A ‘return to normal’ holiday season for performance marketers

After the socially distanced holidays in 2020 and the supply chain challenges last year, the coming holiday season looks likely to return to normal.

That said, with inflationary pressures, there is still uncertainty regarding the upcoming holiday season.

So, what should performance marketers expect this holiday season?

First: Data from a Klaviyo and Qualtrics survey of 3,500 North American consumers found that 65% indicated they would spend the same or more on 2022 holiday gifts compared to last year.

Second: Research from Commerce Signals shows some positive trends. The company’s spending forecast predicts an 11% increase in consumer spending this holiday season versus last year. Specifically for Black Friday, the company predicts a 16% increase compared with 2021 due to more physical store visits. Although in-store visits are helping to fuel the predicted growth, Commerce Signal expects a 17% growth in online shopping in 2022 versus 8% in-store shopping growth this year

Here are the trends we’re watching for the holiday season and into 2023:

The rise of H-commerce

H-commerce – another term for hybrid shopping – is when shoppers use both online and in-store shopping for one purchase.

According to data compiled by the IAB, 58% of consumers now make purchases on their phones from another retailer’s website. And 51% of users surveyed make a purchase from that retailer’s website while in the physical store. Buy-Online-Pickup-In-Store (BOPIS) continues to grow, which 41% of surveyed users now use

Both Direct to Consumer (DTC) online brands and legacy retailers are embracing H-commerce. Increasingly, DTC brands like Allbirds, Everlane, Untuckit, and Warby Parker, as well as smaller brands like Heaven’s Market, Kohara, and Mose Mary & Me, are opening physical stores.

DTC brands are opening physical stores for a range of reasons. The increasing customer acquisition costs have been a driver for opening physical stores for many DTC brands. Other reasons include offering customers a way to physically experience the brand and product, a new way to build community, and strengthening the brand.

Traditional retailers are increasingly embracing online retail to boost sales and satisfy their customers. Macy’s ‘Own Your Style’ platform includes both online and in-store components. In-store screens offer customers style inspirations and recommendations as well as curated merchandise. The ‘Own Your Style’ online hub provides a personalized dashboard for each customer. Beauty retailer Sephora’s mobile app recognizes when customers enter a store, offering deals and product recommendations. And Target is investing $5 billion in stores and in-store fulfillment operations to enable shoppers to pick up in-store or receive deliveries at home.

This H-commerce trend is a breakdown of shopping channels. There is no more ‘online channel’ and ‘in-store channel.’ Instead, because shoppers no longer think of specific channels separately, retailers are embracing H-commerce. And this isn’t a trend just for the coming holiday season. H-commerce is the next evolution in retailing.

Gaming as an entry to the metaverse

As we wrote last year, the metaverse, the new focus of the company formerly known as Facebook, is a future trend for performance marketers. Although the complete metaverse experience might only arrive in 2030, marketers are already embracing the vision of the metaverse.

Research from the IAB considers today’s massive gaming industry, with nearly $150 billion in revenue, a precursor for commerce in the metaverse. This figure is more than double the combined music industry and box office revenue.

But gamers don’t only purchase virtual goods. Research on gamers from Wunderman Thompson found that 51% of gamers would love to buy real-world items from within games. In fact, 56% of gamers are more likely to purchase a brand that was featured in their favorite game.

When asked, 81% of respondents would buy fashion in-game while 74% would buy technology products in-game. Other products that more than two-thirds of respondents said that they’d purchase in-game include food and drink (73%), jewelry & music (70%), films and TV shows (69%), and watches, toys, and beauty products (67%).

While the metaverse technology isn’t ready yet, the growth of gaming as a marketing platform today should make the metaverse compelling for marketers in the future.

AI is important to marketers

The final trend marketers should look for this holiday season is the continued rise of Artificial Intelligence (AI) to enable them to more effectively achieve their goals. 

Manish Sinha, the former CTO of L’Oréal, had the following prediction about the use of AI in marketing:

“DTC will generate customer data, but it's AI that will unlock personalization. By selling directly to consumers instead of third-parties, brands will gain deeper insights into who their customers are. But data on its own won't unlock incremental value for brands. Rather it will be how they use AI and machine learning to uncover patterns in purchases, predict what their customers will order and make recommendations, as well as offer more personalized services like catered shipping statuses. As CPGs see early success, they will shift the majority of their sales to DTC by 2025 instead of in-store.”

There’s still time to make changes to your holiday campaigns.

If you’re looking to make a final push, and even make changes to this holiday season campaign, or are looking to change directions in 2023, reach out to Creative Clicks today.