Holiday Shopping 2016The smart marketer’s guide to a weather strategy

©2016 The Weather Company, an IBM Business. All rights reserved.

Weather is the single largest influence on consumer shopping

behavior. Weather can tell you what customers will buy and when, where and how customers will shop. Smart marketers will leverage both long and short term forecasts to optimize Holiday 2016 profitability.

Paul WalshWeather Expert & Business Analyst

Digital SHoPPerSare in Control of Holiday Shopping experiences

How consumers shop has changed forever. They are more informed and shop when it is most convenient for them from whatever device they have on hand.

This power shift has carried over to the holiday shopping season. While traditional holiday shopping dates will experience spikes, their influence is waning.

Brands can no longer be dependent on a rigid shopping calendar to optimize sales. Marketers must connect with consumers when they are in the right mindset.

Weather analysis predicts emotion, motivation, and decision-making and can be used to help marketers connect at the right time to optimize sales and conversion rates.

2015Although retail sales grew 3% in 2015 they fell below expectations in large part due to mild winter temperatures.

Despite strong sales volume, excess inventory of seasonal items led to reduced prices and lower profits.

lessons learned

The results of December’s retail sales remind us just how significant of an impact unusual weather can

have on retail and overall economic activity.

Jack Kleinhenz

NRF Chief Economist

tHe MilD Winter HanDiCaPMarketers who were unprepared for the mild winter:

Got stuck with excess inventory of seasonal goods

Were unprepared to maximize revenue from the late shopping surge spurred on by mild temperatures

Relied on discount prices to reduce inventory overstock and encouraged reluctant shoppers to get into the holiday spirit

retail stores experienced a 6.4% drop in foot traffic over the holiday period according to a retailMetrix analysis.

For example, in 2014 when Boston was hit by unusually heavy snow that derailed transportation and shut down stores, businesses lost millions. In fact, it’s estimated that losses totaled $10 million each day stores were closed. Boston is not alone.

More recently in October of 2015 devastating floods hit South Carolina resulting in an estimated net loss of $390 million in economic output.

Sources: http://time.com/money/3703336/snow-blizzard-impact-shopping-retail/http://advertising.weather.com/update-economic-impact-south-carolina-flood/

extremely harsh winters are equally challenging for marketers who are challenged to mitigate the risk of poor travel conditions, distribution delays and consumer frustration.

taKe Control:An Effective Weather Strategy Drives Conversions

While we can’t change the weather, we can control the economic impact.

Through the use of analytics, marketers can predict buyer demands & shopping preferences by location and time of day to improve campaign conversions. research shows that

marketers who utilize paid-for commercial weather services reported better customer service (62%), more accurate sales forecasts (57%) and better on-shelf availability (51%).

Sources: http://www.retailtimes.co.uk/met-office-research-reveals-impact-of-weather-on-the-uk-retail-industry/

the are three ingredients necessary for delivering advertising messages at the optimal time.

1. Location: Where is the consumer located? Is their proximity close to your location?

2. Mood: How is the buyer feeling?

3. Attention: Is the shopper likely to see my promotional content?

When all three intersect, targeted messages drive consumer action.

tHe WeatHer CoMPany DeliverSlocationFX is a platform that continuously processes real-world behaviors to create portraits of your ideal consumers and enables you to target them when and where it counts.

The Weather Channel app is embedded in the lives of millions of mobile users worldwide. They use us everyday and throughout the day as they navigate their lives. The result is one of the world’s largest continuous sets of first party location data that we use to build accurate and precise portraits you can target.

WeatherFX is an automated targeting platform that leverages weather’s impact on emotion and behavior to deliver messaging that drives consumer action.

Predictive analytics empower marketers to capitalize on weather-driven consumer demand by informing what, where, and when to run messages.

native advertising The mobile device is intimate and personal and people are engaging with brands that add value in their daily routines and rituals – much more so than those that don’t. In fact, 73% of consumers are more likely to choose brands that give them useful information.

The Weather Company has long been a trusted part of daily consumer life because we deliver irreplaceable value. Marketers can now embed brands in the organic path of the consumer.

SuCCeSS in aCtion: native advertising Beats rei’s return on ad Spend goal By up to 6x

oBJeCtive By generating awareness of its holiday sale. ROAS (return on ad spend) and CTR were key performance indicators for the holiday campaign.

Solution Develop a cross-screen integrated content experience with REI products adjacent to content to increase relevancy and intuitively lead consumers through the purchase funnel. Customized content featured both Weather and REI brand personalities. Native elements also included call-to-action and mobile driver.

reSultS Weather’s native content solutions delivered superior engagement generating the highest ROAS of any publisher, 2x the goal; the best performing placement was 6x the ROAS goal. The program also exceeded CTR goals.

Source: The Weather Company Internal Reporting, 2015. The Weather Company, an IBM business | Case Studies

REI camping products Inspirational camping content

2016 HoliDay ForeCaStnationally the november/December 2016 period will be significantly colder and more winter like than 2015.

eaSt: The more seasonably typical winter weather will lead to much stronger demand for all things winter including outerwear, footwear, outdoor consumables, indoor activities and healthcare products (cold/flu). This will represent a very long and pronounced demand trend when compared to the same period last year.

WeSt: Weaker demand for all things winter will be difficult to compare to last year’s relatively cold and wet winter conditions. Demand will be higher for non seasonal items and even outdoor activities. Electronics, toys, non-seasonal gift giving will all see stronger demand trends as demand for seasonal products lags last year’s very strong demand conditions.

HoliDay teMPerature trenDMuch Colder than 2015!

HoliDay national teMPerature trenD 2016 CoMPareD to 2015

MilDer

ColDer

Thanksgiving week ChrisTmas week

WeeK 1 WeeK 2 WeeK 3 WeeK 4 WeeK 1 WeeK 2 WeeK 3 WeeK 4 WeeK 5

NOVEMBER DECEMBER

12

7

2

-3

-8

-13

Trends across a 7-day week ending SaturdayCalendar based on the National Retail Federation fiscal calendarStatistical trend assuming typical seasonal weekly temps

eaSt / WeSt CoMPariSon Northeast (22% HHs) California (12% HHs) HoliDay national teMPerature HoliDay national teMPerature trenD 2016 CoMPareD to 2015 trenD 2016 CoMPareD to 2015

NOVEMBER DECEMBER NOVEMBER DECEMBER

20

15

10

5

0

-5

-10

-15

-20

20

15

10

5

0

-5

-10

-15

-20

Trends across a 7-day week ending SaturdayCalendar based on the National Retail Federation fiscal calendarStatistical trend assuming typical seasonal weekly temps

-10

-4 -4-2

-3

-10

-15-17

-10

WeeK 1 WeeK 2 WeeK 3 WeeK 4 WeeK 1 WeeK 2 WeeK 3 WeeK 4 WeeK 5 WeeK 1 WeeK 2 WeeK 3 WeeK 4 WeeK 1 WeeK 2 WeeK 3 WeeK 4 WeeK 5

6 StePS to BuilDing a Winning Strategy For 2016 Consumers make shopping decisions based on physical and emotional responses to weather conditions

SteP 1: eXPeCt early SHoPPerSin the Midwest & east

November and December 2016 will be significantly colder and more wintry than 2015 across much of the country and particularly in the Midwest and East.

Christmas week and the 2 weeks before Christmas should be colder than last year, feeling much more traditionally like Winter, and will likely put consumers into the Holiday mood earlier than last year.

The West may see less of an early spike as they experience a mildly warmer holiday season given the cold, wet winter of 2015.

SteP 2: StoCK inventory to PreDiCteD DeManDSexpect strong demand for traditional winter seasonal items including:

• Apparel & footwear

• Cold weather accessories

• Cold weather sporting goods

• Cold weather home improvement products

• Beer, Wine & Spirits

SteP 3: align CaMPaignS By loCation

Context matters. What initiates a splurge for a new sweater in Arizona is likely to encourage a short-sleeve walk in South Dakota.

60° 58° 55° 51°65°

texas new york Minnesota South Dakotaarizona

Consumer behavior is contextual to the shopper’s location.A study by The Weather Company surveyed 6,586 consumers about what they consider “sweater weather”. The results show a stark difference in temperature triggers based on the context of average weather patterns at their location. In Arizona, a 65-degree day calls for toasty cover, while in South Dakota it’s not until 51 degrees that sweaters are likely to be used.

The same principal applies for all types of seasonal items. The most effective marketers will trigger campaigns based on the consumers’ local context.

SuCCeSS in aCtionthe north Face registers 1K+ Purchases & exceeds twitter’s engagement retail Benchmark with WeatherFX

Source: The Weather Company & Twitter Internal Reporting, Q4 2014, Q4 2015

oBJeCtive The North Face sought to drive sales of the ThermoBall jacket by maximizing brand exposure and awareness.

Solution The North Face used WeatherFX to deliver ads to consumers experiencing inclement winter weather. They also leveraged Weather’s WeatherFX API to execute weather-triggered, geo-targeted promoted tweets to seamlessly extend the messaging via social media.

reSultS @TheNorthFace garnered 210K engagements (clicks, retweets, replies & follows). 3.6% engagement rate overall. Additionally, The North Face reported significant increases in website traffic and registered over 1,300 purchases during the campaign. Based on the success of the campaign, The North Face signed up for a second campaign and garnered 308K engagements (clicks, retweets, replies & follows) as well as a 5.94% Twitter engagement rate – which is 20% higher than Twitter’s retail engagement benchmark.

SteP 4: CaPture ConSuMerSWhen they Check the Weather to Plan for HolidaysWeather is a key component of consumer holiday planning. The Weather Company, an IBM Business traffic spikes 2-4 days prior to major holiday events

Source: Adobe Analytics, 2013-2015 holiday traffic averaged and compared to baseline. baseline = two week daily average of visits during normal weather conditions

Digital traffic patterns on Weather demonstrate that consumers are checking the weather ahead of major Holidays, and using Weather properties as part of their Holiday planning process.

This represents an opportunity to influence consumers when they are making Holiday plans, and shopping trip decisions.

• Consider booking high-impact takeovers 2, 3 & 4 days prior to Thanksgiving & Christmas to reach consumers when they are primed for Holiday planning.

• Countdowns can capture consumer momentum leading into the Holidays.

2-4 Days prior to thanksgiving

thanksgiving and Black Friday

Cyber Monday & Cyber tuesday

green Monday

2-4 Days prior to Christmas Christmas

Learn more about Weather advertising opportunities.

SteP 5: taP into Mobile BehaviorResearch shows that consumers check the weather on their mobile phone multiple times per day.

By monitoring the forecast you can deliver advertisements that align to their needs as they are making plans.

according to an analysis of data from internet retailer’s newly published 2016 Mobile 500, mobile commerce now accounts for nearly one-third of all u.S. e-commerce sales.

Source: https://www.internetretailer.com/2015/08/18/mobile-commerce-now-30-all-us-e-commerce

SuCCeSS in aCtion

Source: The Weather Company Internal Reporting, 12/23/14-1/9/15

google Play Drives 35K+ Downloads & 0.87% Ctr With Branded Backgrounds & WeatherFX

oBJeCtive Google Play was interested in staying top of mind with Android users as well as expanding its reach and encouraging downloads during the holiday season.

Solution Google leveraged The Weather Company’s high-impact, award-winning Branded Backgrounds to increase awareness during the cluttered holiday season as well as applied WeatherFX targeting to reach consumers with relevant creative that aligned with their current weather conditions.

reSultS The campaign’s combination of targeted, high-impact, relevant messaging generated over 35K app downloads and drove interaction to a stellar 0.87% CTR, more than double the Branded Backgrounds benchmark.

SteP 6: reDuCe DePenDenCe on Discounts to Drive ConversionsMarketers can maximize email & advertising conversions by varying creative messaging based on how the weather is making consumers feel – and the anticipated consumer response.

experian Marketing Services reports that email volume rose 24.8% during the 2015 holiday season and there was a corresponding increase in the number of email opens, clicks and transactions.

unique email opens increased 19%, unique email clicks increased 10% and email transactions increased 20%.

Source: http://www.retailingtoday.com/article/more-email-01-holiday-forecast

taKe your FirSt StePit’s never too soon to improve marketing effectiveness.

Schedule your personalized weather strategy consultation today.

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aBout tHe WeatHer CoMPanyan iBM Business

The Weather Company, an IBM Business, is the world’s largest private weather enterprise, helping people make informed decisions – and take action – in the face of weather. The company offers the most accurate, personalized and actionable weather data and insights to millions of consumers and thousands of businesses via Weather’s API, its business solutions division, and its own digital products from The Weather Channel (weather.com) and Weather Underground (wunderground.com).

The company delivers up to 26 billion forecasts daily. Its products include a top weather app on all major mobile platforms globally; the world’s largest network of personal weather stations; a top-20 U.S. website; the seventh most data-rich site in the world; one of the world’s largest IoT data platforms; and industry-leading business solutions.

Weather Means Business™. The world’s biggest brands in aviation, energy, insurance, media, and government rely on The Weather Company for data, technology platforms and services to help improve decision-making and respond to weather’s impact on business. For more, visit www.theweathercompany.com.

at the Weather Company, an iBM Business, advertising sales connects marketers to the future of their business with our trusted weather data and technology.