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Three e-commerce predictions for the holidays

When it comes to the holiday selling season, there is one easy prediction marketers can make and it’s about online shopping: It will be bigger than last year. When it comes to the holiday selling season, there is one easy prediction marketers can make and it’s about online shopping: It will be bigger than last year.

But just how big will the growth be? And what channels, formats, and devices will see the largest lift?

Here are three trends I predict retailers will see:

1. E-commerce retail sales share will once again spike in Q4
One annual trend that seems set to continue is the Q4 rise of online sales relative to offline sales. According to recent data from the US Bureau of the Census, e-commerce retail sales rose to account for 9.6% of all sales in Q4 2016 before falling back below 9% for the first half of 2017.

Given that e-commerce share has spiked each Q4 for over 10 years, it’s probably safe to say this will be the case yet again in 2017. My prediction is that e-commerce will account for more than 10% of total retail sales in Q4.

That means offline interactions will still account for almost 90% of total retail sales. But I also predict that the most important brick-and-mortar sales day will see big e-commerce growth.

2. E-commerce sales will grow faster on Black Friday than Cyber Monday
Shoppers no longer line up for deals on Black Friday – many go online, resulting in big online retail growth for the historically brick-and-mortar sales holiday. In 2016, overall e-commerce sales actually grew significantly faster on Black Friday than on Cyber Monday.

Cyber Monday was still the largest e-commerce sales day of the holiday season, but in 2017, it's likely we will once again see bigger online sales growth on Black Friday than on Cyber Monday.

As such, even brick-and-mortar brands luring shoppers in-store with doorbuster sales should give digital channels meaningful focus leading up to the start of the 2017 holiday shopping season. One major channel that reflects this trend is paid search, where on Google, we saw Black Friday sales grow about twice as fast as Cyber Monday sales for retail advertisers last year.

3. Local digital ad formats will be more important than ever before
Over the past couple of years, Google has put more emphasis on delivering locally focused ads to searchers who demonstrate local intent in their queries. One such ad format is Local Inventory Ads (LIA), which are a variant of product listing ads that feature information on when an item can be picked up at a local store.

During the 2016 holiday season, these ads steadily grew from Thanksgiving on, but really took off in the week immediately ahead of Christmas. This increase was likely the result of both increased interest in locally available options from searchers, as well as advertisers becoming more aggressive with bids for local inventory ads, due to time-sensitive shipping demands and climbing shipping costs.

Brick-and-mortar advertisers that don’t currently have LIA campaigns running may find it difficult to get them set up ahead of this holiday season, as it requires that a feed be passed to Google for each individual store the brand might want to include. Further, Google does check up on the accuracy of the feed by verifying pricing and availability during physical visits to the store.

However, brands that already have LIAs running, or plan to do so ahead of Thanksgiving, should be prepared for this format to be even more important during the holiday shopping season than the rest of the year. From Thanksgiving to Christmas Day 2016, LIAs accounted for 11% of all shopping traffic for the advertisers deploying them – I think it tops 20% this year.

There was also another local ad format that grew in importance last holiday season – ads featured on Google Maps. Looking at the share of Google brand text ad traffic attributed to the ‘Get location details’ click type, which primarily comes from Maps ads, we find that shoppers steadily became increasingly likely to search for store brand names within the navigation app in the lead up to Dec. 25.

For non-brand queries (when a searcher does not include the advertiser’s brand name), we find a slight increase throughout the holidays, but then a gigantic spike on Christmas Eve and Christmas Day. This indicates that last minute shoppers are more likely to search directly in navigational apps than at other points during the holiday season.

Any advertiser that has active location extensions added to AdWords campaigns is already eligible to trigger maps ads based on the keywords they’re currently targeting. There is no way to target a campaign only to Google Maps.

All in all, ‘Get location details’ clicks accounted for 2.6% of total Google text ad traffic between Thanksgiving and Christmas Day last year. Expect it to at least triple and top 6% in 2017.

In the case of both LIAs and Google Maps ads, these ads are far more important on phones than on desktop and tablet devices, and accounting for the in-store value they drive will be an important part of mobile strategy this holiday season.

In short, e-commerce will grow to account for its largest share of total retail sales ever this Q4. I also think e-commerce sales will grow faster on Black Friday than on Cyber Monday, as was the case in 2016, underscoring the importance of digital even on days which are usually brick-and-mortar focused.
Aside from online conversions, online retail interactions that drive in-store interactions will also grow in importance during the 2017 holiday shopping season. Digital ad formats that promote brick-and-mortar visits, such as Google Local Inventory Ads and ads on Google Maps, should likewise grow leading up to Christmas Day.

Andy Taylor is associate director of research at Merkle, a global data-driven, technology-enabled performance marketing agency, where he is responsible for analyzing trends across the digital marketing spectrum for best practices and industry commentary.

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