Overall, marketers enjoyed a good holiday season, with sales up 4.7%, according to First Data. However, this figure obscures the significant struggles some retailers are facing as shopping behaviors continue to evolve and crafting a winning marketing push gets more complicated.
Holiday sales growth was significantly stronger for online sales and lower for physical retailers, with department stores in particular taking a big hit. While big changes in shopping behavior are an important reason why Sears and Macy’s announced store closings soon after the new year, it is also true that retailers are having a hard time figuring out how to leverage mobile to meet the needs of younger shoppers looking for omnichannel experiences. For the most part, marketers also failed at engaging on an emotional level during the holidays, something that can drive return on investment and build loyalty long through the cold winter ahead.
“It seemed like the constant hammering and clutter of sales and deals messaging left consumers feeling overwhelmed, instead of focused on the joys of the season,” Marika Roque, VP of Digital Media Activation at Federated Media told Marketing Dive. “While brands traditionally do a great job telling stories during the holiday season, digital marketers’ efforts seemed to shift in 2016, with many resorting to ‘deals and discounts’ to drive sales.”
During the 2016 holiday season, marketers relied heavily on traditional digital channels such as email, which delivered 17.8% of sales on Cyber Monday, according to the Adobe Digital Insights reports. Search ads drove 38.3% of sales, down 4.3%, and direct traffic 25.3%, down 9.6%.
At the same time, foot traffic at stores continued to decline, even though the recent drop was smaller than for the previous holiday. In an attempt to bring in shoppers, many retailers increased average markdowns during Thanksgiving weekend to 16% compared to 11% last year, according to Boomerang Commerce data shared by Boston Retail Partners with Marketing Dive.
“At some point [the discounting] is just too much and with better access to data and people we should really protect and nurture that relationship so that it can be built upon to drive real loyalty and not just holiday sales,” Lara Mehanna, VP Sales Strategy and Development at Viant told Marketing Dive.
"At some point [the discounting] is just too much and with better access to data and people we should really protect and nurture that relationship so that it can be built upon to drive real loyalty and not just holiday sales."
VP Sales Strategy and Development, Viant
One way retailers can build relationships with younger consumers who are heavy mobile users is to build experiences that bridge offline and online shopping via a smartphone. While a growing number of retailers are offering buy online, pick-up in-store options, a recent survey from IBM and the National Retail Federations suggests they need to go a step further.
Generation Z, which has access to $44 billion in buying power, expects technology to be intuitive, relevant and engaging, with 62% saying they won't use apps or websites that are difficult to navigate, per the report. However, 98% still shop in stores, suggesting retailers need to serve needs.
Making a connection
With store traffic expected to continue to decline, another way for retailers to build customer loyalty is to focus on inspirational messages that span across all channels, rather than relying so heavily on markdowns, according to Jeffrey Neville, VP at Boston Retail Partners.
TV and digital video ads are often where inspirational holiday messaging is on display, but this year holiday advertising got off to a slow start, in part because brands didn’t want to compete with the intense focus on the presidential election. In the aftermath of the election, marketers seemed to struggle to find the right tone for making a connection with the population deeply divided over so many issues.
Several brands went for overarching emotional messages in response to the climate of polarization, but with mixed results.
Macy's leveraged consumer-generated content about believing in Santa to generate 7.3 million engagements around sharing positive holiday stories.
Apple’s Frankie’s Holiday ad depicting Frankenstein as an outsider looking for acceptance during the holidays looked to deliver a positive overarching message about inclusion. Despite generating 8.5 million views on YouTube, the ad seemed to come out of left field for the brand, which might have been better by served by focusing on a core group of consumers instead of going so broad, per Federated Media’s Roque.
“Several digital marketers struggled with brand consistency this holiday season, and in their efforts to drive broader brand awareness and ROI, many got lost,” she said.
Teddy bears and dogs
Wal-Mart found digital success during the holidays by focusing on treating video as an important standalone channel and not just another outlet for its TV ads. Through a variety of seasonal content and a holiday theme for its YouTube channel, the retailer was able to drive more than double the number of views for its holiday-related videos compared to the second leading brand for a total that surpassed 75 million.
One emotional appeal that was popular during the holidays was turning the focus away from shopping and gifts to spending time with family and friends. Key to the success of this strategy was a heavy dose of social media and backing up the message like REI did with its OptOutside campaign, reflecting the importance of authenticity in reaching today’s consumers.
“REI’s #optoutside campaign was a clever strategy for a retailer that exists to get its customer outdoors,” Boston Retail Partner’s Neville said. “Why make them be inside to shop? REI closed stores and fulfillment centers on Black Friday, even paying its employees to get outdoors.
“The REI campaign generated 2.7 million PR impressions in 24 hours,” he said. “Mobile specific push notifications and landing pages inspired an estimated 1.4 million people to spend Black Friday outdoors.”
The popularity of cute animals extended its reach into holiday ads, helping marketers make a feel-good connection via videos that were widely viewed and shared online. Two of the more successful efforts hailed from British brands: Heathrow Airport’s Paddington Bears spot about holiday travel and department store John Lewis’ Buster the Boxer ad that cleverly showcased its broad product selection and, with 24.7 million views on YouTube, was one of the most popular ads on the platform in December.
John Lewis’ effort also showcased the need for a clear brand identity in digital campaigns with the potential to go viral.
“[The ad] showed that John Lewis understands the stresses of the holidays, and can provide joy and magic to a holiday experience,” Federated Media’s Roque said. “However, the brand failed to communicate exactly who they are and the holiday lift they can provide, leaving those unfamiliar with the brand with little information to act on.”
Staying on point
The takeaway for marketers is that digital marketers mustn’t get distracted from the need for emotional engagements, something that many fell victim to in 2016 as they struggled to assimilate new technologies and to find the right tone for their messaging following the presidential election.
“It is important that digital marketers develop strategies to make meaningful and aspirational connections with their customers,” Boston Retail Partners’ Neville said. “Curating brand enthusiasts not only helps boost holiday sales, but it is ‘a gift that keeps on giving,’ with more loyal customers all year long. Brand enthusiasts also ‘share’ their brand passion with their social media friends, which magnifies the brand influence on consumers’ decision on where to shop.
“The objective is to make personal factors more important than discounts and promotions,” he said.