The festive season is upon us, and as brands and agencies gear up for this crucial period, the importance of strategically planning and executing advertising campaigns cannot be overstated. With retailers revving up their promotional calendars and consumers ready to embark on their holiday shopping sprees, it’s essential to make every advertising dollar count.
 

Get ahead of the curve

The holiday season presents unique challenges and opportunities for advertisers. Our research shows that consumers are increasingly starting their shopping earlier, a trend driven by retailers launching promotions sooner to maximise sales. This trend is particularly noticeable here in Australia, where shoppers are preparing for the holiday season well in advance. October clicks have proven to be the catalyst for November and December conversions, highlighting the significance of early exposure across multiple channels. For instance, 90 per cent of holiday conversions happen outside of the historical blockbuster retail days such as Black Friday and Cyber Monday. Globally, we see the average holiday shopper take 47 days to complete their journey with an average of 17 searches and 12 clicks prior to the point of purchase.

This shift emphasises the need for early and sustained advertising efforts throughout the season. The brands that will excel are those that capture early interest. Seeing an ad repeatedly in October will increase the likelihood of purchase during the November shopping rush.
 

Price consciousness and value-based gifting

Despite the festive spirit, stubbornly high interest rates alongside cost-of-living challenges mean that consumers remain acutely price-conscious, using search as their compass to meticulously find the best deals. Search behaviour continues to evolve from a navigation tool to a place where consumers go for discovery and empowerment. Within each generation, there are also nuances in how they leverage search. Generative AI has also changed the way that consumers seek information on gifts, using natural language to simplify the digital experience. The reimagination of user-centric advertising in this context is a great step forward for the industry.

This year, Australian shoppers are expected to spend between $100 and $500 on holiday gifts, mirroring spending patterns in the United States. This year’s price sensitivity underscores the need for advertisers to highlight discounts and value propositions in their campaigns, including key phrases like “Buy Now, Pay Later,” “Expedited Shipping,” and “Free Returns” to attract these deal-seeking shoppers. Last season, shoppers who researched BNPL options spent 21 per cent more.

In addition to price, values-based gifting is gaining traction. Shoppers are increasingly interested in sustainable, eco-friendly, and ethically produced gifts. In Australia, as well as globally, consumers are aligning their purchases with their values, opting for brands they trust. Approximately a quarter of shoppers prefer values-based gifts, and this trend is growing stronger each year. Advertisers can capitalise on this by showcasing their commitment to sustainability and ethical practices in their campaigns, using attributes that highlight these values.

Leverage diverse ad formats

The effectiveness of holiday advertising is also influenced by the use of diverse ad formats. Utilising a mix of Connected TV (CTV) ads, display ads, video ads, and native ads early in the season generates awareness and consideration, increasing brand exposure throughout the season. In addition, research indicates that users exposed to multiple unique ad formats spend more, highlighting the importance of an omni-channel, multi-format approach to close sales.

Advertisers have been able to achieve higher conversion rates when they work towards creating synergies across different channels – starting with video ads to build awareness and later reinforcing with display and search ads.

Maximise reach with AI and automation

The integration of AI and advanced advertising technology is also revolutionising how Australian brands connect with their audiences at scale. Microsoft Advertising offers tools like Performance Max (PMAX) that leverage machine learning to optimise campaigns across multiple channels, including search, native, display, video, and retail media. Features such as impression-based remarketing, where a remarketing ad is served to users who have already seen your ad once have also proven to be very effective in cross-channel strategies. Our research shows that using PMAX helped advertisers achieve 2.6x more site visits and 4.2x more conversions, making it a powerful tool for holiday advertising.

Moreover, there is a strong link between AI-powered ads and engagement, with an average 15 percent higher click-through rate and 4 x faster consumer decision journey when compared to traditional search.

However, despite the rise of technologies such as generative AI, it’s important to remember that human input is required to experiment with strategies, evaluate results and ultimately elevate campaigns. As we like to say, AI isn’t creative, you are.

It’s exciting to see how AI can be a force-multiplier for smaller or emerging brands, with AI helping to lower the barriers to entry and level the playing field. Tools such as Copilot in the Microsoft Advertising Platform make it easy to use natural language to unlock productivity, unleash creativity, and uncover insights – ultimately uplevelling performance.
 

Key takeaways for brands

As brands and agencies prepare for the holiday retail season, here are three principles to ensure advertising investments are maximised:

• Start early: Launch holiday campaigns in October to capture early shoppers and maintain visibility, helping keep your brand top-of-mind.
• Embrace cross-channel and multiple formats: Employ a mix of CTV, display, video, and native ads to increase brand exposure and drive higher engagement.
• Leverage AI: Utilise AI-powered tools to create personalised, impactful campaigns while ensuring consumer privacy.
• The power of partnership: go beyond a platform, and seek partners who are in the business of empowering yours

By adopting these strategies, brands and agencies can navigate the complexities of the holiday season effectively, ensuring their advertising efforts deliver optimal results.

Check out the Microsoft Advertising Holiday Marketing playbook to make the most out of the festive season.