The holiday season is rapidly approaching, and with increased pressure on driving channel efficiency and tighter budgets, it's more important than ever to have a clear measurement plan - ensuring you are able to meet end of year revenue or volume targets.
By working with hundreds of leading DTC e-commerce companies, we have a unique vantage point at Rockerbox. We want to share some of the biggest trends and make a few recommendations as you prepare for the holidays.
See below for our holiday predictions and associated best practices on how to optimize your marketing this holiday season. You can also check out the first post of our holiday series on how to begin your BFCM prep.
Our Holiday Predictions for 2022
Given current macroeconomic conditions, we anticipate significant changes during this year’s holiday season - not only in terms of anticipated shopping behavior, but also to brands’ marketing mix.
Earlier Start to the Shopping Season
Continued consumer worries about inventory issues and shipping delays will result in holiday shopping that takes place even earlier. Brands in anticipation of early shopping, will start ramping spend and running holiday creative earlier as well
Additional Aggressive Discounting
With added consumer concerns around price hikes in the midst of ongoing inflation, pricing will be a strong deciding factor as consumers make holiday gifting decisions. We’re already witnessing heavy discounts hitting at an earlier time of the year, and this will hold true throughout the next several buying months.
Decrease in New Channel Testing
With the increased pressure to spend efficiently, brands are choosing to spend in channels where they can be confident concerning performance. This is in comparison to the last few years where we saw a heavy amount of new channel testing during the holiday season.
We will continue seeing an increased reliance on workhorse channels of search, shopping, and affiliate - as we have seen over the last quarter.
Influencers, Content, and Whitelisting are Dominating Creative
Consumers will increasingly look to influencers and social media for gift-giving inspiration, especially early in the season. Investing in both influencer and content-focused marketing will be key in driving users into the funnel early in the season.
Best Practices and Recommendations for BFCM
Below we share our recommendations for not only how to think about budgeting and planning going into holiday, but also tips around creative and merchandising choices.
Tips for Planning An Early Start to Holiday
If you plan on ramping spend earlier in the season, this means planning your holiday budget to begin at the end of October - which, yes, is now!
As you consider how long you are going to keep budgets heavy for and when you will ramp down, keep in mind the impact timing will have on the following:
- Time to convert
- Diminishing returns
- How to capitalize on optimization opportunities
To access Rockerbox-specific advice for handling heavy ups and pacing, check out our tips on spend heavy ups based on your approach.
1. Be Aware of Time to Convert
If you plan to ramp spend early, you should expect this to impact user time to convert. As users who enter the funnel early in the season might not be ready to purchase yet, you will have to manage for a potentially slower pay back period.
When budgeting on a channel and tactic level (specifically for top- and mid-funnel tactics), you should incorporate time to convert as a tertiary metric, given the impact it will have on cash flow. If two channels that have similar CPA/ROAS, optimize into the channel with the faster time to convert to drive a faster payback period.
2. Identify Diminishing Returns
Having a strong understanding of baseline performance is more important than ever, to quickly identify diminishing returns and drive channel efficiency as you ramp spend.
If you’re launching earlier and running at heavier weight levels, there is the potential to see diminishing returns sooner.
As you ramp spend, you should monitor performance on a per tactic level. If you start seeing an increase in CPA or decrease in ROAS, this is an indicator that you may be seeing a decrease in efficiency against a given tactic or channel. Consider making spend shifts or cutting underperforming placements, to drive efficiency.
3. Capitalize on Optimization Opportunities
If you are planning a spend lull during Black Friday/Cyber Monday (heavying up before and after), this is a good opportunity to identify extreme outliers that are performing much better or worse than expected.
However, you should assume that user behavior will change significantly before and after Black Friday/Cyber Monday, considering that users will be in “last minute” shopping mode post-sale.
If you heavy up on specific channels, Rockerbox recommends monitoring that overlap with other channels using the Rockerbox Channel Overlap View. You may start to see a higher channel overlap across channels you are heaving up - this will enable you to identify redundancies within a given point of the funnel (i.e. across top funnel channels).
Planning Your Holiday Channel Mix
With the increased pressure to spend efficiently, brands are choosing to spend in channels where they can be confident on performance instead of taking risks with new channel testing.
This means placing the focus on core channels like paid search, shopping, and affiliate. Brands can leverage Rockerbox to determine optimal spend levels per channel and set performance targets, while ensuring that existing channels are performing at their peak.
For help determining optimal spend levels based on your specific approach to budgeting, check out our budget allocation guide.
Recommendations for Creative and Merchandising
Promos and Discounting
As you launch promos and discounts, consider how much discounting is general onsite as compared to channel-specific promos as you forecast and budget. If you run a universal onsite discount, you should see consistent performance across channels, while if you run channel-specific promos this can skew channel performance.
Additionally, if you launch a heavy discount early and then change the discount after BFCM, remember that performance is going to change.
When you look at performance from a CPA perspective, this will have a big impact - as you will be driving potentially less volume. If you optimize against ROAS, you should expect stronger ROAS with the lower discount since the discount itself isn’t driving down revenue.
Influencers and Whitelisting
This year, consumers will continue to look toward influencers and social media for gift-giving inspiration. As you invest in influencer marketing and whitelisting tactics, think about the following best practices.
Creative for influencers has a high wear out rate and will require a high refresh rate. This effect will be exacerbated at higher spend levels
To avoid hitting consumer fatigue, brands will need to double their influencer network and get access to more creative from these influencers as spend increases
If you pull up influencer spend and go heavy early, the creative you are going to need (both influencer creative and broad creative) will be different because people aren’t in gifting or buying mode yet
You should monitor how well your creative is performing when you are running it in comparison to when an influencer is running or whitelisting. These are different audiences and your creative will perform differently
Bundles and Kits
Holiday and BFCM is a great opportunity to test out selling bundles and kits.
During holiday, consumers are looking to buy bundles for greater value, and it’s a great chance to test which products work best together.
If testing bundles early on, this will allow you to identify which products are resonating early in the holiday and optimize against these products later in the season
What if you don’t have Rockerbox?
As you heavy up in Facebook and Google and start heavy discounting earlier in the season, you should expect to see higher channel overlap. This overlap will make it difficult to understand the contribution of each channel without a de-duplicated view of performance.
A higher percentage of your users will have Facebook and Google on their path to conversion, which will result in what appears to be strong performance in platform making it difficult to determine if you have reached a point of diminishing returns.
If you plan to leverage in-platform data exclusively to optimize during holiday, you will have a harder time identifying when you have hit diminishing returns and you are more likely to overspend with decreased efficiency.
We see first-hand how much a de-duplicated view of baseline performance helps brands effectively measure channel performance during holiday.
And we’re biased, of course, but for the hundreds of leading e-commerce companies we work with, Rockerbox is that solution.
Haven’t started your Rockerbox journey yet? We’re here and ready. Get a demo today.