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2015HOLIDAYDISCOVERIESREPORTHow digital marketing trends will reshape retailers’ 2016 plans

The New Year has begun, signaling a fresh start for many retailers. While still coming down from the seasonal peak, marketers are beginning to outline their annual strategies and budgets. Before diving too far into planning, it’s important to take a look back at holiday performance as there are a lot of lessons that the data can tell us. While this data is unique to each retailer, we uncovered a few trends that are relevant to almost everyone. When we dug into digital performance data for major retailers, a few important learnings emerged.

First, paid search continues to surpass expectations, with sales growing 36% over last year. This growth was primarily driven by strong Product Listing Ad performance, which accounted for 50% of click share. And the visual ad format fared well on mobile devices, with PLA-driven revenue on mobile growing a whopping 221% over 2014.

Second, while mobile conversions grew 33% this holiday season, desktops still accounted for nearly 70% of all sales. Retailers did a great job preparing for an influx of mobile traffic, which grew 86% year-over-year (YoY), but there’s more work to do to get consumers across the finish line. This will be of significant importance in 2016 as mobile device clicks are set to overtake desktop.

Third, while traditional shopping days like Black Friday and Cyber Monday set new records, we saw new high performing days emerge. The biggest winner was the day after Black Friday, which saw traffic increase 62% and revenue another 73% YoY. The following day, Sunday, wasn’t far behind. Expect this trend to continue as retailers extend promotions for greater periods of time.

Fourth, online sales grew 53% while store traffic declined by 10%3 over 2014. This shift in traffic is likely to continue, so retailers will need to reallocate budgets in 2016. It will also be important to make the right omnichannel investments to ensure consumers can easily browse and buy no matter where they are.

Now that we’ve given a preview of the biggest themes from the 2015 holiday season, let’s dig further into the data and discuss how they’ll impact your marketing strategy in 2016.

Retail paid search sales grow 36% YoY Going into the holiday season, eMarketer predicted online sales (regardless of channel) would grow 13.9% over 2014. That’s sizable growth. But when we dug into channel-specific data, we saw paid search sales grow 36% year over year1. So what fueled its growth? Let’s dig in.

2015 HOLIDAY DISCOVERIES REPORTLessons from the Digital Frontlines

PPC sales grow 36% YoY

For more information on PLA performance over Cyber Weekend, check out the infographic on the Adlucent blog

PLA-click share

During Cyber Week, mobile sales increased 306% and traffic 92% YoY.

Product Listing Ads now account for half of total click shareProduct Listing Ads (PLAs) drove the bulk of the sales growth. When looking at retailers who ran both Google PLAs and text ads throughout the holiday season, Adlucent found that PLA-driven sales increased nearly 40% while traffic increased 32%, and impressions by 59% YoY1. PLA click share also accounted for half of total paid search clicks, marking the first time it has been equal to text ads. In 2014, the split was 45% for PLAs and 55% for text ads.

PLA growth was largely driven by mobile. In our Thanksgiving through Cyber Monday PLA analysis7, we found that 40% of PLA impressions came from mobile devices, far greater than the 28% we saw in 2014. This shift meant desktop received fewer PLA impressions, dropping from 52% in 2014 to 43% in 2015. As a result, PLA-driven revenue increased a staggering 221% on mobile YoY, accounting for 15% of the total revenue across all devices. While mobile surges, desktop still has a 4x higher conversion rate than mobile, so at 68%, it still accounts for the majority of total PLA revenue for the big holiday weekend. Tablet makes up the difference with 16% of total PLA revenue, a decrease of 3 percentage points from 2014.

So why are PLAs growing faster than text ads? We know that consumers respond well to image-based ads in search results given their visual nature. Also, because they give consumers the ability to view price and style of products, it’s easier for them to shop on the go. As mobile usage continues to grow, we can expect to see PLA traffic to follow suit. If you have a PLA program, make sure you’re adequately allocating your advertising budget to capture these customers.

Mobile holiday domination becomes a realityToday shoppers are using brief moments throughout their day to not only research products, but to buy. It’s clear that the work retailers and their agencies did to prepare for the sharp increase in mobile sales this holiday season was worth it. When looking at the holiday season from Thanksgiving through Christmas, we saw mobile impressions increase a staggering 160%, mobile clicks by 86%, and mobile sales by 188% YoY. And while mobile conversion rates were up 33%, they were still dwarfed by desktop. While they’ve made considerable headway, retailers will continue to work well into 2016 to optimize the mobile shopping experience so that conversion rates rise even further. Growth rates on desktop were much smaller, with traffic growing 11% and revenue 19%, respectively. But with a much stronger conversion rate, desktops still delivered 70% of sales.

Another interesting thing to note is tablet performance. While tablets have historically delivered a larger percentage of online sales than mobile, this year they were surpassed by smartphones. Tablets only delivered 14% of sales, while smartphones delivered 17% (only 8% in 2014!). This shift in sales by device type shows that consumers feel more comfortable making purchases on their phones than they did a year ago.

Thanksgiving—Cyber Monday Device Click Growth YoY6

More shoppers are clicking on mobile search ads than ever before. Mobile now accounts for 42% of total device clicks compared to desktop which accounts for 43%. So just how big is this holiday season growth? To put this into perspective, during the holiday season in 2014, desktop still accounted for over half (54%) of total clicks and mobile only 31%.

Now that retailers have invested in optimizing their mobile websites, expanded payment options, and are sinking more dollars into mobile ads, mobile is well positioned to generate the majority of traffic for paid search by the end of 2016, if it hasn’t already for your account. If you’re a retailer, stop and look at your mobile traffic and sales data from the 2015 holiday season. It may be a good indicator for what you can expect in the upcoming year. Make sure to look at your return on mobile. Given that cost-per-click (CPCs) are still lower than desktops and tablets, and many mobile searches result in in-store purchases, retailers have a much higher return on their mobile ad spend compared to other devices. If you’re seeing a shift in mobile traffic and mobile-generated sales, your ad budget should be reallocated accordingly.

Goodbye Black Friday and Cyber Monday - Hello Cyber WEEK!Black Friday and Cyber Monday have morphed into Cyber Week. In previous years, Black Friday was a day when shoppers rushed stores, waited in huge lines, and at times, broke out into physical fights for bargain-priced products. In more recent years, Black Friday deals went digital and retailers began opening their doors on Thanksgiving Day. This holiday season, retailers began offering “Black Friday” deals all the way through Cyber Monday. Black Friday/Cyber Monday has morphed into Cyber Week, with the singular importance of those individual days decreasing.

Retailers are driving this trend as they want shoppers to spend beyond just those historical key shopping days. In our Cyber Week analysis6, Adlucent found that the largest growth by day this year occurred on Saturday Nov. 28th and Sunday Nov. 29th, where ad spend increased by 151% and 116% respectively. To put this into perspective, ad spend only increased by 90% year-over-year on both Black Friday and Cyber Monday. And shoppers took the bait as traffic increased 62%, revenue increased 73%, and orders increased 90% on Saturday alone YoY, making it the largest growth day of Cyber Week.

This isn’t to say that the historically key shopping days weren’t important. Black Friday and Cyber Monday saw a 50% growth in revenue and approximately 60% growth in orders YoY. For the weekend overall, traffic increased 51% and orders grew 64%. Given the shift in both retailer strategy and consumer behavior, we anticipate holiday promotions to expand even further across Cyber Week next year. Retailers will encourage early purchases to avoid shipping and weather delays that can ruin Christmas.

Device click share

“Cyber Week” (phrase): The consecutive days from Thanksgiving

through Cyber Monday week.

More shoppers skip the stores and opt to buy onlineWhile online sales grew this holiday, in-store sales declined. According to industry figures, Cyber Week online sales increased 15% YoY.2 Adlucent clients6 saw even greater results, with online sales growing 53% in 2015 compared to the 41% year over year growth seen in 2014. Sales taking place in stores however, declined 10%, according to ShopperTrak’s sales estimates for brick-and-mortar retail from Nov. 26 – Nov. 29th this year.3

Even as shipping deadlines loomed in the final days before Christmas, shoppers still chose to purchase online. Sales at physical stores fell 6.7% in the weekend prior to Christmas, while traffic declined 10.4%.4 E-commerce sales however, are predicted to grow over last year, accounting for 14% of retail sales in November and December.8

These results clearly show the growing shift in how consumers are shopping. The ability to simply pick up your phone and place an order in a few clicks is far more appealing than fighting crowds in stores, only to find out that a product is out of stock. However, more sales still occur in stores and we know that the majority of consumers purchase products both online and offline. In fact, 66% of the people we surveyed ahead of the holiday season said they planned to shop both places, so it’s important for retailers to create a seamless omnichannel advertising strategy. Digital ads should make it easy for a shopper to make a purchase on a website, or in a nearby store. According to Forrester Research 5, 50% of consumers expect to buy online and pick up in stores, and 71% expect to view in-store inventory online, highlighting the importance of having a solid omnichannel strategy going into 2016.

As the dust begins to settle and online sales stabilize, it’s important to take a look back at your digital program to identify areas for improvement and opportunities for additional investment. We recommend focusing on four key areas:

First, because we know that digital traffic will continue to rise, the marketing dollars you allocate to digital should also grow to capture this valuable traffic. And even if they’re not converting online, consumers are using the web to inform purchase decisions made in stores, so focus on creating a consistent omnichannel advertising experience across all devices and channels. Don’t get stuck trying to play catch up.

Second, look at the trends within your digital account. Odds are, the percentage of traffic and revenue coming from mobile is rising, and it will continue to grow over the next few years. Do everything you can to improve mobile conversion rates.

Third, if you have a PLA program, make sure it’s working efficiently. When your product feed is properly optimized, you’ll have a greater ability to target ads at the right customers.

Finally, as competition increases, so do CPCs. By focusing your limited advertising dollars on the right customers for your business, you can ensure you’re getting the most bang for your buck. CRM-based targeting (like Google’s Customer Match and Adlucent’s Audience Expansion services) enables you to create segments of high-value customers to market to. Based on what you know about these customers, you can customize the message, ad type and bids for each one.

Cyber Week digital sales grew 53% YoY

If you’re like most marketers, this list may feel a bit daunting. Don’t hesitate to get a 3rd party to do an audit or assessment to identify areas of opportunity within your account, and prioritize the ones that will have the greatest impact.

Let’s Chatw: adlucent.com

p: 1-800-788-9152

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References1 Adlucent data: Thanksgiving through Christmas 2014 vs 2015 2 Adobe Inc.’s Digital Index3 ShopperTrak4 RetailNext5 Forrester Research6 Adlucent data: Thanksgiving through Cyber Monday YoY 2015-20147 Adlucent data: Thanksgiving through Cyber Monday PLA only accounts YoY 2015-20148 Forrester Research

About AdlucentAdlucent, a full-service digital marketing and intelligence company, helps brands acquire more of their best customers profitably through a mix of personalized marketing services, consumer data, predictive advertising technology, and advanced insights applied across digital touchpoints.

Adlucent translates vast first and third party data into actionable consumer intelligence, answering questions like who are my best customers and how can I acquire more like them? These insights are used to connect brands with high value consumers through the right mix of touch points along their path to purchase.

Methodology:

The Adlucent performance statistics presented include data derived from samples of Adlucent’s client data for those who have worked with us over the full holiday time periods included in this analysis from 2014-2015. Unless otherwise noted, all Adlucent performance statistics are taken from a sample of Adlucent aggregated data from Thanksgiving through Christmas YoY 2015 and 2014. Other analysis included are specifically noted in the report and are also taken from a sample of Adlucent’s client data from Thanksgiving through Cyber Monday YoY 2015 and 2014. In this year’s report, we have changed our previous methodology and included data derived from a sample of Adlucent’s PLA-only managed accounts in our performance statistics where applicable. In this year’s report we have changed our methodology and included data derived from a sample of clients which Adlucent managed, but had reported on separately in previous years.