Merkle: Brands Increase Online Ad Budgets, Concerned About FedEx, UPS Holiday Meltdown

Marketers at brands are increasing online media budgets for the holidays, but unlike past years, timing for the start of the holiday season and logistical concerns seem to be top of mind.  

This year’s challenges and questions focus on when the shopping season will begin and whether FedEx and UPS can keep up with the deliveries.

“Never before has the uncertainty around logistics been in the forefront of their mind,” said Matt Mierzejewski, senior vice president and search capability lead, Merkle. “They’re also thinking about the types of products that might sell out first and when will supply catch up. Brands want to know if FedEx will have a meltdown, and if they do, what will it do to their business.”

FedEx shipped 31% more packages per day through its Ground network during the summer months, according to The Wall Street Journal. It boosted profit more than 60% for the three months ended August 31.

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In fact, the company posted the highest quarterly revenue in its history as the COVID-19 pandemic increased residential shipments normally seen during the holiday season.

FedEx projects an average of 100 million parcels will ship daily in the U.S. across all carriers some time in 2023 compared with its previous forecast of hitting that milestone in 2026.

Despite logistical concerns, brands are increasing holiday ad budgets. This is especially the case for Search and Facebook, Mierzejewski said as the expectation of higher online sales continues to grow.

How much more will it grow? Mierzejewski said “higher,” but not double-digit increases such as 10%, he said. “The uncertainty also becomes how much in sales online vs. in stores.”

AspireIQ surveyed nearly 1,000 consumers, creators, and brands between August 19 and September 14, 2020 to understand how consumer behavior is shifting for the holiday season. When asked where they plan to do their holiday shopping this year, 44% said they would shop in-store, while 82% said online and about 20% said they would shop online, but with curbside pickup. Survey participants were able to choose multiple answers for this question.

 “We’re seeing outstanding success in Facebook,” he said. “A lot of the budget is going to Facebook, which has done specifically well in prospecting new consumers.

Consumers on the platform are feeling more comfortable these days using it as a springboard to commerce.

 

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