The holiday season is almost here, and consumer spending is expected to be as big as ever. The National Retail Federation (NRF) forecasted holiday retail sales in 2019 to increase between 3.8% and 4.2% from 2018, and a report from PwC cited that 86% of consumers are primed to spend as much for this holiday as they did last year, at an average of $1,284.
Because of this, retail brands and even ecommerce powerhouses are putting their focus on how to reach the right and widest audiences with their holiday campaigns by spending massive amounts of money on advertising. One of the most important parts of that ad spend is television.
Brick-and-mortar versus ecommerce
During the 2018 holiday season in the U.S., Walmart decreased its TV advertising expenditures by 22%, Target by 15% and Kohl’s by 10%, while Amazon increased their ad spending on TV commercials by 198%. These increases and decreases are in line with the NRF’s expectation that online and ecommerce sales will increase between 11% and 14% in 2019.
But why are we seeing a decrease in TV ad spend from traditional brick-and-mortar stores while seeing a huge increase from ecommerce giants like Amazon? Amazon astutely recognizes that it can apply its own deep data sets to premium TV inventory, including its own Prime service, to reach a desired qualified audience and then deliver performance metrics on top of it.
With that said, there is an advantage to physicality. Despite more choices today than ever before, local TV is still how most Americans get their news. It reaches a large amount of loyal people and is a trusted source of information for the public. This connection to the community drives local consumer engagement and loyalty, which are significant benefits for brick-and-mortar stores.
A blended approach can work, too. Purely online brands such as Wayfair, for example, have even begun to create a physical presence for themselves after having recently opened their first physical store. But at the end of the day, whether your brand is online, in-store or both, local broadcast television is a necessary component of the ad budget that must be considered when planning for the holidays.
Leveraging data in a retail world
Retail advertising has two main goals: drive customers to stores and get customers to make purchases. Today, vendors are helping retailers achieve these goals through data. Retailers such as Target, Amazon, Walmart and more are leveraging first-party, location and in-store data to inform vendors about who is buying what products. From there, brands can use this data to inform their ad campaigns across multiple platforms.
By using data management platforms (DMPs), retailers can excel in both their digital marketing and linear TV campaigns. Once linear TV is linked to a DMP, retailers can more easily target their consumers and adjust their campaigns. Recently, Videa became the first automated platform to enable the buying of local TV spots based on impression data. This targeting ability becomes even more important during the holiday season and especially for local brands, as retailers must compete against one another to bring customers in the doors or onto their websites.
While addressable and other technology allows advertisers to target customers whose buying behaviors are a good match for retailers, it’s still reaching a smaller population, and often, people who are further along in the buying funnel. Ahead of the holidays, retailers need to reach the widest collection of people, and TV is still the best way to do just that.
Holiday season ad spend has consistently increased over the past 10 years and will likely only continue to do so in the future. Retailers must prepare their ad strategy to take full advantage of the holiday season and the benefits local TV brings.