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The holidays are different this year. Is your advertising plan?

mother and son sitting at a table with a computer together, mother speaking to her son, son playing with a toy car

Holidays 2020 summary

The impact of the pandemic on this holiday’s shopping season is going to be undeniable. While some holiday trends will be continuations of those already playing out within the search marketplace since early spring, this shopping season will present its share of unique challenges and opportunities for retailers. Shoppers are increasingly searching online for products with many physical stores closed or curtailed. Buy-Online-Pickup-In-Store (BOPIS) options are becoming central to business success as consumers have both safety and convenience in mind, and signs indicate the holiday buying cycle could be elongated from previous years, potentially stressing supply chains but also creating a longer period of opportunity. To help advertisers plan for a successful holiday season, the Microsoft Advertising team has launched a new retail hub with valuable insights, content and resources.

Setting the stage

Large swaths of retailers are looking at projected declines in sales for 2020. The combination of economic headwinds and store closures can create a somewhat harsh reality, however, eCommerce sales are already up year over year (YoY) and are expected to remain elevated throughout the holidays across retail categories, according to eMarketer. Additionally, there is a historical holiday trend of consumers spending more YoY as a whole, even when they profess they will spend less, according to Gallup and the National Retail Federation (NRF). This applies even in a year of crisis. The only year of the past two decades in which consumers said they would spend less and did was during the last financial crisis in 2008, but retail holiday sales dipped less than 5% during that period, far less severe than the consumer-reported 29% reduction in spending.
Graph showing expected consumer holiday spend versus actual consumer holiday spend. Actual has always been higher than expected since 2000, with the exception of the financial crisis of 2008.

Search is central

Across categories, retail search volume is up compared to before the spring and the major onset of COVID-19 within the United States. Weekend and nonbusiness-hour searches have surged as more people are spending a larger percentage of their time at home outside the workplace. In the U.S. and across the globe, marketing budgets generally are down by double digits, but search marketing budgets have seen the lowest decreases compared to other media, according to eMarketer. This trend illustrates the importance of search, given its high likelihood to be the last interaction with a retail shopper, and its amplification of other initiatives, like TV or audience, even during high-competition periods.


Holiday planning

While it’s good to be prepared early, as retailers who do so will benefit by attracting “early bird” October shoppers, November is expected to bring the bulk of search volume for gifting queries. Despite all factors being different this year, Black Friday and Cyber Monday are expected to bring the kind of volume to which one is accustomed (double-digit online sales growth per eMarketer). The lead-up to Black Friday is long, stretching back to include the October holiday shoppers. Cyber Monday is a much shorter journey, usually starting around mid-November, but activity quickly spikes as the month progresses.
Chart illustrating search volume for queries with black friday and cyber monday over time. Black Friday searches build up over a longer period of time and Cyber Monday searches peak over a shorter period of time.
And shoppers plan to buy past December 25, looking to spend on themselves and enticed by post-holiday promotions, per NRF. Retailers that keep a presence throughout the entirety of the holiday season will be those that benefit most from reaching customers in the last days of 2020.


Buy online, pickup in store

In previous holiday seasons, BOPIS shoppers tended to be instant converters who mainly focused on apparel, dabbling occasionally in furniture and home décor. In 2019, most retailers implemented a BOPIS solution to cater to these consumers; shoppers responded with a 35% increase in YoY BOPIS purchases for the season. COVID-19 kicked all these trends into hyper speed due to necessary safety measures, and an increase in volume continues even as the country reopens in spots. Compared to the 2019 holiday shopper, more shoppers ended their purchasing journeys with BOPIS post-COVID than before. No longer mostly focused on apparel, BOPIS searches now span a breadth of retail categories with Pet Supplies and Home & Garden taking new prominence.
Diagram illustrating the growth in BOPIS searches, which have increased 17x from December 2019 to May 2020.
Source: Microsoft internal data.

As you can see, the 2020 holiday season has lots of unknowns, but we are here to provide more retail industry insights, consumer-behavior analysis and tips and tricks to help you plan for a successful holiday shopping season. Be sure to bookmark our Microsoft Advertising retail hub to keep up with the latest.