Are the holidays coming earlier each year? When should a brand start advertising in the run up to the holidays? By Jane Christian, MediaCom's Head of Business Science
Every year the battle to kick off the holiday sales period with the year's most emotional blockbuster ad commences in early of November. But is this a vanity exercise for the advertisers? The reality is that sales of most Christmas-related products don't start to pick up until the end of November, with the vast majority sold in the last couple weeks before Christmas.
Is it essential to be at the forefront of people's minds, even though we know that consumers are not in the market to buy until much later? Do toy advertisers need to start early to allow the pester power to build in time for Christmas? Is the vanity ad essential, or do people just want to know about the products and offers relevant to them at the time of purchase?
The retail space
Let's start by looking at how sales build in the weeks before Christmas for the average retailer. From Figure 1, we see that sales build gradually and don't really pick up significantly until the last week of November. From there, the vast majority of sales come in the 2-3 weeks before Christmas. In 2013, this trend was exacerbated due to the lateness of Christmas, making the final week before the holiday even more important. There are a number of possible reasons for this trend. Firstly, consumers are ever more savvy about the New Year sales that seem to start before Christmas these days. Another major factor is believed to be the tough economic conditions leading to prudent spending early on in the run-up to the holiday, until consumers surrender and up splurging just before December 25th.
Advertisers are therefore taking a big leap of faith that starting early translates into sales later. But what is the evidence? Our view is that retailers need not follow the crowd and should tailor their Christmas communications to the shape of their own seasonal pattern. Across the brands we work on, we do register some benefits from advertising early. Every marketer is familiar with the concept of "adstocks," the idea that the effect of advertising carries over into the following weeks, diminishing over time. This means that starting to build your adstock before the sales peak is essential. The typical weighting pre-December is, however, far more than is needed for adstocks to peak in line with sales.
So what are the other benefits of going early?
Many retailers kick off their holiday campaigns early with a brand ad at the start of November, switching to more tactical messages the closer they get to Christmas. We see strong evidence that this works, as long as the proportion of the budget for the early brand activity is modest and the majority of the budget is back-weighted towards the December sales peak.
Strategically, marketing managers will want to go early if they know their competitors are likely so, as there will always be a fear of being left behind. This is fine, as long as it suits the shape of their business and ensures they leave plenty of budget to invest in maximizing their individual sales peaks. Every retailer will have a different sales shape. Gifting retailers will tend to pick up earlier than the grocers. The shape of the respective commmunication plans need to reflect this, rather than doing what everyone else is doing. It is hard to predict whether the Christmas sales peak will be as late in 2014 as it was last year. If the lateness of sales is due to consumers being conditioned to grab bargains, then we might see another late shopping surge. If, on the other hand, last year's behavior was driven more by economic conditions, then we may see sales pick up earlier, as consumer confidence builds.
In December 2013, 18.6% of non-food sales were online, up from 16.5% in 2012. Given the big step change in tablet ownership we should see an even bigger jump in 2014, boosted by the "click and collect" model: another reason to keep a big chunk of the budget to support this later period.
Toys and Games
Looking at the category of toys and games, the advertising here starts even earlier. It's not uncommon for brands to ramp up their spends in September, with investment falling to a trickle in November and December. But does the market warrant going so early? The shape of the toys and game market pre-Christmas is different than the rest of the gifting market, for sure. Sales begin to pick up significantly at the end of September, and the main peak for many brands is November: not December. It seems that parents want to buy early and spread the cost of holiday spending, while also ensuring they bag the year's must-have toy.
Sales here pick up strongly in mid-November and continue into mid-December, dying away in the last week before Christmas. An early November communications kick-off here is therefore essential, with a smaller amount of budget being reserved for the start of December.
The overwhelming message is... do not follow the crowd!
Flight your communications in the run-up to Christmas around the shape of your sales. Don't go early just because your competitors do if it means you don't have enough to support your sales peak, which might not be until the end of December.