Ryan Garrow, director of partnerships and client solutions at Logical Position
COVID-19 continues to disrupt the economy, about nine months after the first cases appeared in the United States. In the early days of the pandemic, unemployment skyrocketed thanks to widespread business closures. With so many Americans out of work or staying close to home, economic output and consumer spending fell dramatically.
Despite taking an unprecedented hit, the economy rebounded as stay-at-home orders eased across the country. Today, however, coronavirus cases are once again surging nationwide. Many states are implementing new limitations on businesses to stem the virus’ spread.
These new restrictions come at a critical time. Many businesses are counting on a strong holiday shopping season to carry them into 2021. In response to this uncertainty, retailers must develop digital marketing strategies to maximize returns during this crucial period. To begin that process, we need to analyze how the pandemic has already affected ecommerce.
Increased reach at a reduced price
You probably remember the early days of the pandemic, when toilet paper and cleaning products were impossible to find, and everyone shopped online. That behavior had a significant impact on the digital marketing world. To cope with this sudden, overwhelming demand, major retailers like Walmart Inc., Amazon.com Inc. and Target Corp. basically abandoned their search engine marketing (SEM) efforts. The absence of those huge players turned the SEM marketplace on its head. When we examined our client’s second-quarter digital marketing results, we discovered that:
- Impressions jumped by 36%.
- Clicks increased by 27%.
- All while cost-per-click (CPC) rates dropped by 26%.
Businesses that continued their SEM campaigns during the second quarter were no longer competing against the big spenders. As a result, advertisers saw historically low cost-per-click numbers combined with rapidly increasing search volume. This scenario could repeat itself during the 2020 holiday season.
2020 holiday shopping outlook
Online holiday shopping revenue grows every year. This trend has more to do with evolving consumer behavior than the health of the economy. While it’s difficult to make predictions during a pandemic, I expect online holiday revenue to grow again in 2020. However, the amount of growth will depend on virus levels and the economy. Here are three possible scenarios for the upcoming season:
- Massive ecommerce growth: In this scenario, coronavirus levels worsen across the country, but the economy remains stable. Shoppers avoid crowded brick-and-mortar stores but still have money to spend online. Under these conditions, I could easily see 50-60% growth over 2019.
- Moderate ecommerce growth: Here, some parts of the country are heavily impacted by the virus and locked down, while others have a more typical shopping season. In this instance, online sales could increase by 10% to 50% year-over-year.
- Stagnant ecommerce growth: In the worst-case scenario, the virus rages nationwide while the economy grows weaker. If this happens, people will be stuck at home with no money to spend, and online sales will grow at 10% or less.
At this point, we seem to be trending towards moderate to massive growth. Infection rates are exploding nationwide, and some states have implemented fresh regulations on in-person activities. So far, the economy has remained resilient, and many people should still have money to spend. It seems clear we’ll see a decline in brick and mortar shopping no matter what happens.
Four things you can do now
In times of uncertainty, businesses need to remain flexible and move confidently to take advantage of the opportunities that do arise. With that in mind, here are four things companies can do right now to prepare for the pandemic holiday season.
- Explore new resources: This is a great time to take advantage of resources you’ve never used before. I’m recommending that my clients use Microsoft Advertising this year. More than half of my new clients don’t use the resource, even though it converts better than Google search ads. Many people use the Microsoft search network, and you want to meet your customers everywhere they are.
- Discounting is dangerous: It’s tempting to offer steep discounts during uncertain times to draw in customers. Unfortunately, this can cause lasting damage to your brand. J.C. Penney Co. is an excellent example of a company that won its reputation as a discounter and then suffered heavily when it tried to change course. Once customers begin viewing you as a discount seller, it’s incredibly challenging to change their perception. Instead of cutting prices, develop buy-one-get-one bundling options that protect your reputation while still extending value to your customers.
- Free shipping is a must: Amazon Prime has created the expectation that ecommerce shipping should be free. As a result, online sellers that don’t offer free shipping risk losing customers to retailers that do. That’s why I recommend that all my clients provide some form of free shipping—even if it’s the slowest option available. Otherwise, you’ll be playing from behind no matter how unique your products are.
- Don’t hold back: Many companies approach the holidays with set budgets for their paid advertising. Unfortunately, placing arbitrary limits on your holiday advertising will prevent those companies from taking advantage of good opportunities. If we see a repeat of the early pandemic months, where big retailers exit the SEM marketplace, CPC rates could fall dramatically. When you’re pushing for ecommerce sales, rising search volume and low click costs is the best-case scenario. That’s why brands should prepare to move aggressively to fill that void and capture market share that might not exist under normal circumstances.
Stay focused on holiday results
The pandemic has brought increased uncertainty to everything we do. That situation will almost certainly extend into the holiday shopping season. This year, businesses must create digital marketing strategies that home in on tangible results like improving sales, driving website traffic and collecting customer data for future marketing uses. With a solid plan in place that allows for maximum flexibility, we’ll hopefully see a successful holiday sales season that will carry us on to better things in the new year.
Logical Position is an agency that offers pay-per-click management, search engine optimization (SEO), and website design services.