Winter Holiday Halftime: A Shifting Media Mix

Shoppers spend big during the winter holiday season – and advertisers do too. In particular,

retailers focus a significant amount of spend during the critical holiday shopping period that

extends from Black Friday to Christmas, hoping to drive more foot traffic and clicks their way

so they can maximize their share of shoppers’ wallets. Accordingly, Kantar Media has

analysed results from the first three weeks of the 2016 shopping season, from Thanksgiving

week through to December 11. Looking across traditional and digital media, earned social

and paid search, we have found further continued shifts in media strategies that have led to

a significant decline in measured media spend.

From print to mobile

During the Nov. 21-Dec. 11 period, retailers spent $1.076 billion on TV, newspapers, radio

and digital display ads – a significant 13% decline over last year. (This data is based on a

limited number of media where preliminary spend is available, and when all media are

subsequently included the year-over-year comparison will likely be more favorable.) Home

retailers were the only group that spent more. This category includes a large number of

home furnishing stores who are increasingly important gift providers, and may also be trying

to capitalize on some upticks in home sales seen this year.

Meanwhile, the electronics and discount and department store categories have seen the

steepest decline, falling by 32% and 25% compared to 2015 respectively. This is due in part

to these groups shifting away spend from newspaper print ads. (Newspaper brands do of

course maintain websites as well; those ads would be tracked in our display ad channel.)

While circulars and printed ads had traditionally played a large role in retailers’ holiday

marketing efforts, that approach is clearly less popular. Indeed, when excluding newspapers,

overall retailer ad spend actually only fell by 3%. Still, the electronics category still saw a

steep 26% drop, due to significantly less spending by Best Buy.

Retail Media Spend by Category, Nov. 21-Dec. 11

Including Newspapers Excluding Newspapers

Retail Segment

Nov 21-Dec 11, 2016 (millions)

% Change: '16 vs '15

Nov 21-Dec 11, 2016 (millions)

% Change: '16 vs '15

Total Retail Category $1,076 -13% $945 -3%

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Discount & Dept. Stores $283 -25% $262 -12% Home & Building $258 4% $213 10% Apparel $219 -7% $204 -5% Food & Drug $86 -16% $70 -1% Electronics $33 -32% $22 -26% Sporting Goods $39 -8% $33 12% Toys/Hobbies/Crafts $28 -8% $23 8% All Other $130 -10% $118 -2%

Source: Kantar MediaPreliminary spend figures for TV, Local Radio, Newspapers, Internet Display

So what is replacing print in the winter holiday media mix? Product listing ads (PLAs) – the

paid search ads that feature product photos and pricing – are clearly one factor. According to

our paid search intelligence expert AdGooroo, spend on PLAs regarding the top 2,500 retail

keywords more than doubled year-over year during the Nov. 21-Dec. 11 period. However,

overall desktop paid search (including text ads as well as PLAs) fell by approximately 16%,

likely due to greater use of mobile search.

Mobile search and the use of shopping and couponing apps like Target’s Cartwheel do seem

to be gaining significant traction, and impacting ad spend through more traditional channels.

These tools fit well with on-the-go consumers’ shopping behavior, and provide the same

ability to highlight local offers and focus in on specific products that local print advertising

delivers. Meanwhile, retailers have a strong incentive to get shoppers to depend on their

proprietary shopping apps. Target, for one, offered special savings on top of the retailer FSI

promotions it offered with brands like P&G and Nestle Purina.

Social media is also an important part of the mix, with leading retailers using a mix of

platforms to build deeper relationships with consumers. During the three-week period we

studied, Unmetric found that a selection of the nine largest retailers posted thousands of

times on Twitter, Instagram and Facebook, with the bulk of activity occurring on Twitter

(which is best suited to rapid-fire posts, often on a one-to-one basis with consumers). While

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volumes were lowest on Instagram, this highly visual platform led by far in engagement. (The

engagement metric weights user interactions based on their importance. The weighted sum

of interactions is then divided by the estimated number of brand fans or followers who

received the content. This value is fit to an index scale of 0 to 1000 where a higher number

indicates higher engagement.)

Social media activity for leading retailers - 11/21/16-12/11/16

Instagram # posts

Instagram Engagement

Twitter # posts

Twitter Engagement

Facebook # posts

Facebook Engagement

Total 170 211 14,831

17 240 117Source: Unmetric; retailers include Amazon, Best Buy, JC Penney, Kmart, Kohl’s Macy’s, Sears, Target and

Walmart

Leading retailers shift their strategies

So how are these trends impacting leading retail advertisers? Consistent with overall trends,

spend is down overall – but individual advertisers are clearly taking different paths. JC

Penney was the only retailer to actually spend more than last year, perhaps taking

advantage of a less cluttered environment to try to make a bigger splash. Meanwhile,

Amazon’s spend was flat, due in part to some aggressive marketing efforts for its new

Amazon Echo products.

By comparison, the deepest cuts were made by Macy’s and Best Buy. Macy’s had been one

of the largest spenders on print and cutbacks in that channel definitely impacted its overall

spend. Indeed, its 37% reduction in spend roughly correlated to the amount it spent in print

in 2015. Meanwhile, Best Buy is now deep into its “Renew Blue” campaign which has

included extensive cost cutting as well as a major focus on mobile marketing as a more

efficient channel for driving sales.

AdvertiserNov 21-Dec 11, 2016 (millions)

% Change: '16 vs '15

Walmart $71 -27% Amazon* $60 -1% Target $53 -5% Macys $45 -37% JC Penney $29 5% Kohl’s $28 -28% Home Depot $17 -23%

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Lowes $17 -21% Kmart $12 -14% Sears $13 -26% Best Buy $8 -56%

Source: Kantar Media

Preliminary spend figures for TV, Local Radio, Newspapers, Internet Display

Walmart and Amazon exclude self-promotion

From a paid search perspective, Amazon is clearly prioritizing text ads, with a leading 8.2%

click share in U.S. Google desktop text ads for 2500 popular retail product keywords during

our studied period. Macy’s and JC Penney ranked second and third for click share with 5.8%

and 4.3% respectively, again demonstrating JC Penney’s strong competitive push this

holiday season.

Meanwhile, Walmart and Best Buy clearly chose to concentrate their efforts on PLAs, where

Walmart led the pack with an 8.1% click share with Best Buy in second place at 6.1%. While

Macys and JC Penney still placed in the top 10 for click share, their click shares were

noticeably less than for text ads.

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On the social front, leading retailers again focused on different channels. Walmart posted an

astounding 7,457 times during our studied period, but this activity was due in part to

customer service responses to its large volume of shoppers. Amazon led Facebook with 100

posts over three weeks and also was quite active on Twitter, although it was surpassed in

both this channel and Instagram by Macy’s. Meanwhile, JC Penney and Best Buy had

surprisingly low levels of activity. Given JC Penney’s aggressive push this year social media

would seem to be an ideal way to reinforce its efforts, while Twitter would seem to be an

important way for Best Buy to connect with its tech-savvy, highly mobile audience.

Social media activity - 11/21/16-12/11/16

Instagram Volume

Instagram Engagement

Twitter Volume

Twitter Engagement

Facebook Volume

Facebook Engagement

Amazon.com 38 174 1148 15 100 69Best Buy 5 177 172 64 19 38JC Penney 14 235 534 18 24 232Kmart 9 129 104 14 8 40Kohl's 24 393 2359 5 11 239Macy's 55 280 1981 12 50 178Sears 10 126 39 19 3 160Target 4 310 1037 3 10 71Walmart 11 71 7457 1 15 26

Total: 170 Average: 211Total: 14831

Average: 17 Total: 240

Average: 117

Source: Unmetric

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Some of these differences are likely due to the individual strengths of the different social

channels. For example, Instagram was well suited to the softer branding approach used by

Macy’s, which offers a higher-end product mix than JC Penney. It posted 55 times using a

mix of festive photos and videos, receiving a peak engagement score of 741 for an image of

the iconic Rockefeller Center Christmas tree in NYC.

JC Penney: Getting their Penney’s worth

So what’s motivating JC Penney’s increase in ad spend – in marked contrast to the

competition? Last year, JC Penney reported a 3.9% increase in sales during the crucial

holiday season. In contrast, holiday sales from Macy’s fell 5.2% during the same time period.

Falling sales were partially blamed on an unseasonably warm winter, however JC Penney

faced the same conditions suggesting the retailer was starting to make a comeback with

increased market share after a failed attempt at trying to reinvent itself with a new strategy in

2011.

This year JC Penney is trying to keep the momentum going with some small but noticeable

increases in media buys. While its ad spending still doesn’t compare to that of some of the

bigger players like Walmart or Target, JC Penney is coming one step closer to closing the

gap in expenditures – particularly given the fairly significant cuts from some of those

retailers.

With competitors pulling back on spend, JC Penney is taking the opportunity to stand out

from the clutter. The retailer has used dedicated Black Friday and Cyber Monday campaigns

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to hammer home the “on sale” message theme, letting consumers know that it is the retail

destination for the best deals and biggest sales.

TV Online Display Facebook

TV Online Display Facebook

Winter holiday promotion continued heavily after the Black Friday weekend, however JC

Penney has been withdrawing some of its “sales” messages. Instead the retailer has been

marketing its price match offers on television, while using internet display to promote specific

brands like IZOD, Dockers and Ashley Nell Tipton a collection carried exclusively at JC

Penney.

Don’t let the declines in spend fool you: Winter Holiday remains a highly competitive period,

and one that all retailers are desperate to win. However, the growth of new channels for

shopping and marketing is giving them the opportunity to experiment with new approaches –

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and find new ways to stand out from the pack. Kantar Media will continue to monitor Winter

Holiday advertising throughout the end of the year, so keep visiting kantarmedia.com to see

our latest insights.

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