Clear Digital Digest: ad spend, Black Friday, TikTok, Royal Mail and Woolworths

Today’s varied Clear Digital Digest round-up includes:

• The launch of major Christmas campaigns is imminent, but it is predicted that advertising spend will be down 10% this year.
• An update on the latest ecommerce sales figures, plus Black Friday getting earlier every year.
• The latest in customer channel shift from brands as diverse as TikTok, Shopify, Royal Mail, AO, Sky and John Lewis.
• And finally...the great Woolworths hoax.

HERE COMES CHRISTMAS: BUT AD SPEND FORECAST TO BE £724M LESS THAN LAST YEAR

With half term coming to a close this week and Christmas products all over the high street, November is typically when the large retail brand campaigns come to life, with large TV spend supported by a variety of other media.  Of course 2020 is not a typical year, so there will certainly be all kinds of challenges creatively this year, as well as with regards to available budgets.

• The Advertising Association (AA) and Warc forecast final quarter spend will be £724m less than last year, a decline of 10.5% on last year to a total of £6.2bn.  This would be the biggest drop in the “golden quarter” since figures started to be compiled in 1982.
• Marks & Spencer are a prime example of a retailer that will likely be drastically changing its advertising strategy this Christmas, with rumours that its TV advertising will be purely focused on food this year, with clothing only supported online.
• TV is actually forecast to be fairly resilient this Christmas, with a decline of just 2.7% on last year.  Instead - and very understandably – it is external sectors such as cinema and outdoor/posters that will be seeing especially significant declines.

• Digital spend across search and online display is also forecast to fall in the fourth quarter, by almost £300m to £3.57bn in total.  However, this still equates to a dominant 57% share of the total ad spend of £6.2bn.

 

• Of course, ad spend shifts this year vary greatly by product category, as is shown by some recent eMarketer research demonstrating that the travel and automative sectors have been hit particularly badly.
• Looking at just digital advertising in the UK, it is forecast that travel spend will decline by 37% this year, as the table below shows.  Other sectors have been less adversely affected by the pandemic, led by technology products as we spend more time at home for both leisure and work reasons.

• After recording just 0.3% growth in digital ad spend this year, eMarketer is predicting growth of 15% in 2021, a similar rate to that experienced each year between 2017 to 2019.
• These changes have obviously led to a shift in the share of digital ad spend by industry, with retail leading the way on 20% of total digital ad spend.
• In monetary terms, this equates to 2020 spend of £3bn for retail, almost £1bn ahead of the second largest category (FMCG and related).

ECOMMERCE: SALES UPDATE - AND BLACK FRIDAY IS GETTING EARLIER EVERY YEAR

Despite all this year’s uncertainty, one trend that can be confidently predicted for Christmas 2020 is that ecommerce sales will take a significant larger share of total retail sales, but how much larger exactly?

• The ONS released their latest online sales tracker on Friday, showing that ecommerce accounted for 26.1% of all retail sales in September, up 8% on the 18.1% recorded in September 2019. 
• This 26.1% was a slight decline of 0.6% on the previous month August’s 26.7%, but the pandemic driven medium term shift to increased online shopping remains.
• Overall retail sales for September grew by 3.4% on September 2019 and edged forward by 1.5% month on month.

Source: ONS

• The final quarter typically sees the highest annual share for internet shopping, usually peaking in November, so it will be interesting to see how much higher this year’s figure will be than the 21.5% that was recorded in November 2019.

• One of the boosters for November’s ecommerce sales is of course Black Friday, which (as is often said about Christmas, perhaps erroneously) seems to be getting earlier and earlier every year.
• Having generally expanded from its one day/weekend event origins into typically running for a week or even a fortnight, Amazon have stretched the Black Friday concept again this year with the launch of their “Early Black Friday Deals” on Monday this week – scheduled to run until 19th November when the standard Black Friday offers will presumably kick in...​

• These early Black Friday Deals come fairly soon after Amazon’s Prime Day event that took place this year from Tuesday 13th to Wednesday 14th October, having been put back from its usual summer slot when Amazon was prioritising essential deliveries.  This additional Black Friday promotion could be due to speculation from Citi analysts that 2020’s Prime Day may have been the first in the event’s history not to record sales growth, perhaps due to its proximity to Christmas plus of course our drastically altered current shopping habits.

CHANNEL SHIFT: SHOPIFY, TIK TOK, ROYAL MAIL, AO, SKY, JOHN LEWIS

Here are a few recent stories that caught my eye regarding channel purchasing shifts, including developments from AO and Sky which demonstrate how digital first brands continue to consider the ways that a physical presence can help them engage further with customers…

• Intriguing news from two fast growing but diverse digital brands as ecommerce platform Shopify revealed a new global partnership with TikTok, which will allow retailers using Shopify to more efficiently target and sell to the Tik Tok audience – but perhaps more crucially will likely make it significantly easier for TikTok influencers to sell directly to their audience.  I took a more detailed look at Shopify in my recent deep dive article: “The growth of Direct To Consumer, Shopify – and developing multiple channels”.  
• Royal Mail has this week announced that it is recruiting a record number of temp workers this Christmas to cope with the forecast additional demand driven by online shopping: a total of 33,000, which is two thirds more than usual.
• As was fairly well publicised last week, Royal Mail has also this month started collecting parcels as returns from customer homes to see it start competing with the likes of Hermes and DPD in this area.
• Showing that the shift from physical retail to online is not all one way, AO have this week opened their first ever store – within a Tesco Extra superstore in Middleton, Greater Manchester, the first of 5 such trials this year.

• Sky is also looking to expand its physical presence with the launch of a network of “social hubs for shoppers” across the UK.  With five due to open this year (the first in Liverpool) followed by more in 2021, Sky said the stores would differ from those of its rivals, going beyond simply operating as a sales point for its TV, mobile and broadband packages and aiming to bring “service, innovation and convenience all in one place, under one roof”.  Each location will boast an “access all areas” stage to host various interactive experiences for customers, clearly more suitable for future than immediate plans.
• Repurposing excess retail space can happen in various ways – and this week saw a high profile example with John Lewis gaining planning permission to convert 45% of its flagship Oxford Street branch into office space, albeit this may be more of a medium/long term development bearing in mind the current low demand for new offices as a result of the Covid induced shift to home working.

AND FINALLY…

​One brand that won’t be returning to the high street – despite a flurry of excitement earlier this week – is the old childhood favourite Woolworths.  

• In yet another reminder to always tread cautiously online, on Tuesday (27th October) dozens of mainstream news outlets including the Daily Mirror and MailOnline ran stories that Woolworths was reopening stores based on nothing more than a new Twitter account with approx 1000 followers. 
• This was later outed as actual “fake news” and then subsequently revealed to be the work of an enterprising 17 year old student, who was actually only 5 when Woolworths originally stopped trading.  Of course in these troubled times, it’s likely that many just wanted to believe the story, nostalgic for Woolies pick’n’mix in particular.