Dive Brief:

• Total U.S. digital ad spend by retailers is expected to exceed $23 billion in 2018, with retailers planning to devote 25% of their annual budgets—amounting to nearly $6 billion—to media during the four-day shopping period from Black Friday to Cyber Monday, according to a survey by performance advertising software Nanigans. Most retailers, or 51%, plan to keep their 2018 holiday season ad budgets about the same as last year, while 48% plan to increase their spend.
• Retailers said they were directing 35% of their spend to Google search and display, 18% to Facebook and 15% to Amazon. They also plan to focus 14% of their budgets on video ads during the holiday season.
• Elsewhere in the report, 30% of retailers want to see higher ROI on their holiday ad spend, and 87% would reallocate the budget to other areas if they could, with 49% saying they would reinvest in martech and adtech technology, if possible. Retailers say the holidays help them acquire more customers with significant value, but 25% report a higher cost of customer acquisition during the holiday season.

Dive Insight:

The holiday shopping season remains key for retailers, and the Nanigans survey reveals that some key insights around how marketers plan allocate their budgets this year. With most marketers are planning to spend at least as much as they did last year, devoting a quarter of their annual ad budgets to target shoppers in the weekend after Thanksgiving, Black Friday is still seen as valuable for driving online and in-store sales. Sixty-three percent are planning to prioritize ad budgets on Black Friday, with 20% planning to spend more on digital ads on Cyber Monday.  

Marketers are also realizing that the month or so leading up to Thanksgiving is crucial for driving holiday traffic. Sixty-four percent were planning to kick off campaigns before Halloween, the Nanigans research found. Ad campaigns that launch in October have a 7% increase in ad impressions, a 12% drop in cost-per-click and 20% in cost per thousand impressions, compared to other months in the holiday season, according to recent AdRoll research. 

By starting early, retailers may be missing the opportunity to reach last-minute shoppers and boost brand exposure. Just 5% were planning to target late-season shoppers, compared to 47% prioritizing early-season campaigns and 48% on prime-season. 

With Amazon nearly catching up with Facebook in planned shopping holiday ad spend, the research also underscores Amazon’s growing appeal as a digital advertising platform. More than half of all online shopping sessions start on Amazon, and the platform offers many benefits to marketers, including extensive consumer data to help with targeting and the ability to drive purchases. Amazon is expected to generate $4.61 billion in U.S. ad revenue in 2018, higher than previous forecasts of $2.89 billion and putting it in the No. 3 spot among digital platforms, behind Google and Facebook, according to eMarketer. Some marketers are shifting 50% to 60% of their search budgets, usually allocated to Google, to Amazon, CNBC reports.

As Amazon makes gains, the so-called digital advertising duopoly of Google and Facebook has recently unveiled new tools to help marketers with their holiday campaigns. Google introduced video in Showcase Shopping ads and shoppable images on publishers' sites. Facebook released holiday-themed overlays, video templates and personalized storefronts.