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The festive ad fallacy: is an ad for life or just for Christmas?

This article discusses the arguments for and against extravagant Christmas ads and aims to answer the question all marketers ask: is it worth it?

The Christmas season brings with it a host of annual events, including exorbitant advertising campaigns, with Kevin the Carrot and Edgar the dragon becoming hot topics of conversation across the UK. In 2017, brands spent a record £6bn on festive adverts, and the 2019 budget will doubtless be even bigger. But how do you measure the success of such an advert? Do they drive up sales? Or are customers loyal to their brands no matter how they position themselves in emotional festive TV adverts?

A waste of money?

Last year, Lord Alan Sugar claimed John Lewis was “wasting money” with its Elton John-themed ad, suggesting it would have “no impact on sales”. However, the company saw a year-on-year increase in gross sales during the festive period of 1.4%. Surely we can agree that this was a success, and move on? Maybe not. Compared to 2017’s rise in profit of 2.5%, 2018 wasn’t as successful (although it didn’t stop them pumping out another elaborate ad this year).

Sainsbury’s reportedly spent £7m on its commercial last year. This audacious expense covers more than just production, with the majority of the money actually spent on marketing and advertising space. Last year, Sainsbury’s had a 1.1% rise in like-for-like sales over Christmas, but it’s general merchandise revenues dropped – attributed to a “challenging” market. So, if a Christmas ad can’t turnaround market challenges faced by the supermarket and department store brands, is Sir Sugar onto something? Are Christmas ads just a waste of money?

On the surface, the return on investment is attractive. John Lewis consistently spends around £6-7m on their Christmas ad campaign and makes around £245m profit. However, November and December are months with increased sales anyway, with the festivities pushing consumers to the high street and online. According to Forbes, the top 10 busiest shopping days in the calendar are all in November and December, with Black Friday sitting in first place. It becomes difficult to understand if these improved sales are related to advertising or are simply inevitable at this time of year. Maybe John Lewis and Sainsbury’s would still see a rise in their profits regardless of competing to make the most engaging ad – saving themselves £7m in the process.

Brand awareness 

According to Google Trends, the top related searches to the term ‘Christmas advert’ are centred around John Lewis. The retailer dominates the ad game every year, being the most anticipated and talked about brand. Whether the ad is good or not, everyone in the UK seems is keen to discuss it. John Lewis has, in less than a decade, become closely associated with Christmastime. From a brand perspective, it’s quite an achievement. 

John Lewis is not the first brand to do this. Coca-Cola has aligned itself so closely with Christmas that for many years there have been rumours that the brand is responsible for Santa’s depiction in red (they actually just popularised it). Every year, Coca-Cola uses the same “Holidays are Coming” jingle – and it works. You can’t help but feel the Christmas warmth when that infamous song starts to play. 

However, as much as Coca-Cola and its advertising are associated with Christmas, its product isn’t. Every year, people flock to visit the truck that drives around the country to give away free Coke. But the public aren’t visiting the truck for a free, small drink (who wants a cold, fizzy drink on a wintery day?). The purpose of the truck is to make them feel in tune with the festive season. The consumer considers the brand before the product. In the same way, you might think of John Lewis as a distributor of festive media, rather than the place to purchase the trampoline featured its 2016 ad.

Brand search: a losing game?

If this is the case, you might argue that John Lewis needn’t make expensive ads anymore. They’ve done their job of positioning the brand alongside a joyful, happy event. However, it seems that this is not the case. Over the past five years, the brand’s online interest has decreased. Although online search for John Lewis still spikes every year around the festive season, year-on-year search volume is declining – excluding a slight rise in 2017 against 2016. In fact, the brand saw its peak six years ago in the Christmas of 2013 which is significant to its advertising history, with the public voting the “The Bear and the Hare” as its best campaign, suggesting that there is a correlation between advert and search interest. The success of the 2013 campaign may have been due to the hype built by previous years and marked its peak.

John Lewis Google Trends

Brand search for John Lewis 2004-2019 from Google Trends

John Lewis’s previous adverts had used emotive cover versions of well-known songs that subsequently crept their way up the charts. The Bear and the Hare featured Lily Allen covering Keane’s Somewhere Only We Know, which made its way to number six in the UK charts that year.

John Lewis is not the only brand with this pattern: Argos, House of Fraser and Debenhams are all subject to spikes during the holidays, with Debenhams and House of Fraser in decline since 2012 and 2013, respectively. Even the UK’s supermarket chains, such as Tesco, Sainsbury’s and Asda, see a rise in online interest in November and December every year. Both Tesco and Asda saw their most successful year for interest in 2014, and have seen steady decline since.

Spoilt for choice: online shopping

The rise of e-commerce may have had some influence over the decline in online interest of certain brands (though people increasingly going direct to sites and not Googling them will also impact this). The ease and convenience of doing all your Christmas shopping from your sofa appeals to many, but online shopping can also influence behaviours and place brand loyalty behind the cheapest price. While many may have previously conducted their shopping by entering a department store or browsing its website, many people search directly for the exact item they wish to purchase. With Google’s shopping SERP feature, it becomes easy to compare prices, which could see many people opting to purchase their present from a place they wouldn’t usually shop. With e-commerce growing and live TV on the decline (as streaming services grow), many of this year’s ‘TV’ ads are skipping TV entirely and launching directly online.

There is also a perception that younger generations are killing brand loyalty. With Generation Z and Millennials being more in touch with technology, they’re more likely and able to find the cheapest price, rather than buy from familiar vendors. When conducting interviews with the public to understand their take on Christmas advertising, one retiree told the BBC: “I enjoy them but they don’t make me rush out to buy stuff. I already know where I’m going to do my Christmas shopping and what I’m going to buy.” However, statistics from Visual Capitalist suggest that millennials are not to blame for the decline in loyalty, with 64% being as or more loyal than their parents.

Is it worth it?

This then raises the question, what is the purpose of a Christmas ad? Are brands expecting to see a direct impact to their sales as soon as their commercial has been released? Or are they designed to function as a brand awareness campaign? Most of the Christmas adverts released by brands are not showcasing specific commodities, giving information about prices or savings. While they might focus on one generic gift (John Lewis’ ad centres around a Christmas cake and Argos’ around a drum kit), the purpose is not to drive the sale of that product. It is to remind the audience about the brand and portray its positive attitude towards the festivities.

However, we must address if a seasonal campaign is capable of increasing consideration throughout the rest of the year. Although we may not be able to answer this question, it’s an important success factor of a £7mn campaign.

Conclusion: the ad fad 

Our brief investigation has revealed a muddled picture of the impact of Christmas ads. While revenue increased during the winter months, this can’t be solely attributed to Christmas ads. As 91% of the UK celebrates the holiday, it is not surprising that the amount of shopping taking place ahead of Christmas is far greater than any other time of the year.

Christmas advertising has led to increased brand awareness, with certain companies such as John Lewis becoming synonymous with the time of year. But is this helping in terms of making a profit? Although John Lewis’s profit is growing, the growth is slowing. At their core, perhaps what these ads are isn’t sales or marketing at all. Rather, they are public relations campaigns, the purpose purely reputation based.  

In the digital age, when online sales dominate shopping habits, we must confront the fact that Christmas TV ads are a fad that will decline in popularity over the next decade. This was always inevitable, with or without the rise of technology; as with all trends, they eventually die out. There are only so many concepts around the theme of Christmas that can be executed without people losing interest. With the oversaturation of the commercial – with what seems like every brand releasing one – the time has come when hype and excitement have been replaced with procedure. So, the real question is, what’s next?

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