BTS 2014 - AdDynamics

Ad Dynamics PerspectiveTM
The Power of Market Intelligence
Back-to-School: New strategies stand out
Advertisers expand their tactics to reach additional audiences
A
s the Back-to-School (BTS) shopping season comes to an end, and students
head back to campus, retailers and manufacturers are now reviewing the
season, measuring their results, and scoping potential adjustments to
strategy for the Holiday Shopping Season 2014, and BTS 2015.
Early sales indicators suggest the BTS season got off to a slow start. EY
(formerly Ernst & Young) reported that higher food and gas prices created a BTS shopping
environment in which shoppers were willing to wait for lower prices and deeper discounts
later in the season. This led to predictions that had spending on traditional BTS items
like apparel and stationery flat compared to 2013. EY also anticipated the increasingly
competitive retail environment to be marked by late season discounts (in addition to the
planned BTS discounts) that spanned into September.
Promotional indicators supported many of the predictions from EY. The BTS season
was highlighted by notable shifts in flyer promotional volume, increases in ad quality
for many key BTS categories, increasing use of offers and overlays by certain retailers,
and early-season price drops from leading online retailers. Competition for the BTS
shopper was stiff, and retailers leveraged new, dynamic promotional strategies across
both print and digital media to differentiate their value to BTS shoppers.
In this issue of Ad Dynamics’ Perspectives, we will review the omni-channel
promotional and pricing activity for the office/electronics, mass, department, and
e-commerce retail channels during BTS 2014. We will uncover which retailers
changed their strategy—from a volume, messaging, category allocation, and pricing
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In This Article…
Ad Dynamics reviews advertising and
pricing trends that stood out during
the Back-to-School period, 2014.
We examine the office/electronics,
mass, department, and e-commerce
channels, uncovering:
•
•
•
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How well retailers used themes
and categories to target specific
shoppers
Which retailers used an integrated
promotional strategy between
their flyers and .ca home pages
How Amazon pre-empted
competitors with online price
discounts
Which Laptop, Tablet, and
Smartphone brands were
supported with the highest ad
quality
Source: Ad Dynamics 2014
Figure 1: Back to School Flyer Volume
perspective—from BTS 2013. We will examine online price
trends over the course of July and August for top-selling
Laptops and Tablets to understand the timing of BTS discounts,
who the price leaders were, and who fluctuated their pricing
throughout the season. We will close with a discussion on how
the emerging promotional and pricing trends from BTS 2014
can help retailers and manufacturers make thoughtful strategy
adjustments for the upcoming holiday shopping season, and
beyond to BTS 2015.
BTS flyer volume saw some extreme fluctuation from retailer
to retailer versus 2013. Where certain retailers maintained a
similar flyer volume strategy year over year, others executed
distinct changes to print strategy by increasing or decreasing
their total flyers published and/or pages per flyer.
Relative to competing flyer strategies, Best Buy, Future
Shop, and Staples each maintained continuity from BTS 2013
to 2014, as seen in Figure 1. Best Buy and Future Shop featured
dense flyers during BTS 2013 and 2014, each publishing over
25 pages per flyer. And while both made small changes to the
number of flyers they published (Best Buy added one flyer,
Future Shop removed one flyer), their page counts remained
static relative to their competition.
Comparatively, the biggest changes
to flyer volume were seen at Walmart,
Hudson’s Bay, and Sears. All three made
at least a 50% change in volume to either
their total flyers or pages per flyer versus
BTS 2013. In particular, Sears overhauled
their flyer strategy. The department store vastly
decreased their count of flyers—down nearly 72%
year over year—while making each flyer more dense.
In 2013, Sears ran 19 category-specific (eg. Mattress
Sale, Home Sale, etc.) two-page flyers, whereas in 2014, the
least number of pages they promoted in any one flyer was
eight. They increased their pages per flyer by 109%, running
just over 11 pages per flyer during BTS 2014, compared to just
over five per flyer in 2013.
Flyer volume changes can directly impact how successful
a retailer is in attracting shoppers to their stores during key
calendar events like BTS. Understanding the volume strategies
of competitors is essential for any retailer when planning their
count of flyer drops and pages per flyer. Volume changes
during key periods should be governed by the competitive
promotional landscape.
Source: Ad Dynamics 2014
Figure 2: Back to School Themes & Targeting, Canada versus US Flyers
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Ad Dynamics PerspectiveTM
Figure 3: Category Ad Quality, Back to School 2014 (Sum of ADVI)
Opportunity for increased use of themes, targeting
Just as promotional volume can influence a retailer’s ability
to drive shoppers to their stores, so can promotional timing,
themes, and targeting. If you are late to market with your
BTS promotional offers—whether you are a retailer or
manufacturer—you risk being pre-empted by competitive
offers. Likewise, if your flyer themes fail to incent your target
BTS shoppers specifically, you risk losing your critical segment
of shoppers to a competitor.
Figure 2 shows the timing, themes, and targeting of BTS
flyers at Best Buy and Staples compared to Best Buy and Staples
US. In this analysis, Ad Dynamics looked at combination of
flyer theme and front page category mix to determine, from a
qualitative perspective, which shoppers each retailer targeted
during BTS.
As they did with their flyer volume, Best Buy and Staples
replicated the timing of their BTS promotions from 2013 in
2014. Best Buy’s first BTS-themed flyer dropped on 7/24, while
Staples’ first drop occurred on 7/31. Both ran BTS-themed flyers
through the end of August, showing consistent promotional
engagement through the end of the season.
From a theme and targeting perspective, neither Best Buy
nor Staples explicitly called on one segment of shoppers,
instead using a more catch-all strategy. Best Buy pushed
a theme of low prices on laptops throughout the season,
featuring promotions like, “School-ready Laptops, Student-ready
prices”, “We’ll beat any laptop price online or anywhere else”,
and “Laptops that fit your budget and backpack.” Overall, Best
Buy pushed the low prices and great savings message.
Similarly, Staples leveraged their “Make back to school
Source: Ad Dynamics 2014
happen for less” campaign each week from their first flyer drop
in August, through their drop on 9/4. They focused on cost
savings for all BTS shoppers, rather than making a push for a
particular target shopper.
Comparing the timing and themes of Best Buy and Staples
to their counterparts in the US, there may be opportunity
for strategy adjustments when planning for BTS 2015. Both
Best Buy US and Staples US began their BTS flyer promotional
campaigns on the week starting 7/6—more than two weeks
prior to the first BTS flyer drops in Canada. By dropping a BTS
flyer just one week earlier in 2015 than in 2014, Best Buy and
Staples stand to gain a pre-emptive advantage over their direct
competitors by being the first retailer to capture BTS shopper
attention.
Their US counterparts were also targeted in their
promotional approach. Best Buy US promoted themes geared
more towards high school and university students—for
example, “Selection for higher learning” and “Grade-A Tech to
help you succeed.” Their front page category mix supported
their themes as well, as they promoted almost exclusively
computers, tablets, and other electronics categories during
BTS. Of the 54 total products featured on Best Buy front pages
between 7/6 and 8/17, 61 percent were either laptops, tablets,
or smartphones. No other subcategory had more than 7
percent share of Best Buy US circular front page promotions.
Staples US went the opposite route with their targeted
flyer promotions, focusing on winning shoppers seeking the
lowest priced school supplies for elementary and middle school
students. Though their theme of “Less List. Our lowest prices
all season long,” didn’t directly call on younger students, they
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Source: Ad Dynamics 2014
Figure 4: Brand Ad Quality, Laptops, Back to School 2013 versus 2014
promoted school supplies much more heavily on their flyer
front pages than computers and electronics categories—101
of their 151 promoted products on flyer front pages were nonelectronic school supplies.
As planning for BTS 2015 begins over the next few months,
retailers like Best Buy and Staples have an opportunity to adjust
both the timing and targeting of their BTS flyer promotions to put
themselves in a better position to win BTS shoppers.
flyers from 2013, several of which featured major appliances
exclusively on the front page.
ADVI provides insight into how shoppers may perceive
a retailers’ promotional offers during a given period. Both
Walmart and Sears made adjustments to their category
strategy from 2013 to cater more towards the BTS shopper,
rather than featuring categories like major appliances that may
not be the best trip driver during the BTS period.
Sears, Walmart feature more BTS categories
Two retailers that made significant changes to their flyer category
mix from BTS 2013 to 2014 were Walmart and Sears. Both allocated
improved ad quality to BTS categories year over year.
Figure 3 lists the top promoted flyer categories by retailer
for both BTS 2013 and 2014, measured by Ad Dynamics Value
Index (ADVI). The ADVI of each category is determined using
the product of multiple factors, including page position, ad
size, and ad count. The better the page position, larger the ad
size, and greater the ad count, the higher the ADVI.
In 2013, among the top five promoted categories by ADVI
at Walmart, three were non-BTS categories, including Sony
PS3 Games, Pool/Water Accessories, and Household. Walmart
adjusted their allocation of premium flyer space in 2014,
during which the top six categories (Backpacks, Markers/
Highlighters, Prepaid phones, Pencils, Postpaid phones, and
Pens) by ADVI were BTS-focused.
Similarly, the top four promoted categories in Sears BTS
2013 flyers were major appliances. In 2014, four of the top
five promoted categories were more BTS-focused, including
Backpacks, Bras-Womens, Pillows-Other, and CoordinatesWomens. The shift seen at Sears was, in part, a product of the
retailer eliminating many of their two-page, category-specific
Computers, Tablets, and Smartphones
given high ad quality across retail channels
In addition to highlighting the shifts in ad quality year over
year, Figure 3 shows us that, regardless of retail channel,
Laptops, Tablets, and Postpaid Smartphones were promoted
with high ad quality. Of the six retailers we examined, Laptops
were among the top two categories by ADVI at three retailers,
Tablets were among the top five categories at four retailers,
and Postpaid Smartphones were among the top seven
categories at four retailers. In our next section, we will review
the brands within these three categories that saw the largest
year over year increases in ADVI.
Figure 4 reviews the top promoted Laptop brands by ad
quality during BTS 2013 and 2014. Seven of the top nine
promoted Laptops brands saw an increase in ADVI year over
year. Toshiba, Lenovo, and Dell were among the biggest
winners in ad quality, each seeing more than a 200% increase
in ADVI compared to BTS 2013. Toshiba vaulted from the
fifth highest cumulative ADVI in 2013, to third in 2014 among
Laptop brands. Their spike in ad quality was driven primarily
by a drastic increase in their count of front page promotions—
they saw an increase of 550% in flyer front page promotions
versus BTS 2013.
*Ad Dynamics Value Index (ADVI) is Ad Dynamics’ proprietary measure of ad effectiveness, which includes factors such as placement, size, retailer, and market.
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Ad Dynamics PerspectiveTM
Source: Ad Dynamics 2014
Figure 5: Brand Ad Quality, Tablets, Back to School 2013 versus 2014
Despite seeing an increase in ADVI year over year, Apple
actually fell from third to fourth among Laptop brand ad
quality. They joined ASUS, Sony, and Samsung as the only
Laptop brands to see a drop in their ADVI rank relative to
other brands.
Where Samsung and Apple dropped in the ADVI ranks for
Laptops, both brands cemented themselves as the top players
within the Tablets category during BTS 2014.
Samsung Tablets saw a 304% increase in ADVI year over
year, driven by a huge spike in flyer front page promotions.
Samsung Tablet front page promotions jumped from two in
2013, to 17 in 2014, making it the top promoted Tablet brand
on flyer front pages during BTS 2014.
The next closest Tablet brand in total ADVI, after Samsung
and Apple, was Microsoft, which saw roughly 25% of the ad
quality of Apple and Samsung. The wide disparity in ad count
between the top two promoted
Tablet brands and the rest of the
pack resulted in the huge delta
in ADVI. Apple and Samsung
accounted for 74% of all Tablet
promotions during BTS 2014.
To better compete within
categories where there are
clear-cut brand leaders, brands
like Microsoft and ASUS can
focus more on ad quality drivers
such as page position and ad
size. If you cannot match the
ad counts of leading brands,
then work with your retailers to
improve the quality of the ads
your products do receive.
The story for Postpaid
Smartphones was similar
to that of Tablets in that
Source: Ad Dynamics 2014
Samsung and Apple phones
accounted for 59% of total
Figure 6: Brand Ad Quality, Postpaid Phones, Back to School 2013 versus 2014
Postpaid flyer promotions
during BTS. Samsung alone
*Ad Dynamics Value Index (ADVI) is Ad Dynamics’ proprietary measure of ad effectiveness, which includes factors such as placement, size, retailer, and market.
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Postpaid brands during BTS 2013, and ranked fourth in ADVI.
With Blackberry off of BTS flyers entirely, Apple saw their
overall ad count nearly double versus 2013, HTC saw a 66.7%
increase in cover page ads, and Motorola saw their total ad
count increase from nine in 2013 to 39 in 2014 (36 of which
were on interior pages, which limited their spike in ADVI
relative to Samsung or Apple).
Source: Ad Dynamics 2014
Figure 7: Promotional Pricing by Flyer Page Position,
Backpacks, Back to School 2013-14
made up 40% of all Postpaid promotions, and 57% of all flyer
front and back page Postpaid promotions. Their dominance
in ad share and share of key flyer pages resulted in Samsung
more than doubling their closest competitor’s ADVI.
Additionally, each Apple, HTC, and Motorola saw a spike
in ADVI year over year in the Postpaid category, in part due
to Blackberry falling out of the Postpaid picture (Figure 6).
Blackberry had the second highest total ad count among
Mass & Department channel retailers use flyer cover
pages to promote lowest prices in Backpacks category
Where Laptops, Tablets, and Smartphones were the primary
promotional focus for the office/electronics retail channel,
one of the top categories promoted in mass and department
channel flyers during BTS was Backpacks. Per Figure 3,
Backpacks was the top promoted category by ADVI in Walmart
and Sears flyers, and ranked second by ADVI on Target flyers.
Sears expressly supported the Backpacks category—of their
41 Backpacks ads during BTS 2014, 32 were either on the front
page or front wrap of BTS flyers.
Figure 7 shows the average promoted price of Backpacks
products broken out by page position. A consistent pattern
can be seen at Sears, Target, and Walmart. All three featured
their lowest promoted price for the Backpacks category on
their flyer front page. Sears and Walmart both featured an
average promoted price of under $10 on their flyer front
pages, with Walmart owning the lowest average front page
promoted at $5.00.
Not only did these three retailers allocate quality ad space
to the Backpacks category, but they also saved the best
promoted prices in the category for their flyer front pages.
These are both leading indicators that the Backpack category
was a primary traffic driver for the mass and department
channels during BTS 2014.
Source: Ad Dynamics 2014
Figure 8: Apparel Offer Types by Percent of Total Apparel Promotions, Flyers, Back to
School 2013-14
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Ad Dynamics PerspectiveTM
Hudson’s Bay, Sears
leverage different offer
types to win shoppers
There was agreement
between mass and
department stores in
promoting Backpacks as
a key BTS traffic driver,
yet the manner in which
they promoted Backpacks
varied greatly from retailer
to retailer. Figure 8 shows,
within Apparel categories
across all flyer pages,
the variety of offer types
used by Hudson’s Bay,
Sears, Target, and Walmart
during BTS 2013 and 2014.
Hudson’s Bay and
Target both increased
Source: Ad Dynamics 2014
Figure 9: Top promoted categories on .ca home pages, ad count totals, Back to School 2013 versus 2014
the percentage of products that were promoted with an offer
type from BTS 2013 to 2014. Over 50% of promoted products
at Hudson’s Bay featured a “% Off” offer, while just over 20% of
their promoted products were featured with only a sale price,
no offer. By comparison, nearly 80% of Walmart’s promoted
products during BTS were promoted with only a sale price. This
was consistent with Walmart’s overall strategy of being the
everyday low price leader, yet shows the dichotomy between
their offer type strategy relative to cross-channel competitors.
The most significant change to offer type strategy year over
year was seen at Target. During BTS 2013, only about 20% of
products on Target flyers were tied to an offer type. In 2014, that
percentage jumped to over 50%. They featured a “% Off” offer
on just over 15% of their promoted products, and an “Exclusive
Buy” promotion on nearly 20% of promoted products. As the
newcomer within the channel, Target leaned heavily on offer
types and overlays to compete during BTS 2014.
Synergistic and disparate online promotional strategies
As shoppers continue the trend towards habitual omnichannel shopping, it becomes more important for retailers and
manufacturers to engage their shopper base using omni-channel
promotions. When developing an online promotional strategy,
it is critically important to determine the purpose of your online
promotions. Is your goal to support your flyer promotional activity
and attract the same shoppers you are trying to drive to the store?
Or is your online promotional activity intended to capture the
attention of a different shopper?
BTS 2014 featured a mix of both synergistic and disparate
online promotional strategies relative to print. Among the
retailers that supported their flyer category mix with their .ca
home page promotions were Best Buy and Future Shop (Figure
9). Of the top ten flyer categories at Best Buy by ADVI (as shown
in Figure 3), seven were among the top promoted categories
on the bestbuy.ca home page during BTS, and the top two
promoted categories—Laptops and Postpaid Smartphones—
were the same in print and online.
Staples and Walmart used more disparate online
promotional strategies relative to Best Buy and Future Shop.
Only two of the top ten categories in Staples and Walmart flyers
(again, by ADVI) were also featured in the top ten categories
on Staples.ca and Walmart.ca. Staples leveraged their website
home page to promote more office supplies categories, rather
than the computers and electronics categories they pushed
in print. Walmart, alternatively, lent relatively little support
to BTS categories on their .ca home page, instead promoting
many summer activity categories such as Outdoor Accessories,
Gazebos, and Swimming Pools.
Whatever approach a retailer takes to their omni-channel
promotional plan, strategy decisions should always be made
based on an analysis and understanding of how competitors
promoted across media channels.
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Source: Ad Dynamics 2014
Figure 10: Top-selling Laptop Online Price Trend, Back to School 2014
Growing impact of e-commerce
According to a recent report from Forrester Research, online
retail spending is projected to reach $33.8 billion (or 8% of
overall retail) by 2018, up from a projected $20.6 billion in
2014. Though still making up only a small fraction of overall
retail spending, a growing segment of shoppers are taking
their purchases online, which has put additional pressure on
retailers and manufacturers to have more consistent visibility
into the competitive promotional and pricing activity in the
e-commerce space. This is especially true for periods like BTS,
during which many retailers and manufacturers realize a large
percentage of their annual sales.
Amazon BTS discounts hit earlier
than flyer promotional discounts
Reviewing the online pricing for some top-selling Laptops
and Tablets during BTS, we found that discount periods varied
greatly from retailer to retailer, and from product to product.
Figure 10 tracks the online price at Amazon.ca, Walmart.ca,
BestBuy.ca, and Sears.ca for the Hewlett Packard Intel Celeron
Laptop from the beginning of July through the beginning of
September.
Of the utmost importance to brick and mortar retailers
was Amazon.ca’s early BTS discount on this Laptop. Amazon
dropped their price on 7/5 from $289.99 to $249.99, and
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Ad Dynamics PerspectiveTM
kept that discount active through the end of July. Why is this
important? Most brick and mortar retailers waited until the
last two weeks of July to publish their first BTS flyers. Thus, for
two weeks, BTS shoppers were finding the lowest price on this
top-selling Laptop on Amazon—a price roughly 15% lower
than the rest of market. Best Buy’s online price on the HP
Laptop, by comparison, was not discounted for their BTS sale
until 8/3, when they dropped from $299 to $279.99.
Where the Laptop in Figure 10 saw early BTS season
discounts, Figure 11 shows that the deepest online discounts
on the Apple iPad Air Tablet were available to shoppers as the
calendar turned from August to September. BestBuy.ca and
FutureShop.ca each fluctuated their online price for the Tablet
on a similar pattern. Both increased their price from about
$555 on July 1 to $576 on July 15th, and fluctuated price for
periods of a few days with each change, all up until the end
of August, when both BestBuy.ca and FutureShop.ca dropped
their prices significantly. On 8/27, FutureShop.ca discounted
the iPad Air from $548 to $478—a discount of about 13%.
BestBuy.ca followed on 9/5 when they dropped from $569 to
$533, a discount of about 6%. Both online retailers featured
their lowest prices of the season for this top-selling Laptop on
or after 8/27, almost a full month after the discount we saw on
the HP Laptop in Figure 10.
Comparing the price trends in Figure 10 and 11 prove that
About Ad Dynamics
Ad Dynamics is a market intelligence firm
dedicated to increasing our customers’
returns on their advertising investments and
providing real-time visibility into e-commerce
pricing. We support our 850+ clients through
monitoring and analyzing over 200 U.S. and
Canadian markets for every channel of trade
and 1 billion buy pages from 3,000 global
merchants, enabling dynamic decision
making by turning data into actionable
insights.
Source: Ad Dynamics 2014
Figure 11: Top-selling Tablet Online Price Trend, Back to School 2014
online pricing and discounting is not something that needs to be checked in on
once a month, or even once per week, if retailers and manufacturers want to remain
competitive on price during key selling seasons. Daily competitive price tracking is
necessary in order to pick up on the sudden and unpredictable prices changes seen
during BTS 2014.
Conclusion
Between the drastic flyer volume and category ad quality at Walmart and Sears, the
increased use of offer types and overlays at Target, the shifts in category allocation
on Walmart.ca and Staples.ca, and the fluctuations and variance in timing of online
discounts at Amazon and BestBuy.ca, retailers were pulling out all the stops to try
and attract the BTS shopper to their stores or online retail space.
Many of the strategies seen during BTS should be top of mind for retailers and
manufacturers finalizing their plans for the holiday shopping season. Competitive
changes to promotional volume should be monitored to determine flyer strategy
during key events, just as competitive category support should govern the process
for allocating key flyer page space to different categories. Likewise, if a retailer or
manufacturer lacks a process for continuously monitoring competitor prices online
during the holiday season, days and weeks could pass during which they thought
they were priced competitively, and during which your competitor was successfully
winning shoppers with the best price.
For both holiday 2014 and BTS 2015, make sure you have the tools in place to
thoroughly monitor competitive promotions and prices, and the process in place to
adjust your own strategy in the moment to ensure the competitive changes do not
have a significant impact on your ability to attract shoppers and drive sales.
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Key Takeaways
• Omni-channel promotional strategies
varied from retailer to retailer during BTS
2014, with retailers like Best Buy featuring
cohesive category promotions in both
their flyers and website home pages, and
retailers like Staples promoting different
categories in print than online. Both media
types—flyers and website—should be
monitored daily during key event periods
like BTS to ensure you are aware of all
competitive promotional offers facing your
potential shoppers.
• Online price changes and discounts can
happen at any time during key sales
periods like BTS holiday. Amazon preempted all competition with discounts on
top selling Laptops occurring early in July.
Do you have the tools in place to identify
discounts to online price early in the
Holiday Shopping Season? This is critical to
avoid losing the attention of early season
shoppers.
• Within the Tablet and Postpaid Smartphone
categories, Samsung and Apple owned
a majority of ad share, and were featured
with the best ad quality. Though smaller
brands within categories that have one
or two brand leaders may struggle to
surmount leading brands in ad share,
they can work with their retailer partners
to achieve better page position or ad size
when they are on promotion. Focus more
on ad quality of the placements you do
receive, rather than getting hooked on
competing for ad share.
Learn More
For more insight into the entire
promotional landscape or
an analysis of your digital
and print strategies, call
Ad Dynamics at 1.800.235.3781
or e-mail
[email protected].
© 2014 Ad Dynamics. All rights reserved.