A Secret Marketing Gem for the Holiday Season
Some advertisers are not going to be happy with us for sharing this, especially at this particular time of the year – right before the busy holiday shopping season. But being the evangelists that we are, we felt it’s important to share this knowledge with you – and yes, of course, we do also have some extent of interest in doing so.
During the holiday shopping season, from October through December, advertisers are obligated to spend a disproportionate amount of money on advertising.
The reason is clear: In these three months – and especially on Black Friday and Cyber Monday – consumers are buying more. Much more.
In the post Brexit UK, for example, analysts from Fung Global Retail & Technology predict that holiday spending will rise by at least 3.5% year-on-year.
According to Kissmetrics, during the holiday season ad impressions typically increase by 50%. In addition, CTR (click-through rates) rise 100%, direct traffic increases by 150%, the average order value grows by 30%, and conversion rates grow by 60%.
It is a shopping celebration and everybody wants to take a bite.
The Big Winners of the Shopping Season
In 2015, US retailers spent $1.44 billion on Google holiday text search ads, on desktop alone. That is 24% more than spending in the same period, just one year before.
And that’s not the full sum, by far. Overall spending during the holiday season by brand advertisers and international retailers is much higher.
The competition on the consumer’s attention – and on ad space – is rising. And, as a result, the bid price for all kinds of advertisements goes up.
According to AdGooroo, the average Cost per Click during the holiday season last year was $0.77 and the Average CTR was 10.6%.
The biggest spenders were, naturally, the retailers – both online and offline. For retailers, it’s a top priority to bring consumers to their stores to do holiday shopping.
Next in line are brand manufacturers, who want the shoppers – as soon as they enter a store – to choose their brand.
And that’s exactly where the hidden gem is: in the store.
Choose Your Battles
When you think about it, brand manufacturers don’t really need to compete with retailers for the expensive “Black Friday” and “Cyber Monday” keywords. They are not their competitors. On the contrary – they share a common interest, at least to a certain extent.
Their products are in the store, and retailers are already spending billions getting shoppers to come inside.
Therefore, it is much more effective for brand manufacturers to spend their money on making a better impression inside the stores – rather than spending money bringing people into the store by advertising on Google, Facebook, or anywhere outside of the store, where competition is massive.
Brand manufacturers can do this using all kinds of in-store promotion tools – Sponsored Product Ads (aka promoted listings), Display ads, etc.
Now, perhaps you will say – rightfully – that bid prices for sponsored products ad campaigns in the stores are probably also higher during the holiday season.
Here are two reasons why, in most cases, you would be wrong.
First, even during the holiday season, in-store promotions like sponsored product ads are still far from consuming all of the inventory the online stores have to offer. Therefore, even if there is a higher demand during this season, it does not necessarily change the pricing.
Second, even if – in certain categories – sponsored products ads are reaching the inventory’s upper limit, competition is lighter because retailers do not take any part in it. It is just you and your direct competitors.
Holiday Season’s Sponsored Product Ads Stats
Looking at the conversion rate and the ROAS (Return on Ad Spend), you’ll find that while – in general – running sponsored product ads delivers above average results, during the holiday season the results are even higher, since more people enter the store (with a stronger intent to buy) and the PPC (price per click) doesn’t change.
Here is some information we gathered from our sponsored product ad network in Europe regarding last year’s holiday shopping season:
- In Q4 2015, we served almost 5 times more sponsored product ads than in Q3. On November 27, Black Friday, we served 3 times more ads than on an average day in Q4.
- The average conversion rate in Q4 was 70% higher than in Q3. On Black Friday, it was 130% higher than the average.
- The average PPC (price per click) did not change throughout the 2 quarters, even on Black Friday!
- The average ROAS on Black Friday was higher than 1,000%.
- In Q4, the average order value of people who clicked and bought products that were sponsored was 140% higher than the regular average order value in the stores.
The D.C.A.D Shopping Season Manual for Marketers
So. If you are a brand manufacturer trying to maximize your advertising budget during the holiday season and you are willing to do things a little differently this year, we strongly recommend the following:
- Do not compete with the retailers. Let them bring the shoppers into the store. This will save you and them a lot of money.
- Concentrate on winning the in-store battle with your real competitors.
- Allocate a decent share of your budget to doing in-store promotions.
- Don’t tell anyone!
Have a happy and rewarding holiday season!
Mabaya develops advertising tools that enable marketplaces and online retailers to monetize their traffic by offering sellers and brands to promote their products. Mabaya’s white label Sponsored Products Ads platform enables sellers and brands to bid in order to ensure their products are listed in premium locations in the online stores.