Holiday Sales Starting to Slow

Posted by: Chris Costello, Senior Manager, Digital Research


When we last left our holiday season already in progress, a strong surge in sales on both Black Friday and Cyber Monday had us speculating about how early returns would affect the shopping dynamic  throughout the rest of December:  Were shoppers “front-loading” their purchases?  Would year-over-year increases sustain through the whole of the season?

Yes.  And no.  Below is the revised chart of sales per advertiser by day, time-aligned to Thanksgiving.  While Cyber Monday proper showed 43 percent growth over last year, what we call “Cyber Monday 2” (12/8/2008) only showed 17 percent  growth, and “Cyber Monday 3” (12/15/2008) actually declined relative to last year.  While I expected the growth to drop in the middle of next week, my gut was that it would have started from around 30 percent on Monday to 15 percent by midweek; however, the curve ended up lower.



First, does this mean shoppers are totally done, and there’s little juice left to be squeezed out of the season?  Probably not.  Anecdotally, I think we all know of people who are caught off guard by the fact that Christmas is next week.  There’s still a window of time through which advertisers can reach these customers with one and two-day shipping options;  ad copy should reflect both this notion of “uh-oh, I forgot” and that there’s still time.  On the merchant side, continuing discounts from earlier in the season will certainly help, as will additional options like in-store pickup.

Second, what does this mean for the overall performance of the season?  If the four to six percent % decline year over year that we’ve seen so far this week continues until Christmas, and if we treat our average sales per advertiser as a hypothetical single advertiser, the total aggregate sales for that averaged-out advertiser will still increase 15 percent  over last year, even with the shorter time frame.  Even a 10% drop year-over-year, by day, only brings that down to 13 percent.

Finally, what does this mean for ROI?  The week that ended on 12/14 witnessed a somewhat sharper increase in CPC and overall search spend, relative to the week-over-week increase in sales, so if you are managing an ROI-focused campaign, that’s something to keep an eye on in case sales continue to slow down.  If you’re not inclined to aggressively target those procrastinating shoppers in order to prevent sales from slowing, this might be a good time to dial back on higher-priced keywords.

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