January 9, 2020
Research: Should You Spend More in Q4 Leading Up to Cyber 5?
All eCommerce retailers know exactly what time of year it is. It’s online window-shopping time.
You know, that time when soon-to-be holiday customers are in the research phase right before the Black Friday & Cyber Monday purchasing pandemonium kicks in?
This leaves digital advertisers with a tough question: What do you do when online shoppers are looking for future purchases, but not actually purchasing right then and there?
You have two options here:
Like most online advertisers, you would probably only choose Option #2 if you knew it would pay off in the long run. The question still remains: does it?
Here at Metric Theory, we did some data analysis to attempt to solve this dilemma. We looked at our top 50 revenue-grossing ecommerce clients from the 2015 holiday season, and found that the typical “window-shopping” week (Week 46 in the graph below) falls right before Black Friday. Click-through rate increased on this week in 2015, while conversion rate briefly dropped (and then skyrocketed to its holiday peak the following weeks).
Long story short: more clickers, fewer buyers for this one week only. The consumer did indeed seem to be researching, but not yet ready to buy.
But you already knew this week exists. The question is, did spending more during this week result in stronger results in subsequent weeks? To measure this, we first segmented our 50 sampled accounts into three classifications:
We also measured the revenue change for each account at three different time intervals: 1 week, 2 weeks, and 5 weeks after Week 46, and compared that to the revenue the account had produced in the corresponding amount of time before Week 46.
The table below summarizes our early findings. As you can see, the advertisers that increased spend during Week 46 saw larger revenue increases over the following weeks:
The preliminary results from this study suggest that an increased investment during a holiday shopper’s research phase will yield greater overall revenue gains by the end of the holiday season. And this makes intuitive sense – if you show an ad to customers while they are researching their purchases, you are more likely to reap greater rewards when they actually do complete their sales in the weeks that follow.
One interesting trend that we noticed during this study is the massive improvements in the Increased cohort after 5 weeks. For the first two weeks after Week 26, the Increased and Neutral groups remained neck-and-neck in terms of revenue gains, but the Increased cohort saw much larger gains over the full five-week holiday shopping period. We hypothesize that the increased spend early on helped to attract larger numbers of window-shoppers early in the season, who then returned to convert throughout the holiday season.
One caveat: we are dealing with small cohort sample sizes here. Make sure you study your own data before jumping to any conclusions about your strategy. And of course, Metric Theory is always happy to take a peek at your data to help determine a concrete strategy for your business this holiday season!