Unwrapping the Christmas marketing dilemma: A jolly good deal or a drain on resources?

A smart marketer’s guide to the best Christmas marketing strategies needed to achieve record sales and new customer acquisition during the festive season.

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In the cost of living crisis, are Christmas marketing strategies just money down the gutter?

As the festive season kicks into full gear, businesses all over the world dive into festive marketing, from all-out TV ads to limited edition menu items. But some businesses have taken a more cautious approach, worried that massive budgets can go down the drain on ill-prepared Christmas campaigns.

This blog explores both sides of the argument, looking at the cases for and against Christmas marketing to help your brand make the best marketing decisions for this year’s festive season.

‘Tis the season for high sales

The festive season, coupled with massive shopping events like Black Friday and Boxing Day, commands significant consumer attention. The “golden quarter” from October to December sees a surge in spending, with over 30% of annual sales occurring during this period. For larger brands, Christmas is a crucial time to grab consumers’ attention considering that many wait in anticipation to see what brands like John Lewis or Asda will offer in the seasonal onslaught of Christmas marketing.

The proof is in the data as well; previous analysis from 2020 has shown that December is one of the strongest months for revenue, outperforming October by 22.63%, September by 31%, August by 13.33% and July by 6.49%. It simply makes sense for advertisers and retailers to capitalise on Christmas.   

Beneath the tinsel and merriment could be misdirected budgets

Recent research conducted by Creative X predicts that $73 billion will go wasted on digital adverts in Q4 this year. Over 50% of digital ad spend in 2020 and 2021 was allocated to image and video ads that were not optimised for their platforms or lacked branding prominence. Brands that invest heavily in Christmas campaigns without planning for factors such as platform optimisation and brand messaging run the risk of low or even negative ROI.

One brand that has decided to withdraw from this year’s Christmas ads campaigns is the frozen food retailer Iceland. Iceland made headlines last week by announcing it has opted out of running a new Christmas ad in 2023, a choice that Richard Walker, Iceland’s Executive Chairman, called “a no-brainer”. Instead, the company said it would redirect these funds to support customers during the ongoing cost of living crisis. This strategic move may be wise for the brand considering its substantial losses in 2023, where it saw a staggering £17 million drop in EBITDA due to energy costs rising by £94 million in the one year alone.

What is the best Christmas marketing strategy for your brand?

A brand’s voice is naturally diminished significantly over the golden quarter as ad spend increases to capture the attention of customers during a season of peak buying behaviour. The very first pillar is planning. Christmas campaigns, no matter the size, need to be planned, booked and executed months before the campaign starts, to ensure quality placements and the most effective results.

Alongside planning, carefully curated messaging, promotions and incentives need to be considered. Researching your competitors from previous Christmas campaigns can inform your decisions on what to run with. Your BAU messaging simply won’t be effective in Q4. Consider the SKUs that will be top sellers in the lead up to Christmas and how best to promote them, either through promotion or incentive to drive visitors to your site.

Consider your customer LTV – while some incentives may cause your product margins to fall in the initial sale, the value of the customer data and future sales help to rebuild that margin. Combine short-term acquisition alongside longer-term value, rather than simply not converting the customer itself.

Q4 is a prime opportunity for new customer acquisition, so focusing on products that mainly sell to new customers, or putting one out at a market leading price stirs up interest from consumers new to your brand. Considering LTV, this is the best time to drive new customers in, and retain them through effective automation campaigns to provide continuous sales from them.

While brands that have chosen to opt out of the Christmas marketing extravaganza show that some are considering a more conservative approach to marketing in the festive season during the cost of living crisis, we recommend a well-researched and highly considered Christmas marketing strategy for your brand over forgoing festive participation altogether. Strike a balance that aligns with both business goals and consumer needs, and you will see the rich results that seasonal marketing has to offer.

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