E-commerce Holiday Growth, AI Search Trends, & In-Store Media Expansion

In a world full of constantly changing technology and information, this monthly newsletter keeps marketers up-to-date on the latest trends that will impact their business. I hope you enjoy it!

If you haven't subscribed yet, click the "Subscribe" button in the upper right corner above.

Forrester projects U.S. retail sales will increase 3.7% YoY to $1 trillion this holiday season.? Online retail sales are the real growth driver here and will jump 10.1% YoY to $257 billion, and online sales will make up about 26% of overall U.S. holiday retail sales, which tracks?with a recent Bain & Company survey that found that 76% of U.S. shoppers expect to buy at least half of their holiday items online. As for in-store sales, Forrester predicts they will see a 1.7% bump from the previous year to $744 billion. So when will this spending happen? The shorter-than-usual period between Thanksgiving and Christmas means that most brands launch Black Friday sales early.? So, while the actual cyber five sales may decline, the period is still hugely important for brands to capture the all-important holiday dollars.?Just expect to see your sales a little more spread out this year. ?

As for next year, North American marketers are a little more cautious, with only 30% of marketers planning to increase their budgets—marking the lowest optimism of any region. While European sentiment shows signs of recovery, those in North America are taking a more cautious approach. The biggest media losers? Linear TV, print, and radio are showing the most significant decreases. The winners? CTV has a 78% expected increase, and retail media has a 75% expected increase. The macro trend suggests overall media spend is softening, but the real story is that marketers are investing in channels where they can more easily measure sales outcomes. So, it appears 2025 will be a year of prioritizing performance over brand building, with 42% of markers saying they will increase their share of performance advertising in 2025.??

Open AI recently released ChatGPT Search, a new feature integrated into the ChatGPT chat interface where users can ask questions and receive real-time information. The currently ad-free interface is clean and reminiscent of early Google; however, unlike Google, ChatGPT Search relies on Bing's index to deliver results, putting Bing unexpectedly in the spotlight. For marketers and SEOs, this is a critical shift to acknowledge. If your content or site isn't optimized for Bing or indexed there, ChatGPT could bypass your site entirely, missing opportunities to connect with users. While Google remains the dominant search engine, now is the time to start paying attention to Bing. Conduct an audit of your presence on Bing to ensure your content is indexed correctly and optimized. Monitor any traffic or insights from ChatGPT-related searches to understand its impact on your brand. By staying proactive, you can position your brand to adapt to these shifts early, avoiding missed opportunities and gaining a competitive edge as search behavior evolves.

This week, Perplexity AI launched its first ad offering, breaking from its previous ad-free approach. These ads, labeled as "sponsored follow-up questions," appear alongside answers and are generated by Perplexity's AI rather than directly written by brands. While this ensures consistency with the platform's user experience, it may raise concerns for marketers about a lack of control over messaging.? Outside the lack of control, the other big issue with adoption is the pricing model. Ads are sold on a CPM (cost-per-thousand-impressions) model rather than CPC (cost-per-click), a significant departure from traditional search ad buying.? If Perplexity wanted to easily steal a piece of the search pie, it would be easier if the pricing model mirrored the major search platforms.? One theory is that they assume that people will likely not click out from their experience, which begs the question: if people won't click, will they be able to prove their worth to advertisers? Google has similarly begun testing ads within its AI search experience, AI Overviews, showing that the search industry is moving toward integrating advertising into conversational search. However, for Perplexity to successfully capture share from established search platforms, aligning its pricing model with existing advertiser expectations will be critical. Until then, marketers should approach these formats strategically, placing them in upper-funnel campaigns rather than direct response efforts. As with other platforms, Perplexity's advertising model will need to prove its ability to deliver scalable results, which may take time. For now, the value lies in experimenting with these formats while maintaining realistic expectations about performance and scale.

Perplexity is also moving into e-commerce, debuting a new shopping feature for paid U.S. subscribers. This feature offers product recommendations directly within search results, complete with visual cards detailing pricing, seller info, pros and cons, and more. Users can even complete purchases without leaving the platform, leveraging stored payment details and addresses for seamless one-click checkout—plus free shipping for Pro subscribers. Currently, product recommendations are "unbiased," as Perplexity does not yet offer sponsored placements. However, merchants enrolled in its new program can improve their chances of being featured by providing more complete product data. This is an apparent attempt to steal market share from Amazon, which recently debuted AI-powered assistant Rufus earlier this year in the U.S. Google also primed its Shopping tab with AI in October for better search results.?

For marketers, Perplexity's approach is an opportunity to engage shoppers during discovery.? It also introduces the new wave of search, enabling users to describe what they need in natural language while AI delivers tailored results to consumers. For brands, this follows the broader trend of omnichannel commerce - allowing consumers to find, research, and buy on whichever platforms they prefer. This means that in addition to Amazon, TikTok, and other emerging e-commerce platforms, brands should start tracking conversational search behaviors and experimenting with platforms like Perplexity as part of a diversified e-commerce strategy.

Google will also be testing a new video functionality in shopping ads, featuring a play icon that changes to a "watch" button upon hover, allowing videos to play within the search results page.??By allowing users to view product videos directly within search results without leaving the page, ads should receive much higher interaction rates than static ones.? There may be unintended consequences like reducing traffic to landing pages, so keep this in mind when looking at KPIs for these campaigns, as ad interactions may need to be prioritized over website visits.? It could also impact conversion rates as consumers who visit the site are even more qualified.? As Google strives to retain users within its ecosystem, it will continue evolving the SERP experience, offering brands increasingly engaging opportunities to showcase their products and offerings directly on the platform. ? Ensure you are testing and optimizing for these new formats as they are what consumers want, but?also make sure you are having larger conversations at your organization about the macro effect it will have on traffic, conversation rates, and more.??

So Perplexity is chasing Amazon, and Amazon is chasing Temu with their official launch of Amazon Haul. Haul is Amazon's marketplace for unbranded, low-cost items shipped directly from China, which is its response to platforms like Temu and Shein. Haul offers significantly cheaper products by bypassing U.S. customs taxes and warehousing, with 1-2 weeks delivery times instead of next-day or same-day shipping. However, these items won't appear in Amazon's main search results; shoppers must actively enter the Haul store. Amazon has many experiences hidden inside its app: Amazon Handmade, its Etsy competitor; Amazon Luxury Stores, which sells expensive fashion and beauty items; and even Amazon Inspire, a TikTok competitor. However, it usually isn't aggressive about promoting them to shoppers.? This development could impact traffic and conversion rates for marketers, especially those managing low-cost or commodity brands. While it's unclear whether Haul will divert significant search traffic from Amazon's core marketplace, monitoring performance metrics would be the smart move.??

There has also been much movement in retailers doubling down on in-store media opportunities as brands seek to integrate online and offline experiences more effectively. CVS partnered with The Trade Desk and Vibenomics to offer self-service audio ads to shoppers. 7-Eleven plans to expand its Gulp Radio network by the end of 2024. Save a Lot is working with Retail Media Fluent Network to install digital screens at its stores. Instacart is bringing its smart Caper Carts to a number of independent retailers. This surge in in-store retail media is a response to both demands from brands for better integration and is also meant to capture the growing investment in in-store media, with advertisers?allocating?18% of their retail media budgets to in-store media this year, up from 7% in 2022. For marketers, I hope in-store has been on your mind, but if not, this evolution should signal that retail media is no longer confined to digital channels—it's a critical part of omnichannel strategies. In-store media offers unique opportunities to engage shoppers in real-time and influence purchase decisions. Brands should evaluate how to balance spending across in-store and online retail media, leverage these new formats to boost discovery and ensure measurement frameworks are in place to track the impact of these investments. As the lines between digital and physical retail blur, staying agile and proactive in testing these new opportunities will be key to driving growth.

Finally, social media advertising is undergoing a significant shift as platforms vie for ad dollars amid the fallout from X (formerly Twitter). Despite some advertisers returning, X remains on the outs with most media buyers. From January to September, major brands spent just $3.3 million on X—a staggering 98% drop from the $170 million spent during the same period in 2023, according to MediaRadar. This retreat has created openings for platforms like Threads and Bluesky to position themselves as viable alternatives. Threads, backed by Meta's ad infrastructure, plans to introduce ads early next year, likely establishing a healthy ad business almost immediately due to its seamless integration with Meta's existing advertising ecosystem. Meanwhile, Bluesky, founded by former Twitter CEO Jack Dorsey, has grown rapidly to 15 million users by November 2024. While it has yet to introduce advertising, its user-centric approach, featuring chronological feeds and advanced content controls, makes it an emerging platform to watch as it eventually seeks monetization. Threads offers a straightforward path for leveraging Meta's tools, and Bluesky's focus on decentralized, user-first experiences could appeal to audiences disillusioned with traditional platforms. Just keep these at the top of your mind as we enter the new year and social media continues to evolve.

Megan Conahan is a 19-year veteran of the digital marketing industry. Over the last 19 years, she's consulted with Fortune 1000 brands on negotiating the ever-changing demands of the digital marketplace and creating unique solutions to set them apart. Megan is an EVP at Direct Agents, an independent and minority-owned digital marketing agency. If you want to chat about marketing support or just talk shop, please message me or email [email protected]