top of page
Search
Writer's pictureStoreBoost

Is the record 2023 Christmas Retail Spend justified in terms of ROI?

As the festive season approaches a crescendo, the 2023 Christmas retail landscape presents a unique blend of challenges and opportunities, reflecting a world adapting to economic uncertainties. While UK retailers started selling early this year, trying to 'cut through', multiple reports convince us that consumers' behaviour has changed, considering value more important than volume. 2023 Christmas retailing will mark as one of the most unusual, as brands have had to adapt in real-time. Historically a retailer’s overall success is heavily dictated by their Xmas sales revenue, but the ROI from putting all their eggs into the Xmas period in terms of advertising spend is increasingly less clear for some.


Essentially, the critical question is: Would it be more profitable for advertisers to spread our their advertising budget over the entire year instead of focusing mainly on the Christmas period?


Record Ad Spending Amid Evolving Consumer Spending Trends


Christmas 2023 shows record spending on Christmas media spend by brands, despite a decline in TV advertising by 0.2% and a growth in OOH media by 10.3% respectively. The Advertising Association forecasts £9.5bn spend across the Christmas ad festive season. One factor driving increased spend is the earlier start date to Xmas retail activity and supporting media activity.


Shopping behaviour of consumers is clearly evolving. According to a survey by Retail Week and YouGov, 47% of UK shoppers plan to spend less this Christmas than in 2022. This trend reflects the ongoing impact of price rises on consumer spending habits​. Brands and retailers need to navigate these trends carefully as the shopping behaviours have been already affected in 2022. For example, Finder.com reported that last year, the average spends per person on Christmas gifts in the UK dropped from £548 to £429, a significant drop of 20%.


London, UK Christmas

Balancing Festive Advertising: Big Brands and the Challenge of Christmas Clutter


Despite these changing dynamics, big brands continue to heavily invest in Christmas advertising. Coca-Cola, known for its effective Christmas advertising, has created a long-standing monopoly around this period. A study into the history of Christmas advertising by Westminster Research underscores Coca-Cola's impactful presence in shaping festive advertising. ‘Santa Claus became a personification of the brand’. This year, once again, Coca-Cola is named one of the most effective ads of Christmas, as per System1.


However, the ROI for such investment varies and it's critical to understand why some brands remain pragmatic amidst the Christmas advertising goldrush. The phenomenon of 'Christmas noise' leads to an oversaturation of the market, making it challenging for messages to stand out. While Christmas ads are known to evoke feelings of happiness and nostalgia, they can also lead to consumer fatigue from market saturation. The intense competition among brands during the festive season often results in an overwhelming number of ads. This overcrowding can make it challenging for individual campaigns to stand out and may diminish their impact. Consumers, inundated with constant and similar messaging, may experience a kind of sensory overload, reducing the effectiveness of even the most well-crafted advertisements. The key for marketers is to find a balance, creating content that resonates emotionally without contributing to the clutter of the festive advertising landscape.


‘Cutting through’ the Christmas clutter is a challenge for brands, as they strive to make an impact without adding to the oversaturation of festive messaging. Successful strategies often involve creative approaches that differentiate from the traditional Christmas themes while still capturing the holiday spirit. JD Sports' Christmas ad for 2023 took a unique approach to festive advertising. Instead of overtly emphasizing Christmas themes, they subtly infused the festive atmosphere into their campaign. This method allowed JD Sports to stand out in the crowded holiday market by not directly shouting 'Christmas' but still capturing the festive spirit. The ad created a holiday feel without relying heavily on traditional Christmas tropes, setting it apart from typical festive advertisements and effectively cutting through the Christmas clutter.


Rethinking Festive Strategy: Small Brands and the Year-Round Advertising Approach


In the contemporary retail landscape, particularly during the festive season, large brands often dominate the advertising space, leveraging their significant resources for high-impact Christmas campaigns. However, for smaller brands, a different strategy should be considered. Investing heavily in Christmas advertising may not yield the desired ROI, given the high costs and intense competition. Instead, a more strategic approach could be to distribute the advertising budget throughout the year, especially when It’s easier to stand out. This approach can help mitigate the risk of getting lost in the Christmas clutter and ensure a brand's presence across all quarters. It's about leveraging real-time data management, including programmatic ooh advertising, which StoreBoost and similar platforms offer, to react dynamically to market conditions such as weather changes, sales or footfall fluctuations. By doing so, brands can achieve a more balanced and potentially higher ROI over the entire year, rather than focusing their efforts solely during the holiday season.


This strategy is particularly relevant for sectors that struggle to maintain stable footfall throughout the year. StoreBoost data shows that brands of each big retail sector struggles in each quarter of the year, experiencing lack of stability.

Data taken from StoreBoost platforms
Retail sectors struggling to maintain stable footfall throughout 2023

Spreading out the advertising spend can cover footfall gaps, maintaining a consistent brand presence and engagement with customers irrespective of the season. A retailer’s cost base remains broadly the same throughout the year, so it makes sense to use advertising to optimise occupancy rather than risk it all for a big Q4. This approach not only aligns with evolving consumer behaviour influenced by economic factors, but also provides an opportunity for smaller brands and retailers to make a more significant impact in less saturated and competitive periods.



The accompanying graph illustrates a striking contrast between store and mall footfall throughout the year, with an evident spike in store footfall during the Christmas period. However, the rest of the year presents a different scenario, where retailers see less foot traffic compared to malls. This trend suggests that retailers may be missing out on up to 20% additional footfall by not distributing their advertising efforts more evenly across the year.


A more strategically spread advertising budget could align with the evolving consumer preference for value, potentially smoothing out the fluctuations in footfall depicted in the graph. Insights from StoreBoost suggest that maintaining a consistent advertising presence could address the dips seen during non-festive quarters.


In summary, the data points toward the benefits of a year-round advertising approach, which could not only fill the gaps during quieter periods but also improve overall ROI for retailers.


24 views0 comments

Comments


bottom of page