Small and medium businesses can achieve transformative growth this holiday season

Nearly 45% of consumers in the United States are planning to spend at least $500 on gifts during the 2024 holiday season.¹ And with four out of five Americans believing that small companies have a positive impact on the country,² small and medium-sized businesses (SMBs) are well poised for a strong position during festive season.

Although there is positive sentiment towards SMBs, business owners across the country will have five fewer days to drive impact during the holiday calendar compared to last year. In fact, Cyber 5 holiday spending will not begin until Thanksgiving day, on November 28, 2024. Therefore, we recommend that your campaigns span the duration of Cyber 5, which includes Small Business Saturday on November 30, 2024 through Cyber Monday which ends on December 2, 2024.

How can I achieve transformative growth this holiday season?

We can help. Microsoft Advertising is excited to share a multitude of products and tactics that empower advertisers like you to create efficient and targeted campaigns.

Defining success for SMBs with three approaches

When advertisers set out to achieve transformative growth, they typically evaluate performance by measuring three different categories of Key Performance Indicators (KPIs). Our customers often use the following metrics to help grow their business:

• High volume – helps to maximize exposure to your clients. This strategy prioritizes maximizing the number of clicks.
• High interaction - focuses on a high Click-Through Rate (CTR). SMBs who are aiming for a high CTR are excited to have strong engagement with landing pages and impression views through interaction with the Seach Engine Page Results (SERPs).
• High efficiency - empowers SMBs who plan to convert potential clients into paying customers care about high Conversion Rates (CVRs).

How should I invest to maximize my potential?

To build upon the positive sentiment of SMB shoppers, we recommend advertisers leverage the following strategies to achieve results.

Strategy #1: Prioritize top-of-mind awareness through diversification

Microsoft Advertising analyzed the Top 20 SMBs by performance type in the 2023 holiday season.³ The twenty clients who prioritized high volume through high clicks also had the most diversified investment strategy between Shopping Ads, Text Ads, Dynamic Search Ads (DSA) and Audience Ads. These clients capitalized on brand awareness by knowing how highly valued SMBs are, and prioritized greater budget towards Shopping Ads to help them compete with the largest retailers. Seen below, the top 20 SMBs across the Microsoft retail sector had the best level of diversification, and the highest investment in Shopping Ads.

Although competing against the biggest retailers can feel like a daunting task, this strategy positions SMBs positively for both the 2024 holiday season—and for the long run. According to Entrepreneur Magazine, brand awareness helps increase sales, create customer loyalty, and improves product recognition.⁴ By diversifying the four investment types, you are ensuring you are meeting all your potential consumers wherever they are in their shopping journey.

Strategy #2 – Promote tried-and-true Text Ads

If ensuring consumer brand engagement is your priority, consider using your marketing budget on Text Ads. During the prior year festive season, the top 20 SMBs for CTR allocated over 80% of their campaign money to Text Ads, while the top 20 performing clients for Conversion Rate (CVR) spent 76% of their ad budget on Text Ads. For both sets of clients, Responsive Search Ads (RSAs) were the largest investment area. Although this strategy may potentially limit exposure to clients who view other investment types, having the best conversion success can still have positive long-run effects on a business.

I now understand how to invest. What features can help me get there?

Similar to the power of diversification in investment strategy, the Top 20 SMBs understood that the benefits of diversification extend to features as well. In the image below, of the top 12 features that were over-indexed, an impressive 10 features were unique.

Here are two excellent strategies to set your business up for success.

Strategy #1 – Achieve brand recognition by prioritizing clicks

As we learned from Entrepreneur Magazine, strong brand awareness helps companies compete in challenging markets. For the top SMBs, the most successful features for driving holiday clicks in 2023 were Phrase Match, Site Exclusions, Local Inventory Ads and Remarketing. Using these strategies will help reach consumers where they are physically located, encouraging shoppers to place orders in their cart and thereby ensuring your advertisements are displayed on sites that represent the same values as your brand. These features can lead to brand recognition, which creates an emotional connection to consumers,⁵ therefore driving both current and future performance.

Strategy #2 – Convert your ideal customer

Americans enjoy celebrating the festive season. So, it’s a great time to implement a strategy that achieves top click-through rates and conversions to positively affect the bottom line. Advertisers with top CTRs use Shopping Ads, Exact Match, Responsive Search Ads and Dynamic Remarketing. These features can help promote available inventory and ensure you are reaching shoppers looking for a specific product. Plus these features will modify ads to match a user’s context. Advertisers who achieved the top CVR over-indexed on Exact Match, Conversion Goals, Responsive Search Ads and Target ROAS. These features can help you convert targeted clients and achieve the desired return on ad spend.

Get started today with four steps to success

With a shorter 2024 holiday season ahead, now is the time for small to medium-sized businesses to create a well rounded and diversified solution to investments. And Microsoft Advertising is here to help you succeed in four easy steps

1. Reach out to our experts today at Microsoft Advertising Support for all of your marketing needs.
2. For advertisers in North America, we invite you to join our virtual event in North America, ‘Unwrap Growth with Microsoft Advertising’ tailored for businesses of all sizes gearing up for the holiday season. Register on-demand
3. For advertisers in Europe, we invite you to join our live virtual event ‘Unwrap Growth with Microsoft Advertising’ on September 12, 2024, perfect for businesses of all sizes gearing up for the holiday season. Register now. This content will be available on-demand after September 12^th.
4. Discover tips and strategies on our Holiday Season resources page.

Wishing you a great and successful 2024 holiday season!