[Report] Your Digital Retail Holiday Marketing Strategy: Forecasting + Planning

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Have you had your first pumpkin spice latte yet?  

Yesterday marked the first day of Fall, which in retail means it’s practically the holiday season already. Hopefully, you’ve already started your holiday planning, made your way through our cross-team checklist from the first post in our holiday series, and started ramping up your Performance Max (PMax) campaigns ahead of the peak holiday shopping season.

In this part of our series, we’ll discuss what holiday forecasts and process adjustments are necessary to be proactive instead of reactive this year in the face of some significant shifts in consumer sentiment, inflation, and inventory concerns and how to adjust what you may have done in years past.

Retail Digital Ad Forecasting for 2022

Expected traffic, spend, revenue, and return on ad spend (ROAS) are the most critical KPIs to predict ahead of time to plan your budgets and bid strategies appropriately, but what should you factor in this year on top of the historical data you typically use for this analysis?

We expect three factors to play a significant role in shifting some of the trends and patterns we’ve seen in years past:

1. Shoppers Are Starting Earlier – due to concerns around inventory and not securing that last-minute gift last year, inflation continuously increasing the price of goods, and retailers pulling promo periods forward, holiday shoppers are beginning their gifting and (“Treat Yourself”) shopping earlier than ever. In fact, according to Google, 31% of US Shoppers already started their shopping in June¹.
2. Tentpole Periods Will Be Flatter – Continuing a trend that started in 2020, we expect less emphasis on the “Cyber 5,” Thanksgiving through Cyber Monday, and a more evenly spread revenue trendline. Insider Intelligence is forecasting similar behavior, with their expectations showing Cyber 5 making up just 16% of holiday season sales, the lowest level since at least 2016².
3. Deeper Discounts – The combination of retailer struggles in inventory management alongside decreased consumer spending expectations because of inflation means that we’ll likely see some pretty sizable discounts from retailers this holiday season. If you know your brand will be in this boat, ensure you’re accounting for that when forecasting AOV (Average Order Value) and CVR (Conversion Rate).

While these are the top 3 things Adlucent expects to see impact seasonal trends this year, there are a host of other factors to consider. Download our holiday report today to read a more in-depth look at our Outlook for the 2022 Holiday Season.

Three Key Holiday Marketing Considerations

Second, to spend and revenue forecasting, understanding what products are most likely to move during the holiday season is critical for retailers to plan appropriately. Predicting and planning for buying behavior changes is key to success this time of year. A few key considerations:

1. Holiday Only Categories – Do you have products and categories that are only relevant during the holidays? There are obvious ones like holiday decor, but what about things like little black dresses being bought for more holiday parties this year than the past two? Do gift cards sell at rates not seen throughout the rest of the year?
2. Audience and Demographic Shifts – Are the people who buy your goods the other nine months of the year the same as those who purchase during the holidays? Are spouses and parents replacing your typical target audience as they buy gifts for loved ones, and do you need to update your targeting to make sure to capture these gifters?
3. Does Your Account Setup Support Your Goals – Are you optimizing to LTV that might not apply to holiday buyers? Are you capturing new site visitors as audiences and then remarketing to holiday browsers with the right creative messaging unique for that shopper set? Do you have a retention strategy for those holiday gifters once the season is over?

Prepare Your Holiday Strategy for Shifting Consumer Behavior

Once you’ve run the numbers and have a good plan in place for scale and timing for your ad budgets, it’s time to think about plan b when things will inevitably not go as planned. As Mike Tyson famously said, “Everyone has a plan until they get punched in the mouth,” and as the last few years have taught us, you’re probably going to take a few jabs as the unexpected happens.

Understanding the reaction time your bid strategies have between when you make a change and when you realistically expect to see that impact happen in your account is critical. Use the next few weeks to start logging and analyzing your bid changes to gauge this lag time so that you’re not doubling up on bid changes when you don’t see the expected impact immediately, but also not waiting too long to apply your course corrections. On top of that, understanding what changes are even possible intra-day with target return on ad spend (tROAS) bid strategies is also critical. Don’t change targets more than 30%, or your strategy might return to learning.

When do you plan on using seasonality adjustments for your bid strategies? By projecting the daily conversion rate throughout the holiday season, you should have a sense of days where you expect CVR to be significantly higher than the rolling average your bid strategy is based on and when you will need to make adjustments. But, as with any automation, knowing exactly where that threshold is and what the algorithm is already accounting for is tricky, so make sure you’re ready to remove or tweak those adjustments if you see performance deviating on those days.

Lastly, when you’ve laid the foundation to predict what products are most likely to sell, there is still more work to do. Communicating and coordinating with your merchandising team is vital to ensure you can pivot when an unexpected product takes off or needs a little extra love to move units. Think through how your PMax and Shopping campaign structures can best support that type of SKU-specific focus and agility and ensure you’ve baked that into your setup ahead of time. Work out the reporting and feedback loops with the merch team so that you’re on the same page about what should be selling, what is selling, and what needs more attention.

Conclusion

There are so many factors to consider and questions to ask and answer when planning for the holidays. Half the battle is making sure you’ve set aside the time to think critically about what to expect and to make sure you have a solid plan in place, to begin with, and know your contingency plans to adjust as necessary. Make sure you dedicate this time to your team and partners and don’t lose the forest for the trees as you prepare. If you don’t feel like your team is fully equipped to handle these considerations, it might be time to consider reaching out for some help!

Citations

¹Google Think Retail
²Insider Intelligence Holiday 2022 Preview

Brad Costella

Brad is a Senior Director of Strategy at Adlucent. He is a strategic, data-driven, solutions-focused marketing leader with 10+ years of experience in omni-channel digital marketing and customer acquisition. He has a passion for turning insights into actionable strategies that improve real world outcomes for advertisers and customers. He believes that success comes from finding and striking the sweet spot where customer's needs intersect with a brand's value and goals.