Health and beauty online sales surged in 2020. Shoppers invested heavily in medical supplies like masks, hand sanitizer, and wipes and the cost to compete for these terms on Google Ads increased as did retailer’s returns, according to the 2021 Benchmarks Report.
“At the onset of the pandemic, consumer search demand for essential items like hand sanitizer and antibacterial soaps skyrocketed. After that initial spike, the self-care boom hit,” says Phil Turicik, Director of Enterprise Customer Strategy at Sidecar. “That drove lift elsewhere as people coped with stress related to COVID-19, the economy, and their new quarantined lives. Many lotions, skincare, haircare, and similar products showed solid growth throughout 2020.”
Sidecar analyzed these trends for the health and beauty retail segment in our annual 2021 Benchmarks Report which covers critical KPIs for retailers. The report analyzes 16 retail segments and explores benchmarks based on monthly ad spend so that retailers can assess how they are performing relative to their segment and spend thresholds.
Conversions Up, But Cost Remains Competitive on Google Shopping
2020 marked a year of massive customer growth for the health and beauty sector, with conversion rates up 26% year over year in Google Shopping. That came at a cost, though, as CPCs also increased 10% year over year, averaging $0.50 and return on ad spend increased just 1% year over year, averaging $4.68 for the year.
AOV Bolsters Returns on Paid Search
Although health and beauty retailers experienced increased CPCs on Google paid search, they also saw ROAS growth thanks to higher AOV on the channel. AOV averaged $110.76 in 2020, driving an 11% increase in ROAS year over year. CPCs averaged $1.44 for health and beauty retailers in 2020, the second highest CPC of any retail segment, coming in second to only office supplies.
Nurturing Returning Customers Is Key for 2021
Many health and beauty retailers expanded their customer base thanks to high demand during the pandemic. The challenge of 2021 will be finding new ways to engage these customers as quarantine restrictions lift. Makeup, nail care, and sunscreen may have more appeal to shoppers who are venturing outside more during the summer months. Messaging that highlights a new look or fresh start for consumers post-pandemic could also help health and beauty retailers entice shoppers back.
