September 17, 2024
Maximizing Profitability: What to Expect This Holiday Shopping Season and Expert Tips for Success
Aside from the obvious, what can we expect from this Holiday season, and tips to maximize your profitability.
It’s that time of year again, and by now, you should have your budgets locked, your offer approved, your strategy sealed, and your creative in the works.
But just in case, the GOATS wanted to provide some value in hopes that any doubts or flaws in the plan might be fixed with our insights and recommendations. Let’s start.
- When to start?
Every year, the holiday season begins earlier. If this year’s Halloween sales are any indication, Thanksgiving and holiday products and promotions will start even before the calendar hits November 1st.
The pandemic changed everything. The acceleration of online shopping and the last vestiges of in-store shopping presented a different landscape for buyers and shoppers back in 2020. Big retailers like Walmart and Target started to capitalize early, offering weekly deals before Black Friday and Cyber Monday.
But this trend is not only due to the always-changing customer behavior; it is also tied to economic indicators, such as inflation, the one thing that has been hitting Americans for the better part of the last three years, and one that makes brands such as yours to predict consumers will be more price sensitive and respond better to deals, which as a response creates this trend of more extensive and earlier deals every year with more and more products on sale.
So, when should you start? Do you follow big retailers and start discounting your products in early November? Before Halloween?
That depends on how you want your brand to be perceived. How vital is Q4 for your sales? Do you offer seasonal products? Are your products giftable? And what are your margins?
A brand always on sale is perceived as an “always-on promotional brand.” Consumers know and have the tools to track pricing and will only buy when a discount is presented. So, if your brand offers exclusivity and luxury, you won’t want to follow suit and start promoting early.
Timing is everything, and while some consumers will shop early, some still wait until Black Friday and Cyber Monday for deeper discounts.
The longer the sale is live, the less attractive it becomes, so plan accordingly.
- What should the discount be?
If 2024 has taught us anything, it is that people are struggling. Even the luxury market is below its projected growth, inflation is a significant planning factor, and users are expecting big discounts.
If your strategy is to promote your 10%-15% from the email and sms sign-up, don’t.
For brands planning to launch early discounts in early November, then increase the promotion during BFCM or include new products during the sale. The offer during BFCM HAS TO BE UNIQUE.
AI and price matching are changing the game. A consumer who waits until the BFCM expects a reward, and even when more and more brands start early with their discounts, the consumer still comes heavy on Friday and Monday. Expect these to be the most significant two days.
Throughout 2024, we have seen consumers coming in on national holidays to save money and take advantage of the discounts. So if you give a 20% discount during these sales, offer 25% off during the holiday period, and be as aggressive as your margins and goals allow you to be, you’ll be rewarded this year.
- How much should you put towards ad spend?
After the iOS privacy update back in 2021, we saw how the paid digital landscape changed, especially for Meta. More users opted out of tracking, and retargeting pools shrink, elevating CPMs to levels not seen before.
But after three years, the landscape has stabilized, and we have months of efficiency behind us, even in a complicated economic environment. Still, with elections coming in Q4, the cost rise is in full effect.
For months, prospecting audiences have seen an increase in the cost to reach 1,000 accounts and CPM for traditional and advantage shopping campaigns. On average, The Ad Goats' portfolio of brands sees up to a 30%-40% increase in costs.
To avoid any YoY decrease in traffic and revenue, plan accordingly and increase your budgets if possible. With the addition of the political media dollars, the auction will be more competitive than ever, so start your full-funnel approach as early as October, replenish the retargeting pools, and build up your CRM.
Google and Meta continue to reign supreme in performance marketing. While it is good to diversify and not depend on one or two platforms, make sure you are at least spending the same amount last year on these two initiatives if you have introduced a third option, such as TikTok. Do so by using the algorithms to your advantage, using no brand awareness campaigns, maximizing your purchase objective efforts, and keeping a high Imp Share for your brand keywords. Use PMAX and Standard Shopping as you wish and not as the algorithm wants.
While the Goats can’t tell how much to spend because each brand has a different reality or goal, our recommendation is to significantly increase your budget during this period. Evaluate how much traffic you are losing due to increased CPCs, how many accounts you are reaching compared to LY, and how healthy your CVR is, and based on these metrics, plan to mitigate these factors.
- Is this the right time to test?
The short answer is no. Q4 is the time to scale what works, maximize proven efforts, and pivot only if necessary.
By this point, you should know your proven winners, what ad type works best for your audience in each stage of the funnel, what value and type of video your users respond to, and what product/category are the top sellers.
Set your marketing promos well in advance in Google Merchant Center, test the promo codes, work with your feed manager, and create your product sets in Commerce Manager. Have everything ready for the big days at least two weeks in advance. Even your ad creative in both Google and Meta should be uploaded and approved; this time of the year, the approval process is slower than usual, so remove the chance and stress from your planning and have your agency partner ready and proactive.
Recommendations
- Start early only if your brand allows it.
- If you are going to start early, make it worthwhile for you and the consumer.
- If you start early, offer a bigger discount or include new products during BFCM.
- If you are not, Walmart,Target, or Amazon don’t have a month-long sale.
- Q4 is the time to go big. Offer a bigger discount than what you’ve offered for the rest of the year, and your margins allow it.
- Don’t offer 10% - 15% and expect big returns.
- Focus your efforts on your proven channels, for the Goats, that’s Google and Meta.
- Expect a rise in CPM and Cost-per-Reach, so plan accordingly and increase your budget by 25% to 40% if possible.
- Black Friday and Cyber Monday will reign supreme. Make sure your daily budgets are aligned with your goals and demands.
- Should you spend more compared to LY? YES! If possible.
Expect a more competitive auction and a consumer looking for deals. - Fill up the funnel, replenish your retargeting pools, and increase your CRM.
- Optimize for Sales/Purchase. Nothing else matters but to see your business grow.
- Don’t test. If UGC is what worked during the year, then there should be more UGC. If static images are generating engagement and high CTR, then continue using them.
- Set up everything beforehand, and don’t leave things until the last minute.
- If you are still struggling with this, contact The Ad Goats.
