The Black Friday weekend whirlwind is over, and marketing analysts everywhere are digging through the early data for clues about the remaining holiday shopping season. Early reports were positive. Analytics firm Adobe estimated that total holiday retail sales hit $210 billion this year, up 2.5% over 2021. Mastercard SpendingPulse, which tracks online and retail sales, saw total eCommerce spending rise by 14% year-over-year between Thanksgiving and Black Friday, the period known as the Turkey Five. According to Adobe, the three busiest Turkey Five shopping days also posted individual gains:
- Thanksgiving Day: Up 2.9% to $5.3 billion
- Black Friday: Up 2.3% to $9.1 billion
- Cyber Monday: Up 5.8% to $11.2 billion
However, buried within these positive numbers are signs that the average American consumer is experiencing an economic pinch.
Rising Prices Drive Deal-Seeking
It’s unclear whether this season’s increases result from more buying activity or higher prices caused by inflation. November inflation data hasn’t been released yet, but with October’s inflation rate standing at 7.7%, it’s possible that actual Turkey Five spending was down over last year.
Other signs point to an increased level of economic-mindedness among consumers. Google searches for “deals” increased 25% year-over-year, while searches for “gifts” were down 10% — indicating shoppers were looking for the best bargains rather than ideal gift recommendations. The data also showed buyers used buy-now, pay-later (BNPL) options more than ever this year. For example, on Black Friday, BNPL usage rose 78% year-over-year. It’s unclear if this spike is due to BNPL being more widely available this year or whether consumers are relying more on short-term credit to finance their holiday purchases.
So, while American consumers are still spending, signs suggest current economic conditions could be negatively impacting them, which is something retailers should keep in mind for the rest of the holiday season.
What Our Team Saw During the Turkey Five
Logical Position (LP) works with more than 6,000 clients across the country, from small mom-and-pop businesses to enterprise-level organizations, which gives us unique insight into the digital marketing ecosystem. During the Black Friday weekend, our clients saw 11% revenue growth over 2021, driven mainly by an increase in average order value rather than higher sales volume — another potential inflationary signal. Our team also tracked a few other interesting results in our core service areas that offer insight for businesses looking to adjust their eCommerce strategy for the rest of the year.
Growing Paid Search Costs
During the Turkey Five period, we tracked a 20% increase in cost-per-click (CPC) for our clients year-over-year. Combined with the 30% increase we saw in 2021, the cost of paid search during the holidays has increased dramatically in recent years. These increases could signal that businesses are less willing to invest in prospecting and brand-building campaigns and are turning instead to paid search, where the return-on-investment is easier to prove.
Paid Social Shines
The Black Friday narrative was a bit different for our paid social team. For the first time ever, the cost to advertise on social media did not grow. In fact, it was 20% cheaper to run social ads during this year’s Turkey Five than last year’s. This may be due to the privacy changes Facebook made last year, which impacted attribution and made it harder for advertisers to target buyers and measure results accurately. As a result, many large advertisers experienced a difficult fourth quarter and may have trimmed their holiday social spending budgets for this holiday season, expecting more of the same.
However, our team took advantage of lowered paid social costs. Campaigns created for 775 clients provided an average 30% increase in purchases and 67% increase in revenue. Results like these can only indicate that some brands may have miscalculated by pulling too far out of the social space, missing out on growth opportunities.
Prime Day Rules at Amazon
Over on Amazon, return and efficiency statistics remained relatively stable year-over-year. Total revenue on the platform increased by 20% compared to 2021. However, it’s unclear if inflation or increased spending drove this growth. Our team tracked a 13% CPC increase in the two weeks leading up to the Turkey Five, which indicates people started shopping early on this platform to grab deals while they could. Overall, compared to 2022 Prime Day data, Turkey Five weekend shopping activity on Amazon was down just slightly, with CPCs down 16% — signaling less competition.
Deals Drive Sales on Email
Our email marketing team tracked data supporting the broader narrative that shoppers were more price-conscious this year. Email open rates were up significantly for all clients, suggesting that consumers were searching for discounts. However, click-through rates were highly dependent on the discount offered. When comparing results for our clients within similar industries, open rate, click rate and revenue generated from email were all higher when a discount was offered than when it was not.
We also saw examples of email discounts driving revenue. One client offered a 10% discount on baby formula during November, which led to $500,000 in same-month revenue. A clothing site offered up to 90% off, leading to $1.2 million in November sales compared to less than $1 million in 2021.
Three Takeaways for the Remaining Shopping Season
These early results offer retailers a few guideposts they can follow to maximize the rest of the holiday shopping season. Here are three trends we’ll be tracking through the end of the year.
1. Inventory Concerns Arise
Many big retailers are bursting with inventory in anticipation of a home run holiday season. The mixed results we’ve seen so far indicate that some of these retailers may need to reduce their inventory by offering more deals heading into Christmas. An inventory glut could also spell a potential post-Christmas bump as late holiday shoppers take advantage of potential deals.
2. Big Opportunities on Social Media
Social media has been a big bright spot this year. Businesses could take advantage of less competition and more efficiency on social platforms by shifting some of their budgets toward Facebook and Instagram. Our clients spent 10% less on Facebook than last year but still saw purchases grow by 30%. That points to a big opportunity for other businesses.
3. Pivoting Into Christmas and Beyond
Businesses looking to make strategy adjustments for the remainder of the season should consider discounting because shoppers are clearly searching for deals this year rather than gifts. They should also spend money on Facebook by focusing on building brand awareness and remarketing to previous buyers and website visitors. During the most competitive time of the year, businesses should take full advantage of every available opportunity.
Staying Flexible is Key
Overall, the 2022 Turkey 5 weekend was something of a mixed bag. Year-over-year sales and revenue increases were great news for retailers. But rising prices, growing reliance on credit and deal-seeking search behavior suggest that the average American consumer is in a worse position than last year.
These results underscore the importance of businesses remaining flexible during the holidays so they can adjust their strategy in the face of new information. Heading into Christmas, sellers should consider leading with discounts to attract new customers and finish 2022 strong.
