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Optimize now for the changing holiday retail landscape in 2021

The retail industry has been rife with change over the last two years and now we’re starting to see the results of those changes. Our recent survey and search data indicate a few key trends that marketers should consider during planning.

This holiday season, we anticipate growing e-commerce adoption and shopping that will begin earlier than ever. It used to be Black Friday that kicked off the U.S. shopping season, but not this year. Now, 32% of shoppers, bolstered by e-commerce, say they plan to start shopping in early fall.

That’s not the only difference. There will be many opportunities for advertisers of all types, but there will be more competition too. Here’s what we’re anticipating with a few tips to help your business make the most of it.

  1. Shoppers will start early this year.
  2. Alternative payments and delivery methods will be in demand.
  3. Sustainability will be a trend.
  4. Advertising competition will be high.

1. Shoppers will start early this year

Our data show that consumers are increasing research on products before purchase. Now, the research phase can be 30 days or more. So, while they may be shopping more, they’re taking longer than ever researching before they buy. That’s a good thing for advertisers who plan for it.

  • 76% of consumers worldwide bought a product due to researching online.
  • 48% of consumers worldwide used search for products.
  • 25% of all global online orders came from shoppers who used the search bar.

This year, a lot more shopping traffic will be online. In fact, the share of global e-commerce retail sales increased 32.4% from 2019 to 2020 and is forecast to grow another 8.3% this year. This data, coupled with the early shopping starts, gives advertisers more opportunity to reach customers while they’re in the research phase.

What advertisers can try:

  • Enhance the opportunity to be found during early product research with Shopping Campaigns.
  • Consider a multi-touch approach. Adding native ads with search can result in 7x higher conversions.

2. Alternative payments and delivery methods will be in demand

Gift cards are rising in popularity as consumers build flexibility into their shopping plans. Even if they can’t find the perfect gift, one in four shoppers said they would purchase gift cards, so ensure they’re readily available and easy to buy.

Gift givers will emphasize buying locally when possible and prioritize stores that offer a large inventory, fast delivery speed, and convenient retrieval options. Buy online, pick up in-store (BOPIS) options grew 555% in the last year and buy now, pay later (BNPL) options have grown over 150%.

What advertisers can try:

3. Sustainability will be a trend

As many environmental, economic, and social causes rise to the forefront, shoppers are looking for businesses, brands, and products that align with their beliefs. Our data show that average search volume for sustainability and sustainable products has grown 37% annually since 2019, so feature your sustainable initiatives in creative imagery, copy, and extension callouts.

What advertisers can try:

4. Advertising competition will be high

The last 16 months have changed the way shoppers buy and learn about products and services. Due to this changing consumer behavior and increased advertiser demand, we predict that retail will see a very competitive holiday 2021 season. Search volume is trending somewhere between 2019 and 2020. Cost per click (CPC) was up 15% over the previous quarter due to more clicks on competitive queries in the second quarter. So, advertisers need to be strategic with keywords and bidding to win.

What advertisers can try:

  • Enable Dynamic and Responsive Search Ads to target shoppers, who want fast and easy options, with ads on relevant queries that are emerging and trending.
  • Try Automated Bidding to save time and maximize ad spend for better efficiency.

Four next steps for advertisers

With the increased competition, e-commerce buying, variety of shopping, shipping and pick-up options, and changes in consumer expectations, advertisers should consider additional steps.

Be visible early

Ensure you’re visible early among shoppers when they are choosing brands. Increase the visibility of your ads and capture attention with visual imagery. Likewise, don’t stop advertising as soon as the holiday season ends. Shoppers will cash in with gift cards and buy the items they wanted but didn’t receive.

What advertisers can try:

  • Capture shoppers’ attention quickly with eye-catching visual imagery with Multimedia Ads, which combine images, headlines, and descriptions in one ad unit.
  • Use Multi-Image Extensions with visual elements to help ads stand out and entice shoppers sooner in the buying journey.

Review 2019 campaigns

There was considerable volatility last year, and specific categories reported substantial unanticipated growth. Therefore, we expect a year-over-year (YoY) decline this holiday season compared to 2020, but there will be growth compared to 2019.

Chart showing year over year decrease in clicks for these categories: toys & games minus 24 percent, gift baskets minus 28 percent, fitness equipment minus 50 percent, hobbies minus 12 percent, food & grocery minus 20 percent, home office minus 14 percent, and household supplies minus 47 percent.

Conversely, some categories reported unanticipated declines last year, so we expect YoY growth this holiday for those categories.

Chart showing year over year increase in clicks for these categories: formal wear 120 percent, jewelry 21 percent, bags & luggage 25 percent, parties & party supplies 46 percent, and dress shoes 85 precent.

What advertisers can try:

  • Plan and optimize 2021 holiday campaigns by reviewing campaign performance and gleaning lessons from 2019, not 2020.

Re-evaluate weekends

Last year, the pandemic caused a significant boost to weekend performance. This year, weekends and weekdays are less blurred as businesses reopen and people return to work and more predictable schedules. You’ll want to modify your ad delivery for your business’s peak conversion times.

Take a multi-touch approach

When using a combination of search and native ads, advertisers see an incremental lift in site visits and conversion rate. To make the most of your holiday advertising, consider a multi-touch approach and activate media across channels. Over the last 16 months, data show an increase from 70.6% to 75.6% of users who are more likely to engage with a search ad after exposure to a native ad.

Summary

The volume of shoppers purchasing online this year will be high. There are plenty of opportunities for businesses to gain new customers and audiences during this vital time. By ensuring that you’re highlighting the right messages at the right time in the right places, you’ll be ahead of the pack when shoppers are ready to buy.

Want more insights?

Download the 2021 Holiday Insights Guide and check out our Retail landing page for tips, tricks, insights, and success stories. Get weekly updates with actionable content: sign up for the Microsoft Advertising Insider newsletter.