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WHITE PAPER The Retailers’ Last Minute Guide to Holiday Advertising on Facebook 4 Savvy Strategies and 8 Quick Tips For Performance Marketing Success The Retailers’ Last Minute Guide to Holiday Advertising on Facebook 4 Savvy Strategies and 8 Quick Tips For Performance Marketing Success TABLE OF CONTENTS Introduction 03 Four Facebook Advertising Strategies for Retailers this Holiday Season 03 Conclusion 08 About Marin Software 09 Copyright © 2014 Marin Software Inc. All rights reserved. 2 The Retailers’ Last Minute Guide to Holiday Advertising on Facebook 4 Savvy Strategies and 8 Quick Tips For Performance Marketing Success INTRODUCTION For most retailers, the holiday season is the most important time of the year, a time that can make or break their annual sales objectives. This year in particular, online advertisers have plenty to be excited about as they finalize their holiday advertising strategies and begin to nail down the final stages of their execution plans. According to eMarketer, holiday spending is expected to increase by 16.6% in 2014 vs. 20131. However, the lure of additional sales revenue this holiday season is also predicted to attract fiercer levels of competition. eMarketer also reports that retailer advertising spend will increase by a proportionately higher rate of 20.2%. With so much riding on the brief but critical two-month holiday shopping season, it becomes more important than ever for retail advertisers to ensure they are investing their time, resources, and budgets in the channels that can provide the best possible ROI. It is no secret that Facebook has officially become one of these critically important channels for retail advertisers. Across Marin’s spectrum of Facebook advertisers, retailers increased spend in the channel by 67% over the 2013 holiday season vs. 2012, a testament to the efficacy of Facebook to reach highly targeted, highly engaged audiences across all stages of the purchase cycle. Retailers are increasingly turning to Facebook to engage with their customers, share promotions, introduce new products, drive traffic to their websites and encourage shoppers to visit their physical store locations. With annual shopping activity peaking during the months of November and December, retailers will again embrace Facebook as a primary channel for building awareness of holiday promotions and driving conversion. FOUR FACEBOOK ADVERTISING STRATEGIES FOR RETAILERS THIS HOLIDAY SEASON To prepare for the inevitable influx of shopping activity, below are four strategies for getting the most out of your Facebook advertising dollars during the holiday season: 1. Build a Budgeting Strategy Based on Facebook User Behavior – Every retailer understands the importance of Black Friday (the day after Thanksgiving) and Cyber Monday (the Monday after Thanksgiving) as key dates for online shopping. In fact, according to ComScore, in 2013, more online revenue was driven on Black Friday and Cyber Monday than any other day in the holiday shopping season2. Compared to Black Friday, 42% more revenue was driven from online purchases in 2013 than Cyber Monday. Most retailers plan their advertising budgets around these dates and increase their advertising spend just before Thanksgiving and continue to increase their spend incrementally, past Christmas until the end of December. Because Facebook as an advertising channel and is still in its relative infancy, many retail advertisers assume because overall holiday sales are highest on these two days that sales on Facebook will also be highest on these two days. Based on this information many Facebook retailers increase their daily campaign budgets and spend in accordance to expected consumer behavior. The below chart depicts Facebook advertiser spend over the course of the 2012 and 2013 holiday periods. As expected, Facebook advertising spend begins to increase in mid-November, registers a temporary lift around Thanksgiving, and then significantly increases around Christmas only to level off 1 http://www.emarketer.com/Article/Beacons-Land-on-Retailers-Holiday-Wish-Lists/1011184 2 https://www.comscore.com/Insights/Press-Releases/2013/12/Green-Monday-Jumps-10-Percent-to-14-Billion-in-Desktop-Sales-to-Rank-as3rd-Heaviest-Day-of-the-Holiday-SeasontoDate 3 The Retailers’ Last Minute Guide to Holiday Advertising on Facebook 4 Savvy Strategies and 8 Quick Tips For Performance Marketing Success in mid-January. Facebook advertisers have exhibited similar holiday spending tendencies over the past two years, with the key difference being that advertisers began increasing their spend approximately one week earlier in December. Facebook Holiday Advertising Spend by Day: 2012 vs. 2013 Normalized to November 1 1800 1600 1400 1200 2012 2013 1000 800 600 400 200 0 8-Nov 1-Nov 15-Nov 22-Nov 29-Nov 6-Dec 13-Dec 20-Dec 27-Dec 3-Jan 10-Jan 17-Jan 24-Jan 31-Jan Source: Marin’s $6 billion global social advertiser index, segmented for retailers However, when examining Facebook user behavior during the holiday period it becomes apparent that retail advertisers may be missing the mark with their holiday advertising budgets from a timing perspective. While overall eCommerce spending trends suggest that retailers should be investing heavily around the Thanksgiving and Christmas holidays, Facebook ad engagement trends suggest the inverse: that Facebook retail advertisers may want to invest more before and after the holidays. In 2013, CTRs for retail advertisers on Facebook were relatively high two weeks before Thanksgiving and then tapered off during the holiday week. While CTR’s increased for a short period right before Christmas, they did not fully revive until after New Year’s Day. Facebook Advertising CTR by Day: November 2013 – January 2014 Normalized to November 1 2.50% 2.00% 1.50% 1.00% 0.50% 28-Jan 26-Jan 30-Jan 24-Jan 20-Jan 22-Jan 16-Jan 18-Jan 12-Jan 14-Jan 10-Jan 4-Jan 8-Jan 6-Jan 2-Jan 31-Dec 27-Dec 29-Dec 25-Dec 21-Dec 19-Dec 23-Dec 15-Dec 17-Dec 13-Dec 11-Dec 5-Dec 9-Dec 3-Dec 7-Dec 1-Dec 29-Nov 25-Nov 27-Nov 21-Nov 23-Nov 15-Nov 19-Nov 17-Nov 13-Nov 11-Nov 7-Nov 9-Nov 5-Nov 3-Nov 1-Nov 0.00% Source: Marin’s $6 billion global social advertiser index, segmented for retailers Copyright © 2014 Marin Software Inc. All rights reserved. 4 The Retailers’ Last Minute Guide to Holiday Advertising on Facebook 4 Savvy Strategies and 8 Quick Tips For Performance Marketing Success Similarly, retail advertisers experienced the highest volume of Facebook clicks not during the holiday period, but just after. While advertisers did experience a rapid increase in Facebook clicks for the three days leading up to Christmas, only after New Year’s Day did Facebook advertising clicks begin to gradually increase. In general, the highest volumes of post-holiday advertising clicks occurred in spurts over between Thursdays and Mondays in January. These trends suggest a clear gap between the assumptions retail advertisers make about Facebook usage over the holiday season and how Facebook users actually use the platform during this critical time period. Rather than investing heavily on days when competition is high and Facebook usage is low, retail advertisers should instead consider investing more before and after the Thanksgiving and Christmas holidays. Trends suggest that Facebook usage takes a sharp dip on holidays, when users are likely spending time with their friends and family. However, retail advertisers still have the opportunity to reach users in early November before they shift into holiday mode and build awareness for their products and services, which they could potentially buy on other channels. Also, retailers should consider targeting Facebook users throughout January when people generally have holiday gift cards to spend. Facebook Advertising Clicks by Day: November 2013 – January 2014 900 Normalized to November 1 800 700 600 500 400 300 200 100 30-Jan 28-Jan 22-Jan 26-Jan 24-Jan 18-Jan 16-Jan 20-Jan 10-Jan 14-Jan 12-Jan 4-Jan 8-Jan 6-Jan 2-Jan 27-Dec 31-Dec 25-Dec 29-Dec 19-Dec 23-Dec 21-Dec 17-Dec 11-Dec 15-Dec 13-Dec 5-Dec 9-Dec 7-Dec 1-Dec 3-Dec 29-Nov 27-Nov 21-Nov 25-Nov 23-Nov 17-Nov 19-Nov 13-Nov 15-Nov 7-Nov 9-Nov 11-Nov 3-Nov 5-Nov 1-Nov 0 Source: Marin global social advertiser index, segmented for retailers 2. Start Early and Sequence Messaging – With the back-to-school season winding down, it’s about that time of year for shoppers to look forward to the winter holidays. And while it may seem premature to preempt Halloween with the holiday discussion, according to Google a whopping 30% of consumers will begin their shopping prior to Halloween3. Retail advertisers should embrace this consumer trend and begin to plan and implement their holiday focused campaigns earlier this year. In addition to getting an early start on the competition, retailers will have the opportunity to execute a phased approach to advertising and serve high value prospective customers with tailored creatives based on their stage in the buying cycle. 3 http://www.thinkwithgoogle.com/articles/five-holiday-shopping-trends-marketers-should-watch.html 5 The Retailers’ Last Minute Guide to Holiday Advertising on Facebook 4 Savvy Strategies and 8 Quick Tips For Performance Marketing Success This approach, commonly referred to as sequential messaging, involves selecting specific audience segments (i.e. “existing customers”) and targeting them over a finite amount of time (i.e. October 15 – January 15) with “sequenced” messages that change frequently with the goal of pushing prospective customers further along the buying cycle. For example, a retailer advertiser looking to begin their sequenced messaging campaign in mid-October could first target customer lookalikes with an attention grabbing video page post that depicts customers using the product. In early November, the retailer could target the same audience with a consideration stage message that features the benefits of the product vs. the competition. Then, in late November when customer purchase intent is high, the retailer could switch to bottom of the funnel messaging with a compelling call to action and price incentives designed to drive conversion. 3. Target Based on Buying Intent – With so many advertisers vying for the attention of Facebook users during the holidays, it will be critical for retailers to ensure their ads catch the attention and interest of users who are most likely to purchase their products. One way to accomplish this is to target users who have the demographic characteristics of those who are likely to buy or from those who have exhibited behaviors that are characteristic of those who typically buy. Retailers have numerous ways to target holiday shoppers on Facebook based on their buying intentions: a. Search intent based targeting – Keyword search history reveals a wealth of information about the products that shoppers are likely to buy and can be a very effective basis for reaching potential buyers on Facebook. For example, a retailer like Macys.com can mine their product portfolio to determine the products that drove the highest ROI during the last holiday season. They then can create Facebook Custom Audiences that target users who have previously searched for these high ROI products in Google or Bing. b. Behavioral targeting – As holiday consumers begin to shop for products in the coming month, it is likely that your website will receive a healthy uptick in traffic. That’s the good news. The bad news is that an average of 98% of website traffic doesn’t convert on the first visit. Retailers should use a retargeting platform that buys on the Facebook Exchange (FBX) to re-engage with website visitors on Facebook based on their stage in the buying cycle. Retargeting platforms like Marin have the ability to use product feed data to dynamically serve creative to Facebook users based on the product that was last viewed. As a first step, retailers should use the coming month building FBX retargeting lists like “all visitors,” “product page viewers” and “shopping cart abandoners.” c. Demographic based targeting – From an advertising standpoint Facebook is considered to be one of the most effective channels for reaching users based on demographic characteristics like age, gender, education, income and interests. However, advertisers many times base their demographic targeting on Facebook on assumptions about their target rather than real buyer data. As a first step, retail advertisers should mine their customer databases and determine the demographic characteristics of last year’s holiday buyers. Use this information as a starting point for building out your campaigns. In addition, retailers can use DMP’s like BlueKai and Aggregate Knowledge to determine high LTV audiences based on data that goes outside of Facebook’s “walled garden” of Facebook-only data. d. CRM based targeting – Most retailers will agree that in general, your most loyal customers are your most profitable customers. In fact, according to the US Census Copyright © 2014 Marin Software Inc. All rights reserved. 6 The Retailers’ Last Minute Guide to Holiday Advertising on Facebook 4 Savvy Strategies and 8 Quick Tips For Performance Marketing Success Bureau, on average repeat shoppers have a 23% higher gross margin than first time buyers and spend an average of 9% more4. With this data in mind, it seems logical that retail advertisers should first and foremost focus on reaching last year’s holiday season customers. Fortunately, Facebook makes it quite easy for retail advertisers to reach previous customers on their platform. Simply create a Custom Audience based on you 2013 holiday season customer list, which you can upload from your CRM in minutes. If possible, segment your Custom Audiences based on the average value of last year’s customers. Target last year’s top purchasers with a tailored message that encourages them to purchase again this season. After the holidays, you can also build lookalikes off of these user groups to expand reach Use Custom Audiences to target gift cardholders and inspire them to shop as well. 4. Embrace Mobile – According to a 2013 research study from Deloitte, 68% of shoppers were forecasted to use smartphones last holiday season, and 63% of tablet owners planned to do the same5. As the data suggests, mobile and tablet devices are increasingly being used by consumers to research, compare and purchase products during the holiday shopping season – From searching for products during their work commute, to comparing products while at physical store locations, to purchasing products while “on the go.” More than ever, retailers must ensure that their holiday campaigns are reaching customers on mobile and tablet devices throughout the purchase cycle. With 50% of its 1.3 billion user base accessing the platform via mobile devices every day6, Facebook presents arguably the best opportunity for retailers to engage with mobile shoppers during the holiday season. Facebook offers retailers two primary means for reaching advertisers on mobile devices over the holiday season: Mobile App ads and mobile-formatted Page Post ads. Both creative formats look fairly similar to Facebook users. Both creative types blend into Facebook’s native mobile newsfeed experience, feature large images, and customized call to action buttons. The primary difference between the two is the landing page experiences the ads present to holiday shoppers. However, with Mobile app ads, retailers can drive customers deep into the mobile app experience while Page Post ads drive the user to the mobile website. Retailers should analyze their customer’s buying tendencies (i.e. do most customers purchase on mobile devices or mobile web pages?) and select the creative that is most appropriate. Regardless of the creative type selected, there are some common mobile advertising best practices that retailers should keep in mind over the holidays: e. CTA Buttons: Customize call to action buttons based on what user activity you’re encouraging (downloads, purchases, gameplays, etc.) f. Deep Linking: Direct users to a specific section or product page of your app that is most tailored to the creative and audience buying intentions g. Image Selection: Avoid stock photos if you can. Mobile users expect mobile Facebook ads to appear “native” to their social experience and should appear as if they belong alongside other posts from family and friends. h. Video: Leverage video assets during the awareness phase of your campaign to catch the attention of users. When using video-based creatives, make sure to target WIFI-only users. 4 http://www.practicalecommerce.com/articles/61531-Ecommerce-Profitability-The-Critical-Second-Sale 5 http://www.forbes.com/sites/stevecooper/2013/11/14/studies-predict-a-mobile-2013-shopping-season/ 6 http://files.shareholder.com/downloads/AMDA-NJ5DZ/3461874457x0x770377/abc6b6d4-df03-44e1-bb4d7877f01c41e0/FB%20Q2%2714%20Earnings%20Slides%2020140722%2012p.pdf 7 The Retailers’ Last Minute Guide to Holiday Advertising on Facebook 4 Savvy Strategies and 8 Quick Tips For Performance Marketing Success CONCLUSION Preliminary forecasts for the 2014 holiday shopping season suggest while consumer spending is expected to increase this holiday season, advertising spend is expected to increase by a proportionately higher rate. In other words, this year retail advertisers will need to focus more closely than ever on making every advertising dollar count through strategic, well-calculated audience targeting. As an advertising channel, Facebook presents a tremendous opportunity for retailers to reach an expansive pool of 1.4 billion+ highly engaged potential buyers. To be successful this holiday season, retailcentric Facebook advertisers should consider launching their holiday-themed campaigns earlier than last year, pay attention to key dates between November and January, embrace mobile advertising and use an advertising platform like Marin Software that can reach potential customers based on their purchase intentions using data collected across multiple channels, platforms and devices. Copyright © 2014 Marin Software Inc. All rights reserved. 8 The Retailers’ Last Minute Guide to Holiday Advertising on Facebook 4 Savvy Strategies and 8 Quick Tips For Performance Marketing Success ABOUT MARIN SOFTWARE Marin Software Incorporated (NYSE:MRIN) provides a leading cross-channel advertising cloud for performance marketers to measure, manage and optimize more than $6 billion in annualized ad spend across the web and mobile devices. Offering an integrated SaaS platform for search, display and social advertising, Marin helps digital marketers improve financial performance, save time, and make better decisions. Advertisers use Marin to create, target, and convert precise audiences based on recent buying signals from users’ search, social and display interactions. Headquartered in San Francisco, with offices worldwide, Marin's technology powers marketing campaigns in more than 160 countries. For more information about Marin's products, please visit: http://www.marinsoftware.com/solutions/overview. 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