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How will this year’s pandemic holiday look for the technology industry?

It is no secret that COVID-19 has altered this year beyond what anyone could have predicted. But what does that mean for the holidays? Specifically, for the latest and greatest tech devices? The Microsoft Advertising team has been analyzing trends in the technology and telecommunications industries to answer questions like these. Keep reading for valuable insights on how to structure your holiday campaigns.

A shift in consumer behavior

More than half of U.S. consumers expect to begin holiday shopping earlier than normal this year, likely due to expectations for slower deliveries. In addition, about three quarters say they intend to purchase more than half of their gifts online. Behavioral shifts go further than this shift – McKinsey research shows that three quarters of Americans have bought from retailers beyond their preferred brand or retailer due to COVID-19.

Across categories, technology search volume is up post-COVID, as weekend and non-business-hour searches have surged with more people spending their time at home. This highlights the importance of search to capture consumers where they are, particularly when it comes to new devices that will dominate the holiday tech market. Advertisers should be prepared to start their campaigns sooner and conquest on competing products to capture new customers.

Searches for tech hardware have been trending above the expected normal as well, and our projections show that this behavior will continue into the end of the year. Due to earlier shopping and shifts in device launch schedules, we anticipate holiday spikes in searches to occur earlier than normal and/or to be prolonged. Advertisers should plan to meet this demand from “early bird” October shoppers, while still readying themselves for the bulk of gifting searches to occur in November.

Search volume over time for 2020 compared to 2019 for computer hardware
Chart depicting computer hardware searches have been consistently up year over year in 2020

We have also seen user shopping behavior change throughout the course of the pandemic. Conversion funnels for technology hardware are three times shorter than they were before the pandemic. This means advertisers may not have as much time to convert a consumer and should consider starting investment efforts sooner to take advantage of this pivotal year for new phones and 5G adoption.
 
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Smartphones, tablets, wearables – oh, my!

This year is expected to be a big year for smartphones; so far, this trend has proven true. In July, there was a 43% increase in impressions for Smartphone from last July, and a 27% increase in clicks. Combined with a 23% decline in costs per click (CPCs), advertisers have ample opportunity to get bidding! With several much-anticipated phone releases this fall (including widespread 5G-enabled devices), search interest will only increase and is likely to be accompanied by heightened interest in 5G technology and services. In addition, this year is a “super-cycle upgrade year” for Apple – with over 33% of iPhone users due for a phone upgrade.

Search volume over time for 2020 compared to “normal” for smartphones
Chart depicting smartphone searches have been trending well above expected normal since the COVID-19 lockdowns in March

For wearables, manufacturers are seeing heightened success post-launch this year. As an example, Apple Watch search traffic was up 30% week over week after their launch announcement was made.

Including shopping ads in your campaigns for tech devices like these will be more important this year than ever, as shopping ads are up year over year (YOY) with more people shopping from home versus in-store (Impressions for smartphone shopping ads are up 56% YOY; clicks up 44%.).

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So, what now? Our suggestions for advertisers:

  • Prepare for an online shopping-heavy holiday. Ensure proper coverage for Shopping/Product Ad Campaigns. Due to shifts in brand loyalty, consider incorporating conquest terms for those who will cross-shop between brands.
  • Nonbrand phone searches are expected to nearly double YOY due to positive momentum so far in 2020. Make sure to allow budget for nonbrand queries in your campaign.
  • Take advantage of hardware searchers’ readiness to convert by bidding on hardware terms.
  • For mobile phone and carrier plan advertisers, focus messaging on cost, plans, and bandwidth as a response to COVID-19​.
    • Price is an even bigger selling point for phones this year due to the pandemic, so promotions around key times is essential to growing sales.
    • Increased demand for fast internet speeds necessitates a focus on unlimited plans and bandwidth to address consumer needs.
    • Searches for older phone models increased after the pandemic began and are expected to continue through the end of the year, indicating that advertisers should maintain some focus on older models.
    • Utilize the Microsoft Audience Network (MSAN) and audience targeting. Advertisers who incorporated MSAN into their campaigns saw a 47% lift in search clicks post-exposure to MSAN ads.

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  • Microsoft internal data.
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Curious about retail? Take advantage of other rich industry insights, consumer trends, and product updates by making your way to the Microsoft Advertising Retail hub, which has launched in the U.S.U.K.CanadaAustraliaGermany, and Spain. Or, listen to our Retail Unwrapped webcast on demand. Happy holiday planning!