Black Friday 2020: Online Ad Spending Up 2-3X Offsets the In-Store Drop

Key Digital Advertising Takeaways from Black Friday 2020:

• Black Friday 2020 was the second biggest online shopping day in history
• Digital advertisers spent 2-3X the daily November average 
• Ecommerce Channel Ads: Sales up 2.9X, average order value up 40%
• Mobile spending was the majority of Paid Search advertising

On Black Friday, in-store retail traffic reportedly fell 52.1% versus last year. Although a drop was certainly expected, many experts didn’t project that shopping in-store would fall by quite that much.

But, the good news is that Americans spent 116.6 million hours shopping online on Black Friday. The sales lost in-store were made up with surging digital sales as consumers spent a record $9 billion online—up 21.1% year-over-year (YoY). In fact, Black Friday 2020 was one of the biggest online shopping days ever—second only to Cyber Monday 2019. Building upon this momentum, this year’s Cyber Monday is expected to eclipse every previous day of online shopping sales.

Overall, the story for the U.S. economy is looking solid. The National Retail Federation predicts that combined online and offline holiday sales during November and December will increase between 3.6 percent and 5.2 percent over 2019 to around $760 billion. 

Key Digital Advertising Takeaways from Black Friday 2020

Online advertisers were ready to spend on Black Friday

To say that Q4 is critical for brands that sell consumer products is an understatement. Given the year that 2020 has been for brands, there was even more pressure than usual for this year’s holiday shopping season to deliver—no pun intended—in order to make up for softer results earlier in the year that were affected by the global pandemic.

Compared to the average daily spend for the November “ramp up” period (Nov 1-25), advertiser spending on Black Friday was:

• Up 3.1X for Ecommerce Channel Ads (Amazon, Walmart, Target, etc.)
• Up 2.9X for Paid Search
• Up 2.1x for Social Advertising

3X Black Friday sales driven by Ecommerce Channel Ads (ECA)

Comprised of ads on Amazon, Walmart, Target, Instacart and others, the Ecommerce Channel is one arena that has seen supercharged growth during the pandemic. Advertisers have followed consumers as they have flocked to these online shopping portals at an accelerated rate and spending on these ads grew 45% year-over-year in Q3. 

On Black Friday 2020, sales revenue driven by Ecommerce Channel Ads was up 2.9X over the daily average of the November ramp-up period (Nov 1-25). Additionally, Black Friday conversions were up 2.1X and the average basket size of those conversions was up 40% (or 1.4X) versus the same period.

Mobile represented more than half of Black Friday ad budgets

One of the storylines of the pandemic has been the rise of mobile usage—especially mobile commerce. Mobile consumer spending rose across all categories but was generally led by retail, grocery, food delivery, and entertainment.

According to AdWeek, consumers also turned to mobile shopping for their Black Friday purchases with 40% of purchases—$3.6 billion—made on smartphones, a 23% increase year-over-year.

Black Friday media spending reflected this trend, with 54% of the day’s spending in Paid Search—digital advertising’s biggest channel—going to mobile phones.

Biggest industry spenders by channel

Across Skai’s ecommerce clients, nearly half of total spending on Black Friday came from the categories of Beauty & Personal Care (24%) and Computers & Consumer Electronics (21%). 

For Search shopping & retail accounts, the largest share of spending was the more general Retailers & General Merchandise category (43%), while the highest-spending category across Social Advertising was Sports & Fitness (40%). 

The Apparel category was second-highest in both Search and Social, with 25% and 21% of total spend, respectively.

Trends in Ad Pricing: a new normal vs. betting big

Compared to last year, trends across Paid Search and Ecommerce Channel Ads on Black Friday were really a tale of two channels.

In Paid Search, same-advertiser spending for Black Friday 2020 increased by just 7% compared to 2019, but total clicks increased 24%. That means average cost-per-click decreased, driven in large part by more clicks on mobile shopping campaigns, which have a relatively low CPC, and also showed much less volatility during November compared to previous years. Mobile shopping has matured to the point where it’s more of a default option, and not a spigot that marketers “turn on” for the holidays with much more aggressive bidding.

Ecommerce Channel advertising, on the other hand, is starting to see more bidding competition during high-demand periods as more and more advertisers get into the space. Click prices were up year-over-year, which led to an overall spending increase by 60% while clicks only grew by 45%.

Methodology & Caveats 

This analysis is based on performance data from accounts designated as “Shopping & Retail” on the Skai platform. Some numbers may change in future analysis as source data is refreshed, updated, and cleansed. Year-over-year analysis includes Skai accounts with spending in November of both 2019 and 2020.

Look out for the Skai Cyber 5 recap later this week

National Retail Federation President and CEO Matthew Shay recently said, “We expect a strong finish to the holiday season and will continue to work with municipal and state officials to keep retailers open and the economy moving forward at this critical time.” This would be a welcomed ending to what has been a down year in the U.S. and globally, and the early holiday results point to overall growth for the fourth quarter in the online retail sector.

And it’s not over yet. Once the dust settles on the Thanksgiving to Cyber Monday peak holiday shopping period, Skai will have more analysis. Check back later this week for the full story.

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