Black Friday becoming less worthy of investment by brands/retailers
The return on investment for ecommerce businesses over Black Friday week has been dropping for the past three years, according to data released by ecommerce data specialist Conjura. The metrics are taken from Conjura’s Black Friday benchmarking study, which analysed data from businesses across multiple categories between 2018 and 2020.
Most notably, the study found that customer acquisition costs (CAC) for Black Friday week are 13% higher relative to other times of the year as calculated on paid digital media (paid search and paid social marketing).
Other notable metrics include:
• The six-month lifetime value (LTV) of customers acquired during this period is 9% lower than the average for the rest of the year.
• Repurchase rates for those acquired during Black Friday are also consistently 5% worse, depending on category.
• Average return on ad spend (ROAS) has decreased over the past three years. Falling from 46.1% higher during Black Friday versus other times of the year in 2019 to 28.7% last year.
• The marketing channel that offers the highest ROAS is affiliates, while paid social has the lowest.
• Customer acquisition costs to lifetime value are falling across all channels except in paid social, which has been growing marginally over the past three years.
Fran Quilty, CEO of Conjura, says: “I don’t want to suggest that ecommerce businesses should avoid Black Friday week, it still accounts for almost a tenth of annual revenues across categories and revenue peaks are three to four times higher than on the average day.
“It remains an important annual event for driving customer acquisition, however what’s important is attracting the right customers. Businesses should look at the data beyond the short-term revenue spikes to understand if Black Friday really is the best option for them. For instance, it is better suited to businesses selling big ticket items, such as furniture, or those structured around repeat purchases, rather than for FMCG brands.”
The data also suggests Black Friday is also becoming less of a draw to consumers too as the level of discounting over this period compared to other times in the year has dropped sharply, from a difference of 89% in 2019 to 19% last year.
