Holiday shopping Trends for Advertisers in 2022
Updated: Nov 22, 2022
The holiday shopping season is here. In full swing. Already. That means sales, longer store hours and many sleepless nights for marketers and digital advertising agencies everywhere. As we put the finishing touches on our clients' holiday campaigns, we're excited to share Digipave's annual "Holiday Shopping Trends" report where we take an in-depth look at the retail and online advertising space during this unique time of year.
Based on conversations with clients, real data from customers and media reports, we've identified 5 major trends this season which we’re watching closely. They are:
Shift in consumer behavior
Extended holiday shopping season
Decrease in digital advertising budgets
Consumers that are hunting, bargain hunting (amid rising costs and inflation)
Projections of slower growth in sales
Let's now expand on each of the points above and the questions we've been asking ourselves:
The never ending shift in consumer behavior. As consumers continue to change their shopping behavior and spending habits, an increase in spending on travel and entertainment is expected this season. This means there will be less money for consumers to spend on retail. Will major retailers identify this trend on time? Or will they be caught off guard again as they were just a few months back when consumers moved away from home goods like TVs and Kitchen appliances?
Holiday shopping is already underway. According to Bankrate, over half of winter holiday shoppers have been shopping already since before Halloween. Our figures show that Amazon’s October Prime Day (remember that?) officially kicked off the shopping season - both for consumers and for retailers. It's still unclear what this early holiday shopping season will mean for Black Friday and Cyber Monday and whether or not consumers are waiting for those iconic days, as in a traditional year.
The demise of digital advertising. Depending on what you read and who you talk to, online marketing budgets are either shrinking or collapsing. Ad giants like Alphabet, Meta, Microsoft, Snap, Roku and others have all issued strong warnings about slowing ad growth. As Snap wrote in their October investor letter, "We are finding that our advertising partners across many industries are decreasing their marketing budgets." Having lower ad budgets will definitely make for interesting times (and challenging times if you're an advertiser) this season. With that said, we have been asking ourselves at Digipave, if ad budgets are really shrinking that drastically or if advertisers are simply spreading their ad spend among more platforms. For example, Pinterest reported a phenomenal Q3 2022 beating analysts expectations. Also, Amazon is seeing strong growth in its advertising business which generated $9.5 billion this past quarter, a 25% increase compared to the same time in 2021. We'll hopefully have a better answer to this question when we advertise our internal Q4 ad spend figures in a month of two from now.
This will be a very promotional holiday season. Price-consciousness shoppers will be looking for steeper discounts this year as they deal with rising inflations and recession fears. Retailers that have excess stock, as many do thanks to over-ordering inventory and a shift in consumer behavior, will be offering significant promotions in an effort to convince shoppers to buy. Hopefully this "retailers clearing stock and consumers getting a great price" will make for a win-win both for stores and shoppers.
U.S. sales growth is expected to slow this holiday season. According to Mastercard, holiday season sales are expected to increase 7.1% year over year. DC360 is projecting even slower growth of only 6.1%. While Adobe is forecasting growth of only 2.5%. In 2021, the holiday shopping season grew by 8.6%.
Without a doubt the 2022 holiday shopping season will be challenging for retailers (as well as advertisers). The constant change in consumer behavior and lower advertising budgets are certainly headwinds. Nevertheless, this season also has some very unique opportunities. All signs point to a consumer willing to buy (if the price is right) which can work out well for retailers holding onto excess inventory and willing to offer significant discounts.
When taking into account all of the above, we understand why we're seeing a lack of enthusiasm among sellers and shoppers alike for this holiday season. The longer time span, the deeper discounts and the lack or projected growth is definitely a recipe for fatigue
Whether you'll be shopping or selling, we'd like to know how are you planning for the Holiday Season. Let us know in the comment below or on Twitter, Facebook, LinkedIn and Instagram.