Holiday season starts slow with 9% drop in ad spend

Dive Brief:

Retailers’ ad spend dropped 9% for the four weeks ended Nov. 27 compared with the same period a year ago, according to Kantar Media. Ad expenditures totaled $1.2 billion for the period.
Best Buy spent 50% less this year during the first few weeks of the holiday shopping season, likely due to a shift in ad spending away from TV to less-expensive digital tactics, per Kantar. By segment, only home and building and food and drug saw a lift in ad spending.
Walmart spent the most on traditional and display paid advertising, as it has in the past. Between Black Friday and Cyber Monday, the retailer had a 31% share of total spend from eight top retail advertisers. Only three of the 11 retailers reviewed increased their ad spend.

Dive Insight:

Multiple reasons may be contributing to the slow start to ad spending this holiday season.

Advertising typically dips during a presidential election season, and given the contentious nature of the recent election cycle, it is not unreasonable to consider its impact on ad spending. However, Kantar’s research shows the declines persisted even after the election was over, indicating other factors are in play.

Overall, data indicates that holiday advertising is in a period of transition as retailers try different strategies to reach shoppers, who are buying during a wider range of times and places.

With Black Friday becoming less of a cultural force as consumers spread their spending out over the two-month shopping season, in part because they are spending more online, retailers may be opting for more cost-effective digital strategies earlier in the season and then waiting until the end of the season is closer to release mass TV appeals. Kantar found that retailers are using Black Friday messaging less in their ads this year.

Among digital strategies, retailers invested heavily in product listing ads this year, shifting budget from text ads to do so, per Kantar Media company AdGooroo. The shift could be because of how Google has dropped text ads on the right rail of search results pages and added more product listing ad placements. Between Black Friday and Cyber Monday this year, advertisers spent $9.6 million compared with $2.9 million last year. Spend on text ads dropped to $8.9 million this year from compared with $15.4 million a year ago.

Kohl’s, Best Buy and Target had the highest engagement across social media platforms Facebook, Twitter and Instagram, per Kantar Media partner Unmetric. Twitter’s new algorithm that highlights older content for users may have helped Best Buy drive its engagement score even though other retailers tweeted more often. While fewer retailers chose Facebook, those who did had a higher engagement than on Twitter. Instagram had the lowest level of activity but the highest level of engagement.