US sales during the holiday shopping season are predicted
to increase 4% to nearly $490 billion this year. This is a huge number – and holiday
advertisers want to capture as much of the pie as they can. Retailers make up
the biggest share of ad spending during the holiday period according to Kantar
Media (ad tracking firm owned by WPP). In the 2013 holiday period, retailers accounted
for 15% of total ad spend – almost $5 billion of the total $32.5 billion.
During Black Friday, retailers spent almost $790 million during that week alone
(omg).
Guess which retailers spent the most on ads last year?
Wal-Mart, Macy’s, Target, and Sears – not surprising.
Wal-Mart spent the most: $300 million. See the chart below for other top
spenders.
I don’t know if this is surprising to anyone else, but
last year retailers spent 45% of their November and December ad budgets to
television ads. I personally would have guessed it would be a lower portion. I’m
going to go ahead and guess that this number will drop this year, and much more
significantly over the next few years as retailers move more advertising to
digital. Internet advertising was just 17% of total spend last year, and I bet
that will be much higher this year.
Now that we’re on the topic of the holiday season and
Black Friday, I’d like to highlight an article from WSJ about Kohl’s. Maybe
this is not so related to digital marketing, but I found it interesting. In such
a competitive environment, Kohl’s has spent the last year trying to reach a
deal to undercut competitors’ prices. Kohl’s took the approach of working
backward from the price they wanted to offer, and then to find a product that
fits the price. $5 is that price – and this year Kohl’s will be offering
toasters, coffee makers, blenders, and slow cookers at five bucks a pop. Yes,
you heard it correctly!
Kohl’s was able to reach an agreement with Select Brands
to manufacture these products. You might be wondering “why would Select Brands
agree to such a thing?”. Well, even though the margins will be quite slim, the
volume and one-time shipment makes it worth it. Also, the $5 price tag is after
a $10 mail-in rebate – which many people won’t even bother to redeem so they’ll
actually be sold for $15.
Happy Holidays!
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