For many retail brands, the Black Friday, Cyber Monday and Holiday promotional periods are the most consequential marketing events of the year. This Q4 push can account for significant increments of annual revenue and expense which require an escalated “all-hands on deck” approach to planning, pacing and execution.
As we consider this year’s holiday initiatives, we reflect upon the trend lines established in 2020 and 2021. Analysts note that while pandemic behaviors were significant deviations from business-as-usual, saturated ad markets and online shopping preferences are here to stay in 2022.
According to the U.S Census Bureau, eCommerce sales increased 43 percent in 2020 during the height of the pandemic, and were estimated to be up 9.4 percent in 2021. This year, demand is expected to normalize as more consumers return to on-premise retail shopping.
As for macro trends, Markacy predicts single-digit growth in retail eCommerce sales in Q4. Our clients have been advised to buckle up and get creative with placements, messaging, promotions and budgets. What follows is our analysis of the top 8 considerations to plan against in holiday 2022.
Top 8 Trends Shaping the 2022 Holiday Season
1. The Holiday Shopping Period Is Expanding
For the last few years, big Holiday shopping dates like Black Friday and Cyber Monday have become less important as consumers have spread out seasonal shopping.
According to Adobe, the weeks before Thanksgiving (Nov. 1 to Nov. 24) grew 19.2 percent year-over-year, while Cyber Week (5 days between Thanksgiving and Cyber Monday) was down 1.4 percent year-over-year. Additionally, the weeks following
(Nov. 30 to Dec. 31) grew 5.6 percent due to brands stretching Holiday promotions and campaigns.
In August 2022, the U.S. Bureau of Labor Statistics reported that in the previous 12 months, through July 2022, the prices Americans pay for all items had risen 8.5%. With costs increasing consistently on a quarterly basis due to inflationary pressures, consumers may look to shop sooner and look for promotional opportunities outside of Cyber Week and core Holiday.
For instance, Amazon held its two-day Prime Day sale on Tuesday, July 12 – Wednesday, July 13 which generated some $11.9 billion in sales, an 8.5% increase over 2021’s event. The company is also discussing another Prime Day event this Fall, but details are to-be-determined. Inflation-wary shoppers may look at promotional events like Amazon Prime Day to bring forward some of their Holiday gift-buying.
Brands should be strategically analyzing 3their marketing calendars now through shipping cut-offs in December. A brand’s goal should be to excite and entice your audience bi-weekly or monthly with new content, messaging, campaign themes, promotions, and product releases. Then supporting those themes on the website, organic and email for those sprints. These advanced sales opportunities can help maximize total revenue for the period and help with pre-Cyber Week prospecting.
2. Economic Headwinds
Inflation has taken the world by storm in 2022 as we restart the global economy coming out of the pandemic and deal with lingering supply chain issues, rising wages, and the rapidly rising prices of gas and everyday items. Consumers this year will also not have any stimulus cash as in prior years, so our prediction is that consumer sentiment and spending may be more conservative this Holiday season.
Brands are also experiencing increased marketing costs. Amazon recently announced they are increasing their seller fees for the holidays to manage through surging inflation. From Oct. 15 through Jan. 14, third-party sellers who use Fulfillment by Amazon will have to pay 35 cents per item sold in the U.S. or Canada. In addition to marketplace cost increases, brands can expect year-over-year cost increases in terms of advertising CPMs, express shipping costs, etc.
Below are a few tactics brands should be considering to combat these economic pressures this Holiday:
- Inventory Management – Due to global supply chain issues, brands should be evaluating inventory levels and prioritizing campaigns and promotions around high inventory products, especially any best sellers or new products. Understanding your product shipping timelines for Fall and Holiday and building in some conservatism and Plan B’s into your marketing calendars in terms of launch dates and product mix will also help marketing teams execute in an uncertain environment.
- Buy Now Pay Later– Saw double-digit growth last Holiday season according to Adobe, as consumers continue to try this emerging method of payment. Revenue was up 27 percent year-over-year in 2021, while orders were up 10 percent year-over-year. Brands should leverage these finance programs if they do not already, or if they do, promote them during the Fall and Holiday season.
- Strategic Promotions Outside Of Cyber Week – As noted above, brands should be leveraging various brand promotions outside of Cyber Week to give spend-conscious consumers multiple entry points for conversion, when they are ready to gift shop – which might be earlier in the Fall, or last minute after Cyber Week.
3. Growth of mCommerce
Mobile commerce, or mCommerce, is a subset of eCommerce shopping and transactions that occur on wireless handheld devices. It includes in-app purchases, virtual marketplace apps (e.g. Amazon app), and digital wallets like Google Play, Apple Pay and Samsung Pay.
mCommerce conversion rates have benefited from advances in mobile technology interfaces and ad placements. According to Adobe, smartphones alone accounted for 43 percent of online sales in 2021 over the Holiday season. Brands need to maximize their mobile advertising investments, frequencies and ad creative (e.g. Meta, Google Ads, TikTok, Pinterest, etc.) to get in front of customers before and leading up to November and Cyber Week, to drive awareness, consideration, clicks and conversions.
Brands should also be assessing the marketplaces they are on (e.g. Amazon, Target, Walmart) for Holiday media inventory and planning as a lot of discovery will be happening on mobile marketplace apps.
4. Meta Performance
At Markacy, we have seen our Clients revenue contribution and advertising budget allocations for Meta come down in 2022 versus 2021 and 2020.
Since the Apple iOS14 privacy feature rollout, advertising has become less effective on Meta. Fortunately, the Meta advertising algorithm is still one of the best in the world next to Google, however, brands have had to spend less on the channel to maintain prior ROAS results.
This singular issue has caused more brands to be on their toes than anything else. It’s very important to be investing in brand (e.g. content, SEO, press, TikTok, organic social, influencer programs etc.) and brand awareness expansion channels to drive traffic to site that Meta, Google or email can help convert (e.g. Direct Mail, Linear TV, CTV, Direct Buys, Audio, etc.).
Relying solely on traditional top performing digital channels like Meta and Google is not enough anymore. However, brands can ensure they are maximizing platforms like Meta by continuously investing in platform specific content testing which is the primary driver of ad performance increases on that channel today.
5. Expansion Channel Testing
Due to the observed year-over-year decrease in Meta performance, brands are coming to terms with the need to tap back into more traditional brand awareness marketing channels outside of Meta and Google to compete during Holiday. Direct Mail, TV, CTV, Out-Of-Home, Audio and direct buys with publications have been the greatest beneficiaries of budget shifts as brands focus on new channels and data sources for prospecting new customers.
In most cases, Meta and Google alone are not enough anymore to effectively scale an eCommerce business year-over-year. By pulsing brand awareness investments like Direct Mail leveraging credit card purchase data, brands can drive new relevant traffic to their website which will be remarketed across Meta, Google and email to drive conversions. The key is finding creative and financially viable ways to get new customers into the funnel.
6. Profitability vs. Revenue
Given the broader global economic headwinds, CMO’s in 2022 have enhanced their focus on eCommerce profitability. In 2020 and 2021, brand and investor sentiment was still focused on revenue growth and new customer acquisition at the expense of profitability. Given the tightening of global fiscal and monetary policy, and lingering supply chain issues, brands are focusing more on the bottom line.
As brands are investing more in brand awareness channels, they are also holding Meta and Google to higher efficiency targets and ensuring email is contributing to revenue as much as possible. Brands are also prioritizing higher average order value or higher margin products for advertising, and are growth-testing on site to find ways to improve cross-sell, units per transaction and ultimately average-over-value.
Brands can leverage Markacy’s ecommerce profitability calculator to understand their overall media efficiency rate target for advertising budget management during the second half of 2022.
7. Email Capture & Customer Data
With the death of third-party-cookies coming in 2023, brands have been far more focused on first party data in 2022. This is a trend we expect will continue into Fall and Holiday and something brands should prioritize.
Brands should think about ways to incorporate email capture throughout their funnel by leveraging tactics like updating their homepage welcome pop-up for email capture seasonally with new promotions or creative. Social teams can leverage Instagram stories to activate a swipe up email capture request or to direct users to a landing page with email capture. Media teams can run lead generation campaigns and work with email teams to drive customers into a Holiday email automation flow. Brand collaborations, giveaways and email capture at pop-up events are other tactics to consider.
CMOs should be measuring month-over-month and year-over-year email list capture, growth rates and unsubscribes to ensure there is organizational focus on overall company list growth.
In addition to email capture, brands are leveraging landing page quizzes, email form fills and on-site pop-ups to get customers to opt into more personalized zero-party data. This data can be appended to customer profiles in the brand’s Email-Service-Provider (ESP) or Customer-Data-Platform (CDP) and used for email and media targeting to make the brand experience more personalized.
Brands who are building and curating their customer list overtime with zero-party data capture tactics will be ahead when the economy shifts back to growth mode.
8. Creative Is Still The Key Variable
In 2022, website, media and email creative is equally, if not more important, than 2021 and 2020. Creative has always enabled brands to tell their story, products or services and main differentiators. CMOs and eCommerce leadership should have a clear marketing calendar for each day from now through 12/31/2022 with an outline of which creative will be in market when, and in correlation with which products and promotions. By mapping out creative requirements against your marketing calendar well in advance, brands can be on the offensive in terms of getting the right content produced in-house or in tandem with influencers and UGC content creators ahead of key dates.
Creative is one of the primary drivers of media performance and so media and creative teams should be highly integrated to ensure final media content is placement specific and optimized based on historical data.
Tell a great story this Fall and Holiday, and you will have a better shot of standing out from the crowd and converting customers who need to be sold more than in 2021 and 2020.
Action Items for the CMO
We expect Fall and Holiday 2022 to see growth vs. prior years, however, brands will need to work harder and be more creative with investments to achieve those results given the global macro economic outlook.
With economic headwinds, the need to update media mix due to platform consumer privacy restrictions, and changing consumer sentiment will require brands to be agile this Fall and Holiday gifting season to maximize revenue and profitability.
Each year customers are also shopping both sooner and later than Cyber Week, and brands need to create unique moments and campaigns they can own to capitalize on these sales periods and expand their Holiday sales potential.
As always, preparation is everything. There will be challenging marketplace dynamics this holiday season, but companies can take into consideration these tactics to best prepare for the road ahead.
