Black Friday: How to fight inflation in campaign costs

It’s no secret that November is a key month for brands to boost their sales. In what we know as the e-commerce event of the year, Black Friday and Cyber Monday come together as the perfect excuse to launch offers that will deeply impact the annual profits. These events put a spotlight on Christmas shopping and have become an attractive commercial hook to ‘pump up’ the market, despite their controversy due to previous manipulation of prices in order to offer discounts afterwards.

In any case, these two days generate the greatest digital commercial activity of the year, even more than the days before Christmas. The figures for number of transactions, sales or volume of discounted offers are overwhelming and leave no room for doubt:

• November is the top month for sales, despite not exactly coinciding with our traditional Christmas season.

• In 2021, nearly 180 million people shopped over Black Friday and the american consumer spent an average of $381 and shopper budgets remain significant, with average budgets of $574 for Black Friday deals and $735 for holiday gifting in New York.

• eCommerce retailers’ revenue increased 240% in Black Friday and 380% Cyber Monday.

• 90% of Future’s audience is planning to spend on Black Friday the following years.

But what happens when all brands recognize this amazing opportunity? At a time of such high demand, all advertisers start a simultaneous fight to capture a given segmented audience.

This battle between brands in order to capture users’ attention generates several reflections: What impact does such a strong temporal concentration have on campaign costs? Does competing in such a short timeframe generate price inflation? Are actions less effective?

Meta ads: November is 43% more expensive than other months.

What happens when brands fiercely compete for advertising space? The cost considerably increases. According to our account’s data, which includes 7-figure client investments, the average annual cost per thousand impressions (CPM) on Meta is €1.13 while in November, the month of Black Friday and Cyber Monday, it rises to €1.62.

This 43% increase means that Meta rates are radically affected and exceed any other month of the year, including December. But if we take this comparison to the cheapest month —January— the percentage shoots up by 117%.

CPM in Meta ads (2021)

Display: November rises by 32% more than other months

Performing a similar exercise, we’ve estimated an investment of €100,000 in the time frame from October 2022 to September 2023. Spoiler alert: the conclusions are very similar. The average CPM in display is €1.08 whilst November rises 32% to €1.43 and the difference with the cheapest month soars to 79%.

Estimated Display CPM September 22 – October 23

Low prices, high campaign costs. How to manage our investments on Black Friday?

There’s no Black Friday without discounts, and no Black Friday without paid media investment. And that’s a very complex combination indeed: on the one hand, margins are reduced by having to offer Black Friday discounts and, on the other hand, traffic acquisition costs soar in the face of high competition. Marketing costs increase dramatically: the data obtained for Meta Ads and display can be applied to any other channel.

How could we make this combination profitable? In this context, brands are forced to work on strategies that minimise the impact of such high costs:

• Optimise audiences. Connecting with key audiences is fundamental. The main thing is to segment, analyse behaviours of previously differentiated groups and create audiences from our databases, in order to focus on the most willing, profitable targets.
• Focus on conversion ratios, not on cost. Rather than on the price paid, the focus should be on the return on investment. In order to improve conversion, we must work on all aspects of the campaign: from the discounts we offer, to the user experience and the creativities used on the ads. In short, improving the overall persuasion of the landing pages.

• Increase average revenue. Work on increasing the average basket with cross offers, bundles and reduced shipping costs. If there is not much margin, we must at least look for volume.
• Activate first-party data. Leverage on proprietary data to improve media buying and automate marketing, especially in channels such as email or telephone. Hence the importance of a year-round data acquisition strategy and not only linked to specific actions.

November is one of the key months of the year to get the most out of your ecommerce, but it’ll depend on how your brand achieves a balance between offering quality, user experience and media planning in one of the most costly times. Volume can’t cover profitability and all details must be taken into account for a successful strategy.

Is your brand ready for Black Friday?