For every retailer, mastering online channels is key if they want to have a successful Christmas.
This year Mintel predicts that £4.7bn will be spent online in the UK during the run up to the big day – and that doesn’t include purchases that are researched on the web but completed in brick-and-mortar stores. Attracting increasingly savvy consumers requires smart, integrated digital campaigns, with paid search and social advertising crucial and growing parts of the marketing mix.
So what trends can we see from Christmas 2014? Based on an analysis of the search and social advertising campaigns managed through the Kenshoo platform we see four main areas of interest:
1. Facebook advertising is on the rise
As Facebook advertising has evolved, it has given marketers the opportunity to identify and target their highest valued audiences to drive interaction and conversions. By generating efficiencies and optimisations in their paid social programmes, marketers have made their strategies more sophisticated and more vigorous, thus increasing overall competition within Facebook advertising and, in turn, upping the value of targeting Facebook users.
This can be seen in a year-on-year (YoY) comparison from November 2013 to November 2014. Overall global Facebook advertising costs and ROI rose dramatically, with aggregate average CPM from Facebook ads increasing seven-fold YoY. This rise in costs is due to two factors. Firstly, Facebook now shows fewer ads in the right-hand column, meaning advertisers are buying more of the Page Post ads that appear in users’ Facebook Newsfeeds (the higher demand for Newsfeed ads has driven up prices). Secondly, increased mobile usage by consumers (and consequently greater competition amongst advertisers) has also pushed up prices.
However, the rise in costs is counteracted by greater ROI, which nearly doubled in 2014. This is due to the better performance of Newsfeed ads and comes with a 5x YoY increase in click-through rate. The opportunity to reach a more targeted, tailored audience through Newsfeed ads justifies the increased investment from advertisers.
2. Google PLAs are being used more extensively
Retail paid search advertisers in the U.S nearly doubled daily spend on Google Product Listing Ads (PLAs) across the week of Thanksgiving this year compared with 2013, with peak spend shifting this year from Cyber Monday to Black Friday. This swing was even more pronounced in the U.K., with retailers increasing spending on PLAs by 348% on Black Friday 2014, compared to 2013.
On the biggest shopping days – Thanksgiving, Black Friday, and Cyber Monday – the overall conversion rate for Google PLAs was considerably higher than the surrounding days, peaking at nearly 6% on Cyber Monday. And, the biggest year-on-year spend growth for Shopping campaigns among the key dates was on Thanksgiving (+143%), followed by Black Friday (+113%), and finally Cyber Monday (+59%).
3. Paid search is still increasing
The increased spending on Facebook and Google PLAs hasn’t held back investment in traditional paid search campaigns. U.S. retail paid search advertising saw year-on-year increases across nearly all key metrics including impressions, clicks, click-through rate, and conversions. Most markedly, advertiser revenue saw a healthy 34% rise in November when compared to last year. Particular days stood out – Thanksgiving search revenue was up 54%; Black Friday saw a rise of 42%; Cyber Monday search revenue increased by 34%.
Driven by these positive results retailers are investing more budget into their paid search campaigns this year than ever before. When compared to 2013, paid search spend increased 16%+ on each day prior to Thanksgiving in 2014, with the largest increase generated 7 days prior to Thanksgiving (+43%).
This year, overall U.K. retail search spend increased by 145% between Thanksgiving and Black Friday. That works out to an increase of 88% year-over-year for Black Friday itself, compared to just an 11% increase for the day before.
4. Shopping is starting earlier
Everyone comments that Christmas shopping seems to begin earlier every year, and the statistics agree. While Black Friday used to be the official kick off for festive shopping, retailers are noticing consumer shopping appetites grow even before Thanksgiving, allowing them to shift their seasonal promotions into full-gear by November 1st, a day now dubbed “Orange Saturday.”
To meet this demand, Kenshoo’s data found that U.S. retailers ramped up spending earlier in the season this year. Compared to 2012 and 2013 peak shopping seasons, paid search spending began to rise 9 days prior to Thanksgiving in 2014 – four days earlier than the years prior.
These trends demonstrate that digital marketing is growing in importance and becoming more effective in the role it plays in retailers’ seasonal campaigns. Retail marketers are adopting more sophisticated approaches – mixing paid search, Facebook, and Google PLA advertising in order to reach consumers at this crucial time of year.
