How retailers are rethinking this holiday marketing approach

Dennis Charlett | AFP | Getty Images

It’s not just raw materials, transportation and labor costs that are rising. Retailers are also facing rising digital advertising costs. The challenges are: Is it worth the extra money?

Last year, especially during the holiday season, social media platforms like Facebook were very effective at unintentionally scrolling and reaching consumers stuck at home.But this year AppleWith privacy changes in progress Controversy that’s all FacebookDue to this practice, more and more consumers are avoiding Facebook apps such as Instagram and WhatsApp. Or look for something new like TikTok.

Due to this shift, brands are concerned that online marketing blitz will not reach the right customers. Some are even worried that visiting certain social media sites could keep consumers away.

“When Covid happened, it had a different impact on everyone, but for many brands it created a really serious tailwind,” said MacK Weldon, founder and founder of the direct consumer men’s clothing brand MackWeldon. CEO Brian Berger said. “For the last 9 months [in 2020], We’re all back in an era of glory that we can really take advantage of … in the right place, at the right time. “

By interacting and trading with customers on their website, brands cannot exaggerate how important it is to actually have this direct one-to-one relationship with their customers.

John Melis

Solo Brand CEO

There was a flight by a major advertiser at the start of Pandemic He said he came out of a channel like Facebook last March. Companies, including hotels and airlines, were trying to save cash at uncertain times or wanted to avoid making the wrong tone in advertising during a health crisis. Companies that continued to sell their products were able to win top advertising real estate online for far less money. However, this dynamics suddenly stopped earlier this year.

“Then 2021 begins, vaccines begin to be deployed, people begin to become more comfortable, and life begins to become more normal again,” Berger said. “And we returned to 2019 overnight. Prices have recovered. Competition has recovered.”

Fallout from Apple’s privacy changes

The last blow came when Apple came in April Changed privacy Affects how your app tracks users. Since then, many consumers have opted out of tracking with popular apps. This means that companies are collecting less information about their users’ daily habits and interests. resulting in, It’s much harder for advertisers to target people on the internet Effectively.

Posh markSecond-hand online marketplace, said Wednesday that it must review its marketing strategy for Apple’s privacy policy. The company said it is focusing on TV advertising and influencers to attract new customers.The stock was closed nearly 29% On Wednesday, the holiday outlook hit a daytime low of $ 16.08 after falling short of analysts’ expectations.

“When Apple announced new changes and operating systems … overnight, the entire digital marketing space, including Facebook, really shook,” said John Mellis, CEO. Solo brand, In an interview. “By interacting with and trading with customers on their website, we cannot exaggerate how important it is to actually have this direct one-to-one relationship with our customers.”

Many retailers are increasingly concerned about how changes can make it difficult to tailor ads to shoppers, according to Mellis.

“It seems that the fields of advertising technology and digital marketing are changing every day,” said Merris, who runs a company that owns outdoor-inspired products such as Solo Stove, Chubbies, and Oru Kayak. increase. “And you’ve heard many consumer brands are very concerned, or you’re already seeing a big challenge in acquiring new customers online because of those changes.”

Set to reduce Facebook usage

Meta, Formerly Facebook has faced extensive scrutiny during that time after whistleblower former product manager Frances Haugen. Released a pile of abominable internal documents.. Among other things, these documents reveal how Facebook handles hate speech and how it affects a user’s mental health. At least one retailer has begun to rethink its presence on social media platforms.

Patagonia, a sports equipment company known for its bold attitude towards social issues, boycotted Facebook after withdrawing all paid ads from the company last June in a Twitter post on October 28. He said he was continuing.

“This decision has impacted our business and the environment. [nonprofit organizations] “What we support-the campaign benefits from the expansion of social media we fund and run,” Patagonia said. “But we learned to adapt. As a result of this ad ban, we are smarter about how to grow our community. “

The company didn’t explain more accurately how it adapted. Facebook and Patagonia representatives did not immediately respond to requests for comment.

The Patagonia store is one of the outdoor enthusiasts’ stores in Telluride, Colorado.

Robert Alexander | Photo Archive | Getty Images

According to Polly Wong, president of full-service marketing strategy firm Belardi Wong, troubles on Facebook have become an even bigger headache for direct-to-consumer brands compared to traditional retailers. That’s because many of them started out thanks to creative Facebook ads that direct customers to their websites rather than relying on stores in the area.

“The majority of DTC [direct-to-consumer] Brands build their business on Facebook. Google “But we now see more than half of our clients outperforming Facebook,” Wong said.

Belardi Wong’s clients include eco-friendly shoe brands AllbirdsAccording to its website, bedding maker Parachute, men’s clothing company Backmason, and dozens of other direct sales businesses.

According to an analysis by market research firm eMarketer, US users are expected to spend less time scrolling Facebook this year and in the coming years. According to eMarketer, time spent on platforms for adults over the age of 18 is expected to decrease by 3.3% in 2021 compared to 2020 levels. It is projected to decline by another 1.8% from 2021 to 2022 and by another 0.7% in 2023.

“Since people have returned to normal life … going to restaurants and gyms and going out, the screen time is shorter. In fact, the shorter screen time is less impressive. It means, “Won said. “And if you have a small number of impressions, but you still have a lot of marketing demand, it pushes up the price of those impressions. It’s more competitive with advertisers for the same impressions.”

According to Wong, CPM, the marketing term used to describe the price of 1,000 ad impressions, is skyrocketing. During the summer, Berardiwon was tracking a 50% increase in CPM on Facebook, she said. The company also predicts that CPM could rise another 50% in addition to this holiday season.

According to Wong, more retail brands are testing direct mail catalogs, podcasts, and large-scale TV campaigns to diversify their marketing mix. The brand is also trying to harness the support of celebrities. And they could be cheaper alternatives in this environment, she said.

Activewear brand Vuori is looking for a store as a marketing channel. After receiving an investment of $ 400 million from, we plan to open about 100 in the United States over the next five years. SoftbankVenture capital fund. Brands such as Allbirds and eyeglass makers Warby Parker Similarly Plans to accelerate store growth..

“When first started [a brand]”It may be cheaper to get customers through social advertising and paid search,” said Joe Kudla, founder and CEO of Vuori. shop. “

Product promotion “ready to ship”

However, some of the transition from digital advertising may be temporary. snap I suggested that this is the case.Social media companies to analysts at a conference call at the end of October, some retailers Bring back marketing at Snapchat You need to cut costs temporarily, or you don’t have enough products to sell.

Jeremi Gorman, Snap’s Chief Business Officer, said: “I think some of these clients choose to delay marketing costs.”

Chocolate maker Hershey And consumer product giants Kimberly-Clark Two examples were spending cuts in the third quarter and supply chain issues. Both companies are facing rising product costs, and in some cases there are not enough products to meet demand.

Other retailers are tweaking their advertising messages to reflect their inventory location. According to Berger, McWeldon added a “ready to ship” message to marketing materials before the holidays, emphasizing to consumers that the product is readily available and in stock.

“We have a global supply chain and are unaffected by the problem,” Berger said. “We have experienced a lot of things related to holiday travel, but we can anticipate a lot and implement fallback plans for different types of marketing campaigns based on delays. I did. “

According to Wong, many companies fall into one of two camps. Both retailers have enough products to sell, but shoppers are advised to buy early as they may sell out before Black Friday. Or, retailers are waiting for merchandise to arrive, so until then the business has postponed the marketing blitz.

“Unfortunately, we actually had a few clients and couldn’t pull the trigger right away,” Wong said. “In fact, the catalog is home for some clients, and half of the products aren’t even available in the catalog.”

Correction: Poshmark shares closed nearly 29% on Wednesday. Earlier versions made a mistake on that day.

How retailers are rethinking this holiday marketing approach

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