Walmart Spends Wisely this Black Friday

Walmart was the most efficient major retailer when measured by ad spend per Black Friday visitor share, followed by Best Buy and Home Depot

November and December are high stakes months for retailers. It’s a period when nearly one-fifth of annual sales occur, swelled by consumer spending for holiday gifts. Although retailers’ year-end marketing programs seem to debut earlier each year and now creep into October, the holiday shopping season doesn’t start in earnest for many people until Thanksgiving.

Among brick-and-mortar retailers, Black Friday sales promotions remain a popular tactic for drawing customers into stores and combatting the shift toward online commerce. Retailers spent millions of dollars on advertising in the run-up to Black Friday 2014 hoping to persuade shoppers to spend money at their cash registers during the big holiday weekend. And though Thanksgiving weekend performance is an uncertain predictor of the total holiday season, it is a widely followed scoreboard. Which retail advertisers got a strong ROI this year in the form of customer traffic and which ones lagged?

To answer this question, Kantar Media and location-driven insights specialist Placed Inc. merged their respective data on advertising expenditures and in-store visitor counts to calculate a ratio of ad spend versus share of visitors. The metric has been used to evaluate and compare the results achieved by top national retail chains over the four-day Thanksgiving weekend and provide insights on how offline advertising helps drive in-store customer traffic during a critical promotional period.

For the analysis, Kantar Media used its syndicated monitoring data to tabulate retailers' TV ad spending on broadcast networks, cable networks and local TV stations for the period of November 3-26 (the day before Thanksgiving). Placed used its opt-in panel of smartphone-enabled consumers to track their locations and the retail stores they visited from Thanksgiving Day through the following Sunday. From these data, the top 59 retail destinations were identified and the total number of unique visitors was tabulated. Each individual retailer’s percent share of total visitors was then calculated.

The table below presents results for a select group of retailers:

In the fierce competition among department stores and mass merchandisers, Walmart effectively leveraged its enormous scale to both outspend and outdraw each of its major rivals. The company pumped $70.7 million into TV advertising and earned a 38.0 percent share of store visitor traffic, the highest incidence for any retailer. As a result Walmart had the lowest visitor acquisition cost by far in this analysis, spending $1.9 million per share point- slightly less strong than the $1.7 million per share point it spent last year, but a great result compared to the competition.

Target came close to matching Walmart’s TV ad budget by spending $61.6 million – more than double what it spent last year - but only drew about one-third as many shoppers (a 13.2% share), yielding a rate of $4.7 million per share point. This was second best in the segment but only the fifth best ratio among all twelve retailers examined, and significantly less efficient than the $2.4 million per share point it achieved in 2013.

In one regard Target had a better relative result than Walmart over Thanksgiving weekend. Compared to the same four days from the prior week (November 20-23), Target’s share of customer traffic increased from 10.8 percent to 13.2 percent, a gain of 2.4 points. The comparable figures for Walmart were 37.4 and 38.0 percent, an uptick of just 0.6 points. This may be due to Walmart’s greater focus on driving sales throughout the entire month of November, through releasing many special offers starting on November 1 and offering “Black Friday”-type deals online as of November 3.

At the other end of the scale, Macy’s spent $10.5 million per visitor share point, more than five times greater than Walmart. The mass merchandisers in our study – Walmart, Target, Kmart – each had lower costs per visitor than the full line department store brands.

Among the big box home improvement stores, Home Depot bested Lowes on each of the critical measures. It won the period on TV ad spend ($25.1 million vs. $20.2 million), foot traffic (6.9 percent vs. 5.1 percent) and acquisition cost ($3.6 million vs. $4.0 million).

Consumer electronics are a popular item on consumer’s shopping lists for Black Friday deals and Best Buy stood up to the retail challenge posed by mass merchandisers. The company parlayed a $22.7 million pre-Thanksgiving TV budget into a 7.4 percent share of visitors for a highly effective rate of $3.1 million per share point, second best in this analysis.

Black Friday messaging starts earlier

Leading up to the biggest retail sales weekend of the year, Kantar Media also examined the ad messages within every TV commercial aired by retailers and noted those with explicit themes tied to Black Friday.

As expected, the proportion of their spending on ads with Black Friday messaging accelerated as the day drew closer. However, there were wide variations in timing and spending among individual retailers.

Amidst concerns that early 2014 holiday promotions would make Black Friday shopping less relevant, a majority of the retailers we analyzed devoted a larger share of their TV spending to directly promote the event as compared to last year. A common strategy was using the extra budget to launch Black Friday campaigns up to a week earlier than normal. (Last year, only four of the twelve major retailers studied had begun ads with Black Friday messaging prior to the final week before the holiday, as compared to eleven this year.)

During the three days preceding the Thanksgiving shopping weekend Black Friday themes accounted for more than 85 percent of total TV spending from six retailers: Toys “R” Us, Home Depot; JC Penney, Macy’s, Kohls and Lowes.

With significant variations in how much they are spending, as well as when they emphasize Black Friday sales events in their ads, retailers are using a variety of different strategies to appeal to holiday shoppers during this important weekend. Many additional factors can also impact Black Friday shopping success including the use of other advertising channels besides TV, the number of stores retailers operate, their merchandising mix and the importance of online. However, the Cost per Visitor Share Point metric provides one useful way to help retailers evaluate their current outcomes and feeds into planning the 2015 holiday marketing playbook.

About Kantar Media

Kantar Media provides critical information that helps our clients make better decisions about communications. We enable the world’s leading brands, publishers, agencies and industry bodies to navigate and succeed in a rapidly evolving media industry. Our services and data include analysis of paid media opportunities; counsel on brand reputation, corporate management and consumer engagement through owned media; and evaluating consumers’ reactions in earned media. As the global house of expertise in media and marketing information, Kantar Media provides clients with a broad range of insights, from audience research, competitive intelligence, vital consumer behavior and digital insights, marketing and advertising effectiveness to social media monitoring. Our experts currently work with 22,000 companies tracking over 4 million brands in 50 countries.

About Placed

Placed is the leader in location-driven insights and ad intelligence. Measuring billions of locations across the world's largest opt-in mobile location panel, Placed provides the most comprehensive understanding of consumers' offline behaviors. Connecting the physical and digital worlds, Placed gives brands, agencies, publishers and ad networks the ability to target location at scale, measure the offline impact of media, and deliver actionable insights into consumer behavior.

Founded in January 2011, Placed is headquartered in Seattle and is backed by Madrona Venture Group and Two Sigma Ventures.

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