One thing a lot of people in e-commerce and digital advertising don’t like to talk about is the fact Black Friday and Cyber Monday is unprofitable for many … and it’s getting worse.
There’s a few reasons for this:
- Every year retailers have new and bigger revenue targets to hit, this often means bigger and more margin impacting discounts.
- A lot of research suggests that this demand isn’t actually new, but customers being savvy and holding off until the big sales hit (meaning full margin sales that would’ve happened, are being swapped for discounted sales).
- In the meantime, big competitors flood the ad marketplace (most notably Google + Facebook/Insta) and increase overall cost per clicks and reach.
As we all know, a decrease in margin, in line with an increase in ad costs = bad news.
There are a couple of ways to decrease this pincer squeeze effect over Black Friday/ Cyber Monday:
A note on brand bidding
- Offer smaller free gifts rather than big margin loss campaigns of 30/40% off. A free wallet/ t- shirt might cost you some margin, but not as much as if you gave the big discount.
- Drive the majority of discounts to your email subscriber and remarketing lists. Since the cost of sending an email is minimal you don’t have to compete in the ad marketplace. It would be advised to also run remarketing ads on both Google & Facebook/ Insta. This will ensure a high engagement rate, and keep ad costs to a minimum.
- Focus customer acquisition efforts before Black Friday/Cyber Monday. September and October is a busy period in retail with hungry buyers, so your conversion rates should still be strong. This will enable you to push to acquire new customers in this period to them sell the BF/CM offers to later on.
Be especially aware of competitors brand bidding. Since a lot of competitors will be going really hard on the discounts, they may be tempted to steal some of your audience. This includes bidding on your brand names. This is a time of year to ensure you protect this audience, even if it means you take a slight hit.
Hopefully these tips are of use, and can be implemented in good time ahead of the retail rush in 2020.