August Isn't Too Early To Start Preparing For The Holidays

Started hanging the tinsel yet? Ordered the instant latke mix? Mixed the punch and dragged out the Dickens? While personal preparations for the December holidays may be a ways off, mid-August is a good time for marketers to start planning their campaigns. Bill Tancer, general manager of research at Experian Marketing Services, has just released The 2010 Holiday Marketer: Benchmark And Trend Report. He spoke with Direct Newsline about holiday trends and myths – Santa Claus notwithstanding.

Direct Newsline: You wrote that the pendulum is swinging from marketing being viewed solely as an art form to data-based decision making. Given the heightened focus on accountability in marketing, is what you call faith-based decision making still the hazard you describe?

Tancer: I do believe there is art to marketing. The art is in structuring the message regarding how consumers want to be reached, and with what message. That said, there is increasingly room to turn to data, to fine-tune what marketers believe to be true. There were limitations in the past. Getting data from our tools, or analyzing data, required a degree in computer science. Now those tools are so easy to use that we are fully capable of turning to that data. That said, one thing we have to be careful of is what [mathematician] Nassim Nicholas Taleb called the narrative fallacy. He said when we have a theory of how markets or consumers behave, we can find data that corroborates our theory. So we have to play devil’s advocate with our own analysis when we look at data, whether we are looking for things that will confirm our hypothesis as well as refute it.

Direct Newsline: What are some of the top myths of the holiday season?

Tancer: Marketers are often off the mark in terms of how they think consumers behave, such as when consumers start thinking about buying things. We have found good examples this when we look at Internet behavior data from our Hitwise product. We look at search terms to tell us when consumers start thinking about things. For example, searches around the holidays oftentimes begin as early as August or September. We are starting to see searches about the holidays now. Most marketers believe that’s really early, in terms of when they should be getting out their holiday sales information. Yet that consumer behavior is what it is. We can look at a specific event like black Friday [the day after Thanksgiving, when retailers supposedly move to profitability for the year]. As early as the first week of November we start to see a ramp in Black Friday queries. We see queries for terms such as holiday sales, Christmas sale, Christmas decorations. Those are queries in August. My guess, having analyzed this behavior during the past six years, is that we will see that behavior earlier.

Direct Newsline: According to your report, 2008 and 2009 holiday sales rates represented the first declines since the 1950s. This year sales are projected as being very slightly up. Isn’t that the result of having a lower base than in previous years?

Tancer: It may be the result of a lower base. That information comes from our catalog cooperative database and consists of actual transactional data we are tracking as we approach the holiday season. That is where we are seeing the 1-2 percent increase.

Direct Newsline: Your report includes year-over-year daily visit data for the top 500 online retailers during November through December in 2007, 2008 and 2009. How is the same data looking for January through July of this year, and what does that augur for November and December of this year?

Tancer: It’s not in the report, but looking at our Retail 500 index, looking at the first week of August this year as opposed to last year, we see a drop of 9.9% in visits compared to last year. [That said], I’m extrapolating that we are seeing some cautious optimism. I think the gap will decrease. What we are seeing is a reflection in what we are seeing in consumer confidence. It’s based on what we see in overall patterns. That number represents only a week. Analyzed long term I think that dip is related to the recent dip in consumer spending and confidence. My cautious optimism is if we see an increase in consumer confidence, we will once again catch up to where we were last year.

Direct Newsline: In discussing spikes in online orders moving closer to Christmas Day, you wrote “Improvements in shipping times have enabled holiday shopping procrastination” What data made you draw this conclusion? Could it be that consumers have fewer dollars and are waiting longer?

Tancer: When we look at the trending data regarding visits to the top 500 online retailers year over year, we see movement of the big spike [in visits] from the first to the second week in December. Our hypothesis is that shipping is now enabling consumers to order later. For six years running Thanksgiving Day has been the busiest day for online retail sites. I don’t think the tradition of those sales that appear on black Friday will be affected by the movement of orders closer to Christmas. But the second spike [in online activity] is getting orders closer to the holidays.

Direct Newsline: Within your report, you discuss the different results e-mail campaigns might have. For instance, one might have a lower open rate but yield higher average transactional values. How do you get a marketer to suspend his faith in open rates?

Tancer: In this environment we have to think about return on investment. The transaction rate is the important metric, not the open rate. I do believe we are going to be looking at the bottom line more. That said, there is a value to open rate in terms of the brand value and getting your message across. That e-mail might raise awareness of your product or service which translates to a transaction further down the line. There is still is value to looking at open rate, but I think our bottom-line mentality going into this holiday season is going to make transaction rates more relevant.