Special Edition: Cyber 5

Or is it now Turkey 11?

In this edition we’ll dive into what was remarkable about this year’s Cyber 5 shopping holiday - how it was bigger than ever, how advertisers won (mostly), and the trends driving the evolution of the shopping holiday. Tomorrow, Pacvue will be launching our official Cyber 5 report so stay tuned for that!

???? Black Friday and Cyber Monday Break Down

Sales across categories soared, with Adobe reporting that 2023 Black Friday receipts totaled around $9.8 billion, up 7.5% vs 2022, and Cyber Monday spending reached approximately 12.4 billion, up 9.4%.

Let’s get into the key highlights and takeaways for brands and retailers from one of longest Black Fridays ever:

#1: Ad Spend is UP

Ad spend shot way up this Cyber 5. On Black Friday, ad spend for sponsored products and sponsored brands rose 55% and 61% respectively, YoY. On Cyber Monday, spend increased 56% YoY for sponsored brands, and 31% for sponsored products vs 2022. Top takeaways:

• As Kiri Masters in her Forbes article reported based on Pacvue data, increased competition on Amazon pushed a rise in the cost of ads - a not insignificant factor for the lift in spend leading up to the shopping holiday.
• Sales peaked around 7-8AM PST on both BF & CM but while sales and spend trailed off in the evening of BF, last minute shoppers and advertisers saw a last minute spike from 5-6PM PST to try to capture CM deals (a reminder to boost ad dollars at this time)
• Advertisers allocated 78% of their budget during the Cyber5 timeframe to Sponsored Products this year vs 80% last year as brands diversify into more ad types

#2: Black Friday Came A Week Early This Year

Deals just keep arriving earlier - a trend that Amazon pushed with their Prime Early Access. This season several big players pushed out deals as early as the Friday before Thanksgiving to create more opportunities for consumers to buy. A new holiday timeframe has been coined: Turkey 11.? Amazon even reported that its extended Black Friday and Cyber Monday holiday shopping event— November 17 through November 27—was its biggest ever compared to the same 11-day period ending on Cyber Monday in previous years. Top takeaways from our data insights at Pacvue:

• This year, brands seemed to favor ad spend in the lead-up to Black Friday, with competitiveness up on average 24% year-over-year in the seven days prior to the Friday sale.
• Overall, there was a general uptick in advertising costs in the days leading up to Black Friday compared to last year. Costs for Sponsored Brands placements saw a notable surge, rising by 17% vs 2022. In contrast, costs for Sponsored Products saw a more modest increase of 4%.
• However, deals starting earlier isn't necessarily great for everyone. Because a growing number? of shoppers will hold out to see if better deals arise, directional conversion rates indicate that ad conversion was lower this year than in 2022 for Sponsored Products, down 5.1% and Sponsored Brands placements down 3.8% from last year, despite increased ad spend overall.

#3: Rising Advertising Costs Impact ROAS

While brands spent more than ever this Black Friday to combat rising advertising costs, higher CPCs and lower conversion rates caused ROAS to take a hit this Black Friday, with lower ROAS coming in –14% lower than the July Prime Day event. Overall ROAS remained relatively flat week-over-week, increasing 4% for Sponsored Products and 10% for Sponsored Brands. The stats:

• Our early assessment has Black Friday ROAS for Sponsored Products down 34% vs 2022, and Sponsored Brands down 27%. Brands still spent more than ever on advertising, showing an appreciation of the extremely competitive nature of this year’s event.
• Cyber Monday ROAS was down 10% for Sponsored Products and down 28% for Sponsored Brands.

This chart below shows YoY increases in Spend and Sales over the key drive periods.? Net - brands spent much more, yet saw a lot less sales increase than last year:

#4: The Struggle is Real for SMB’s on Amazon

There are certainly many success stories, but I’m also hearing it is increasingly tough to be an SMB on Amazon.? Cyber 5 is a time you have to 1) discount and 2) advertise.? Phillip D'Orazio , CEO of JoopcoOfficial left a comment on an earlier BF post I did that really resonated: “The hard part is finding profits for sellers. All cost are going up, more ad placements on search results and PDP, TOS bids increasing for 1st page placements. Higher fees FBA and FBA related - it's a really terrible time to be a small to medium sizes seller account or brand on Amazon... With each new seller that comes to the platform they use the same amazon playbook, launch hard into advertising - raising cost. Basically a death-loop…”

Sellers are being forced to diversify and look to sell on more platforms like Shein, Temu, & Tik Tok as their margins are squeezed.? Competition has forced Amazon to make some changes - in fact, Amazon will cut fees for merchants selling apparel priced below $20 in Jan to better compete with SHEIN , according to Bloomberg’s Spencer Soper article.??

#5: Marketers Are Playing with New Tech

Gen AI Creative - Gen AI may not have all the kinks out yet, but marketers were still getting use out of AI for Cyber5, using it to improve creative and saving time as a result. 2023 is a test-and-learn year of experimentation that sets up 2024 to see a big boost in AI’s role, particularly in terms of ability to quickly generate micro-seasonal events with creative. One of the newest ad features Amazon rolled out at their #unBoxed2023 Conference in October was an AI-powered image generator (which Pacvue was one of the first partners to integrate).

Some of our clients ran A/B tests of AI-generated images vs non AI-generated images.? In running these tests, we looked at CVR, AOV, ROAS, and CTR; and while in many cases the non-AI generated images performed slightly better, it was pretty close.? One of the biggest benefits was the ability to leverage a holiday theme, and one of our team members Matthew FitzMaurice who analyzed results? of these tests stated “I feel as if the floodgates are opening in regards to long term tests rotating out creative to capitalize on holidays/small tentpoles.”

Reminder: Always be testing!

#6: Amazon Co-owns New BF Sports Tradition w NFL - Viewership was good, ad engagement was even better.

For the first time, Amazon launched a Black Friday football game, and it delivered.? Viewership was strong, drawing an average 9.61M viewers according to Nielsen (10.83M according to Amazon).? It was the most watched game of the day & highest rated TV show among young viewers 18-34 & 18-49 (would be interesting to see how Amazon’s partnership with Dude Perfect impacts these numbers).

With this new tradition came a new ad format: shoppable sponsored TV ads enhanced by Amazon’s “audience based creative,” enabling a new level of hyper-targeting that’s an absolute game changer.? This new format of shoppable commerce is still in the “Day 1” stage - many commercials displayed QR codes and a lot of the engagement drove a CTA of buying products on Amazon. However, innovation in in-game shopping promotions, like deals unlocked based on the in-game accomplishments of players like Ryan Fitzpatrick’s passing, drove the value prop for advertisers and captivated audiences.

#7: Why Pay Now?

Buy Now/Pay Later is gaining momentum, particularly with younger consumers. A new study by ConsumerWise found that more than 50% of Gen Zers say they think they will use BNPL in their holiday shopping. As these consumers gain more buying power, retailers will have to expand offerings at check out to make it easier and more accessible for these shoppers to make the purchase.?

I'd love to hear your most interesting takeaways from Cyber 5, so please drop a comment. And feel free to DM me to learn more. If you’re already a Pacvue customer, you can also reach out to your account manager for more information.

?? Podcast of The Week

I really enjoyed the most recent episode of the McKinsey on Consumer & Retail podcast with Host Monica Toriello on 2023 holiday shopping. The episode dove into how the holiday shopping season started early and will end late, making this a longer season than years before. Rather than rushing to buy items, consumers are instead lengthening the holiday season, waiting for the best deals. In conjunction, retailers are acting differently and putting more urgency on consumers in order to get them to transact and make that purchase. You can listen to the full episode here.?

A few other Cyber podcasts in our space to check out:

Jason & Scot Show Episode 315 - 2023 Turkey5 Recap with Salesforce Rob Garf

Kiri Masters Ecommerc Brainstrust BF/CM on Amazon: Trends, Performance, & Outlook with Emily Peterson & Damiano Ciarrocchi Episode 318

Lastly, Check out Jeffrey Cohen 's Newsletter with a recap of Amazon's Turkey 11

About the Author: Melissa Burdick is an ecommerce expert having spent a decade at Amazon and then co-founded the market-leading commerce acceleration platform Pacvue to help brands, sellers, and agencies optimize their returns efficiently & effectively and win online.