How to Get Promotion-Based Advertising Right This Holiday Season
Competing solely on price is a losing strategy. A truly valuable holiday season reinforces loyalty with current customers and creates new relationships with first-time customers.
Holiday shopping season starts earlier every year, as early as September this year. And one thing people are always looking for is a good deal. One of the tried and true advertising tactics is to offer promotions and discounts to lure shoppers into making a holiday purchase.
This year is no different. In fact, there are several factors that make promotional sales an even more important part of an advertiser’s strategy. First, consumers are feeling the pinch of an uncertain economy expecting their overall spending to decline 5%, the most in five years. Second, online shopping continues to increase in importance during the holiday season, forecast to reach a record $250 billion in 2025. When purchases are just a click away, whichever advertisers offer the best deal, get the sales. And finally, more consumers are digital native shoppers. Millennial and GenZ shoppers know how to find deals, using comparison shopping apps, Amazon and even Reddit to find the lowest price for what they want.
In this difficult environment, simply advertising a lower price isn’t enough. Advertisers need to be savvy about when, where and how they reach audiences with the right price and the right message. Because ultimately, advertisers don’t just win with the lowest prices, they win when they delight loyal customers and attract new customers who will buy again and again.
Promotions Can’t Be a Race to the Bottom
Consumers have more options than ever this holiday season. Not only can they find comparable products at hundreds of online retailers, they now have plenty of highly trusted resale options, which tend to be much lower cost. In this market, competing solely on price is a losing strategy.
There are too many factors that make a standard “40% off” less effective this year. First, as soon as one retailer offers a lower price on an item, other retailers can follow to match the price for search engine results - creating a “race to the bottom.” Most retailers can’t match the free shipping and other incentives that major retailers like Amazon and Walmart can deliver. Not to mention the fact that consumers are now using new ways to find gifts from TikTok to ChatGPT. And every consumer has specific preferences and expectations. In some cases, a promotion can actually hurt the relationship with the buyer!
If the lowest price isn’t the name of the game, then advertisers need to use promotions and discounts more strategically. Consumers still like a good deal, and they still care about a sale, but advertisers need to appeal to specific needs of different audiences with a combination of discounts, value, and personalization.
Use Data and Technology to Make Promotions Count
The good news for advertisers is that digital advertising provides a foundation of data-driven messaging that can appeal to different shoppers with the right discount at the right time. Using audience data and message testing to understand shopping behavior, loyalty and preferences can help advertisers craft messages that are specific to different segments. For example, testing a “waterfall” of discounts to net-new audiences as well as offers like free shipping can help advertisers see where the sweet spot is and get some people to buy with a relatively small discount. The holidays can be a time to attract first time buyers, and is an important time to make a great impression and not discount too much with a focus that is solely short-term. Knowing their preferences ahead of time and delivering relevant messaging will help ensure that they come back after the sale is over for higher lifetime value.
To succeed at this more strategic approach requires unified data and technology that can help advertisers get a complete picture of their audience and optimize across channels:
Smart media buying techniques like curation can help advertisers reach nuanced audiences at the right place and time.
AI-enabled targeting and analysis can help advertisers gain deeper insights and move more quickly - testing a much wider range of messages that are tailored to different audiences.
Multichannel infrastructure helps advertisers optimize across all touchpoints and reach audiences where they are.
Dynamic creative can help advertisers deliver targeted, personalized experiences.
Working with partners that can support a cohesive strategy makes it much easier for advertisers to be agile, gain insights fast, and shift messaging, targeting and discounting quickly and effectively.
Beyond the Sale: Building Lasting Customer Connections
A successful holiday season isn’t just about the number of sales or total topline revenue. If advertisers are only able to achieve it with steep discounts that hurt margins and don’t leave shoppers with any desire to come back, then holiday discounting does more harm than good. A truly valuable holiday season reinforces loyalty with current customers and creates new relationships with first time customers who may be lured by a discount, but are enticed to come back because of a relevant, personalized experience.
With AI and data-driven advertising technology, brands have the opportunity to go beyond promotions this holiday season and develop lasting relationships that can help them reach both short and long term goals.
