.22%

DigitalCameraWorld 0.81%

BuyMobilePhones 0.31%

EXECUTIVE SUMMARY

HOW DO WE MEASURE THE SEARCH MARKET?Search Impression represents the number of times a website page is displayed within the search results. It is only after the results are displayed that visitors are able to click on either a PPC advert or an organic link. Therefore, “click share” represents the act of a visitor clicking on a PPC advert or an organic link and is calculated as follows:

• Organic Click Share is the number of clicks that an individual operator has achieved against a keyword, as a measure of where they rank for that keyword.

• PPC Click Share is the number of clicks that an individual operator has achieved against a keyword as a percentage of their Share of Voice (SOV). SOV is a measure of how often an operator’s PPC ad appears.

For more information see Appendix A: Search Impression and Click Share Methodology

SEARCH IMPRESSION VOLUMEThere is a diverse range of consumer electronics brands, each offering a multiplicity of products with many specialising in a particular service offering. The sector is divided with mass market retailers such as Amazon and Currys/PC World, alongside niche specialists such as Bose and Garmin. This report also includes review sites which are influential to the conversion process.

From the perspective of online presence, it is clear that manufacturers lead total brand related search impression volume with 72.51%, closely followed by review sites representing 21.11%. What is interesting is that although retailers are only representative of 6.02% of brand search impression volume, they often lead the click share indexes for product categories (see Figure 3).

Aggregators do not have the dominance over the consumer electronics sector that they have over other sectors of the UK economy. This is because many sub-verticals in consumer electronics have reached saturation point based around a few dominant international brands. This means that consumer comparison is relatively easy with fewer variables than the service industries such as law and insurance (see Figure 4).

ROLE OF REVIEW SITES WITHIN THE BUYING CYCLEReview sites have positioned themselves as a critical part of the buying cycle, providing consumers with a reliable and trustworthy overview of quality versus price considerations when purchasing a product. Often they also have advance reviews of products yet to come onto the market, building up anticipation of a product launch (witness the recent hype over the launch of the Xbox One).

This is particularly apparent in the market for tablets, personal audio devices and video games, where some of the leading websites for online visibility are review sites. Given the fact that they are a key part of the conversion process, they are often competing with direct online retailers for premium position within the search engine results pages (SERPS).

Figure 4: Brand search impression volume by operator for each constituent service offering (excluding Amazon)

Source: Google keyword estimation tool

Source: Google keyword estimation tool

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Figure 5: Search Marketing Leader Board Index

5 a Aggregated Leader Board Index % Split

Amazon 28.69%Argos 13.93%Currys 11.59%Apple 6.96%Tesco 6.73%John Lewis 5.93%TechRadar 4.65%PC World 3.87%Nintendo 3.03%Play 2.78%Halfords 2.63%Phones4u 2.61%Dell 2.39%Ebay 2.33%Carphone Warehouse 1.88%

5 b Organic Search Leader Board Index % SplitAmazon 23.14%Currys 10.23%Argos 10.03%Tesco 9.06%TechRadar 8.41%Apple 7.97%PC World 5.30%Nintendo 4.59%Richer Sounds 3.86%Sony 3.80%Play 3.28%Trusted Reviews 3.21%Phones4u 2.58%Halfords 2.38%Whathifi 2.16%

5 c Paid Search Leader Board Index % SplitAmazon 29.05%Argos 15.56%John Lewis 11.63%Currys 10.85%Apple 4.78%Ebay 4.68%Pricerunner 3.68%Tesco 3.13%Halfords 2.62%Play 2.56%Dell 2.51%Carphone Warehouse 2.50%ASDA 2.24%LG 2.13%PC World 2.08%

EXECUTIVE SUMMARY

MOST VISIBLE CONSUMER ELECTRONICS BRANDS IN SEARCH• The most visible brand across all ten sub-verticals is Amazon, which benefits from a large presence for all consumer

electronics products analysed and a consistent performance across both organic and paid search. This position is enhanced by its use as an order platform by third-party retailers (see Figure 5a).

• Second place on the leader board is claimed by Argos with 13.93%, followed by Currys with 11.59%. This is a result of their consistent growth of the click and collect service (Argos, 28% to 31% in Q4 2012) (Source: Telegraph, Argos and Dixons lead fightback for the high street, 17 January 2013).

• Apple has a click share of 6.96%, which is 21.73% behind the leader although it is still the highest performing manufacturer in the aggregated leader board index. It benefits from its products having high search impression volumes for keywords such as iPod, iPad mini and iPad3.

• John Lewis is an example of a high-end retailer that doesn’t specialise solely in consumer electronics. It gains an aggregated click share of 5.93%, which is supported by second place position for paid search in half of all verticals.

• Amazon dominates the organic leader board with 23.14%, closely followed by Currys and Argos with 10.23% and 10.03% respectively (see Figure 5). Tesco ranks in the top five for 60% of our verticals, ranking third in the ‘personal audio’ and ‘Sat Nav, GPS & Car Accessories’ verticals (see Figure 5b).

• PC World struggles within the organic leader board because its online visibility is split across two brands that are part of the same ownership. However, individually they rank highly across verticals, with PC World outranking Amazon for the ‘Laptops & PCs’ vertical.

• Play holds 3.28% of the organic search leader board; a respectable showing given that it is only present in 40% of sub-verticals.

• Four brands in the organic leader board are purely from the mobile & home phones vertical, reflecting the high-level of competition within this market and the desire for contract and price comparison by the consumer.

• Amazon, Argos, Tesco and Currys all feature highly in both the organic and paid leader boards, mostly due to their presence across all verticals (see Figure 5c).

• John Lewis’ aggregated presence is largely due to strong performance in paid search. The retailer often fails to rank in organic listings.

• Asda, Pricerunner, Dell and LG are other brands that appear within the paid search leader board but they lack organic presence, leading to them to miss out on any aggregated click share presence.

“THE MOST VISIBLE BRAND ACROSS ALL TEN SUB-VERTICALS IS AMAZON, WHICH BENEFITS FROM A LARGE PRESENCE FOR ALL CONSUMER ELECTRONICS PRODUCTS ANALYSED AND A CONSISTENT PERFORMANCE ACROSS BOTH ORGANIC AND PAID SEARCH.”

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