Here’s a holiday present for retailers: a new playbook.
In a dynamic ecommerce environment, using last year’s digital ad strategy is a non-starter. Consumer shopping habits change too frequently to make that a viable proposition. This year’s U.S. holiday ecommerce sales are expected to grow over 16 percent, and there are now new ways of engaging with customers that simply didn’t exist in holidays of yesteryear. Brands need to fundamentally rethink how they go to market during the holiday season from who they’re targeting to the channels they’re advertising on.
While Q4 is drawing to a close, there still exists a strong willingness by consumers to spend. Advertisers can influence their purchasing preferences before the holidays conclude if they take steps to adjust their tactics.
Consumers in December are a different breed, so an advertiser’s tactics must be fluid enough to respond. Some shoppers are opting for the convenience of ordering via Alexa or Pinterest while more price-conscious shoppers are waiting until January for post-season deals. Because of the dynamic environment, some industry analysts suggest discarding the idea of a holiday shopping season altogether, and while that’s an extreme opinion, advertisers can take the more pragmatic approach and look at recent data to determine the best strategy for the current holiday season.
With digital advertising, one thing that’s clear is that Black Friday through Cyber Monday still tops the charts when it comes to retailers’ budgets. With total U.S. digital ad spend by retailers exceeding $23 billion in 2018, retailers were on track to allocate one-quarter of that to the four-day period around Black Friday, about $6 billion in media spend.
Even though Black Friday has come and gone, there’s still time to maximize your remaining holiday ad spend. Just one-fifth of holiday sales occur during Thanksgiving through Cyber Monday—that leaves a ton of potential purchases on the table in December.
Be strategic about when you run ads
New data shows that late-season shopping is blue-sky territory. Just 5 percent of retailers surveyed target last-minute shoppers. The rest serve online ads during the more crowded times of the season: September and October (47 percent) and November through early December (48 percent).
It’s a good strategy to exploit times that other retailers ignore, but advertisers should keep in mind frequency capping, which restricts the number of times a consumer is shown an ad. Consumers see a lot of ads during the holiday season, particularly late in the season. Seventy-seven percent of consumers report they often see too many retargeting ads from the same retailer. To assuage this concern while still reaching your target audience, use a data-driven approach to refresh your ad creative and determine the point when ad exposure begins to work against you. Then optimize your campaigns accordingly.
Rethink where your ad dollars go
While the Facebook-Google duopoly is forecast to absorb a combined 53 percent of digital ad spending from U.S. retailers this holiday season, Amazon is becoming a strong temptation for retail marketers. Roughly half of consumers start their product searches on Amazon, and the purchase intent of an Amazon shopper is arguably much clearer than that of a Google user.
However, retailers should consider the implications of reallocating ad spend to Amazon as opposed to other channels. With an advertising and private label business that’s grown rapidly in 2018, Amazon is both a valuable partner and cut-throat competitor to retailers. Advertisers must weigh the benefit of boosting sales via Amazon advertising, with the drawback of deepening Amazon’s moat around ecommerce. Some direct-to-consumer brands such as Mack Weldon, Manscaped and Peloton avoid Amazon entirely.
Monitor your performance and respond in real time
Unfortunately, many marketers won’t know how their holiday campaigns perform until January, especially if they’re outsourcing campaign management to an agency. However, sophisticated marketers, particularly those that have brought digital advertising in-house, can tell instantly which campaigns, which audiences and which channels are performing best.
Some advertisers are evolving their optimization and measurement strategies this holiday season to include incrementality, which enables marketers to target shoppers more likely to be influenced by an ad that should lead to a greater impact on a retailer’s holiday bottom line.
Seize the season
The holiday shopping season doesn’t end after Cyber Monday, and neither should a marketer’s willingness to experiment. With so much at stake during December, it behooves marketers to react in real-time to their digital ad campaigns. Instead of waiting until January to audit campaign performance, marketers should be analyzing campaign performance now and immediately troubleshooting poor ROI and iterating on themes from successful campaigns. This may mean reconsidering where and when you’re spending and which audiences your campaigns are targeting.
In the online world, every second counts, particularly in December. Retailers must act fast and capture as much consumer spending as possible. It could end up being the difference between being in the black or red for the entire year.