The holiday season is joyous and bright, but the holiday spirit won't extend to your digital marketing budget.
To establish an effective marketing budget for the year, a number of considerations should be made. One of the most impactful decisions will be how you manage the increase in digital advertising costs, which inflate during the Q4, across all online platforms.
This annual price increase is one which many businesses are unaware of, yet all businesses should prepare for when heading into the final quarter of the year.
Advertising costs increase during Q4 because competition increases as eCommerce brands ramp up their digital ad buy to maximize sales during the holiday season. This results in rising costs for impressions, clicks and conversions across all industries as each business competes for the highest impression share and audience attention.
To navigate the increase in digital ad cost, you can reference this guide which will assist you in successfully navigating this expensive advertising period. You'll learn more about the direct cause of increased ad prices, and develop strategies to best maintain your digital presence.
Business Behaviour and Digital Advertising
The increase in holiday ad pricing is based on the principle of scarcity. When a commodity (people’s time/social media newsfeed space) is scarce, the prices for this commodity (your ads) will rise. This is exactly what happens in Q4. For many retail brands, Q4 is the time that they see the highest sales volumes because of holidays like Black Friday, Christmas, and Boxing Day. This means that eCommerce brands will spend a larger portion of their budget (in some cases all of it) to purchase more ads which increases their reach. Most retail brands begin this process as early as the 3rd week of September and promoting discounts and holiday sales, supporting their goal of overall awareness and customer acquisition. What this means is that the digital market-space will become saturated, and will cause the price of ads to increase due to increasing competition for a limited amount of digital real estate.
Consumer Behaviour During Christmas and the Holiday Season
From the third week of September to the last week of the holiday season, consumer interest shifts into a holiday and retail buying mindset.
Consumers are busy researching gifts for loved ones and often turn to platforms with significant digital advertising networks like Google, Amazon, Facebook and Instagram.
At the same time, there are noted decreases in the overall hours people spend online throughout November and December. Whether due to busier schedules, travel, family time or a factor of the types of content shown online to people (for example, algorithms where Facebook and other social networks “[prioritize] content that encourages meaningful social interactions“), consumers aren’t looking at their screens as frequently. This consumer behaviour during Q4 correlates with a sharp increase in advertising prices.
How Does The Christmas season Affect Web Traffic?
During the Christmas break, most businesses will see a dip in their website. We see traffic start to decline during the week before and after the Christmas holiday, with many offices closed for the holidays. Time away from the office typically means less time in front of the office screen where upwards of 40% of desktop traffic occurs. It is common to see a significant dip in impressions across all ad platforms (especially search/Google) during the holidays due to reduced screen time).
In the fourth quarter of the year, all businesses are competing with retail giants like Amazon who, in 2017, increased their ad spend by between 60-70% from Q3 to Q4 in preparation for the holiday season. There are, however, a few strategies which businesses can implement to be able to compete during Q4 without breaking their budget.
q4 Advertising Costs, A look at The Statistics:
- Google Ad costs increased 20% in Q4 2018 when compared to the previous year
- Facebook ads can cost up to 43% more in Q4 in comparison to Q3, while the number of impressions only increase by 4%
- Amazon’s Q4 revenues increased 90% from 2017 to 2018, due largely to the growth of their advertising platform, which is now the 3rd largest in the world.
Your Holiday Advertising Strategy:
Following these practices can help you avoid blowing your advertising budget in Q4, or shying away from advertising and losing your impression share.
Start your digital marketing campaigns early
- If you know you do not want to increase your marketing budget to compete in Q4, one key is to start your campaigns early. Activate your marketing campaigns in September to increase awareness and interest making sure you've set up the essential marketing tags to remarket to this audience in the coming months. The goal in September is to increase awareness and interaction with your brand so that you can attract as many new customers as possible. Once your ad costs rise, your focus will shift from awareness to re-marketing, re-engaging the prospective customers you connected with in September. Remember, people rarely buy a product or service on the first interaction. Most consumers learn of a brand, review their website, social, read reviews and consider their products or services against the competition. Trying to attract new customers to buy from you during the Q4 without developing an on-going relationship is expensive and unlikely to drive the sales goals you're seeking.
Test out your creative and written collateral
- In the months where ad costs are lower, it is a great time to test out all collateral designs and language to discover which images, video and written content best resonate with your audience. Full Blast Creative recommends testing out a minimum of 5 different designs assets to determine the strongest content (your hero content) to put your budget behind once ad costs rise. August and September are also the best months to test audiences. You may try custom audiences, lookalike audiences, interest-based audiences and even value-based audiences, for example running ads only to users with the highest average order value (AOV). When the digital real-estate on buyers’ newsfeeds is saturated, you may only get one shot to get in front of your customer’s eyes. You need to make the most of it by publishing your best content to the right people over the holiday season.
Choose your audience appropriately
- During November and December, it's important to serve your ads to the right audience. This is not a time for testing out new audiences or launching a new product expecting immediate sales. This is a time when companies should serve ads to hyper-targeted groups who have already shown interest in your product. Messages should be targeted towards the interests of each key group. This may require running a higher number of small ad campaigns to assure that your ads truly resonate with their intended audiences. A blanket advertising approach will not work unless you have a HUGE budget.
Reserve your marketing budget for slower periods in Q4
- Although tempting to increase your budget on days like Black Friday and Boxing Day, this is not a good strategy. These are the days which retail giants will spend a large proportion of their budget. The market will be saturated with discount retail offers, campaigns from the worlds biggest retailers, and general media chaos. On these days, it is best to lay low and utilize your budget for other periods when things cool off slightly.
By utilizing these tips and tricks, a business can avoid some of the large ad costs in Q4 while still seeing the performance that they value!
Still have more questions about ad costs in Q4? Contact us!