Ad Spending Trends for the 2019 Holiday Season
Love it or loathe it, advertising and the holidays are irreversibly intertwined and on the minds of the masses from now until the end of the year. This dual preoccupation has been on retailers’ radar from the moment the last holiday season ended. It will increasingly occupy the headspace of consumers who began seeing the first wave of holiday decorations hit the shelves months ago. The true kickoff of the season is triggered by the Black Friday/Cyber Monday run. Famous for literal “door busting” and disturbing scenes of frenzied consumerism, the BFCM cyclone hits retail hard and tends to leave a trail of mixed feelings in its wake. Some negative associations perceived by shoppers is inevitable, but retailers know that this seasonal hysteria leads to serious opportunities and they plan to take advantage of it. Amazon has extended their BFCM deals for a week, capitalizing on the entrenched consumer mindset that this is the time to steal those holiday deals or miss the chance for another year. Other advertisers contain their deals to the two days a year that promise the biggest revenue bumps; Black Friday and Cyber Monday are on the horizon. It’s the time of year where everyone will collectively brace for nothing less than total chaos.
The critical mass experienced in the economy during the holiday season puts a ton of pressure on advertisers. As they attempt to reach distracted consumers with what they have to offer, they must complete with the nonstop seduction of storefronts and smartphones and every screen and speaker in-between. There’s no question that its a clamorous time of year, and consumers’ reactions run the gamut from eager to engage, to completely over it. This is the backdrop against which retailers’ have to articulate their unique brand story, and it’s their last chance for the year to sell harder and smarter than the sea of competitors. Sales predictions based on previous holiday seasons form the basis of revenue expectations, and a few emerging trends are being tracked for their potential to bring big changes to how consumers will engage, shop and buy in 2019.
Unlike previous times, holiday shopping procrastinators are no longer punished by the empty shelves and the death of hope as they let the clock run down on gift buying time. In fact, even those not inclined to dilly-dally may opt to wait it out on purpose employing strategic last-minute shopping tactics designed to get them the most aggressive deals possible. Smoothing out the stress this formerly risky approach is the adoption of click-and-collect convenience. This growing trend is expected to kick up several notches in 2019. In bypassing the need to plan ahead for shipping deadlines, click-and-collect, otherwise known as “buy online, pickup in store” or BOPUS, creates the ability to buy from the comfort of home and pick up from the store when it’s convenient. No crowds and no calculations around how far in advance to order. No timing flubs that mean missing the cutoff for shipping. It’s a huge advantage enjoyed by brick-and-mortar companies who have many more disadvantages the rest of the year. Physical stores have another edge if they know how to develop and optimize it, and that is the ability to create unique, meaningful, memorable customer experiences. A recent survey reported that 84% of the customers they polled said that the experience a company provides is AS important as their products and services, and another three-quarters reported that a company’s ethics factor into their deliberations around whether or not to buy. Adobe Digital Insights (ADI) looked at one trillion visits to US based retailers and at 55 million sales of unique products last holiday season concluding that the key to creating powerful CX is to make it a year-round initiative. This 12 month approach was shown to translate to more loyalty in the critical holiday season.
Offering another insight from 2018, ADI also reported Cyber Monday was the highest revenue day of the year, crediting consumers’ increasing comfort level with mobile shopping as being partially responsible for the trend. Smartphone visits accounted for just over ½ of online visits in the 61 days leading up to December 31st, with 31% of the purchases being made on the phone. Leading ecommerce platform Shopify reported that 39% of 2018 holiday sales came through mobile, and of all the Cyberweek mobile traffic, Salesforce reported 8.5% flowed from a social media channel. Traffic to digital sites from social channels generally increased 22% from the previous year. Multi-channel shopping is another consumer behavior variable to consider looking ahead to 2019. One report suggests that 64% of buyers are using multiple channels for a single transaction, bringing a new meaning to covering all bases. With so many touch points on fire during the year’s biggest days to land deals, many events and trends are simply impossible to analyze until after the smoke clears.
The Amazon Factor
As expected, the Amazon factor last year was significant with nearly half of holiday sales flowing through the behemoth ecommerce retailer. Between first and third-party sales, Amazon fulfilled 41% of the total US online sales in 2018. While low on any scale for providing customer experience, Amazon is a well-known resource for buyers with tons of presents to tick off the list, because it provides instantaneous price discovery and a robust product review hub for shoppers who need to make decisions quickly and efficiently – concepts not associated with shopping excursions to big box and malls.
Worldwide Ad Spending
In total, the US ad spend outstrips all other countries worldwide by a wide margin, followed by China and then Japan. Google, the largest digital ad seller in the world in 2019 continues to hold its ground, but Facebook is encroaching rapidly followed by Alibaba and Amazon. The US is hands down the biggest ad spender in the world, but zeroing in on just digital advertising, it falls somewhere in the middle of the dozen or so countries that will hit the “50% or greater” digital ad spend in 2019. In this lineup, China leads the pack, followed by the UK, Norway, Ireland, Denmark, Sweden, Australia, then the US with New Zealand, Canada, the Netherlands and Russia completing the current digital spend picture. The ascendancy of digital is a subject of paramount interest to advertisers across the globe, as it appears possible that it will gain more momentum than traditional media in 2019. Digital ad spend is expected to rise by 17.6% to $333.25 billion. That means that, for the first time, digital will account for roughly half of the global ad market. The importance of this trend is not lost on advertisers with many making significant investments in more adtech, data and ecommerce. The time has come to prioritize digital infrastructure in order to avoid losing any ground.
An omnichannel approach still makes the most sense overall when considering the flurry of interpretations around holiday ad spend data. The big global players like Google and Facebook will dominate the digital ad space worldwide. Interestingly, there are pockets outside the US that have adopted the concept of Black Friday and Cyber Monday without the connection to Thanksgiving. This is good news to media channels that can monetize the collective sales spree that precedes the actual end-of-year holidays outside the US. In America, where Thanksgiving is the second favorite holiday, the Black Friday through December 31 crunch time has always been make or break for retail. Recently Criteo predicted that most marketers will invest even more this year, increasing ad spend as much as 46% over last year. So important is this once-a-year window of opportunity, many retailers began holiday ad planning as early as the second quarter of this year.
Managing Sales Expectations
There’s a lot a stake every holiday season for retail and this year will be no different. The National Retail Federation (NRF) projected a deceleration in retail sales due in part to the ongoing trade war with China and concerns over a recession. In a recent BDO survey, many retailers voiced less optimistic points of view about the upcoming season. Of the C-Suite retail execs polled, 54% reported the fact that they’ve hung their holiday expectations only as high as surviving a market correction. Still, there are those who remain undaunted. NRF President Matthew Shay commented that in spite of all the potential negative influences, he believes “the underlying state of the economy is sound” citing increased employment, income and lower taxes as indicators that all is well.
There’s no avoiding the fact that advertisers know more after the season than they do going into it. Even though there is no crystal ball, each year reveals new ways to win, and keeping up on the trends is a smart head start. The forecasts have been floated and the bets are on the table. The net effect of advertising in the 2019 holiday season remains to be seen – but not for much longer.
Not sure how to capitalize on these holiday trends? Contact us to discuss a media strategy for your brand.