Q4 is make or break
Q4 is the most important period of the retail calendar. It is the most competitive time of year and often determines whether a retailer hits their annual targets or falls short. Getting Q4 right, therefore, is critical.
To cut above the noise and maximise returns during this period, brands need to start planning, testing and validating their strategies months in advance. The biggest mistake brands can make is leaving things too late.
Rushed experiments during the peak season can lead to missed opportunities and reduced performance. Therefore, brands need to decide on their experiments, plan them, and secure buy-in well ahead of time so they are ready to deploy over the summer.
According to aggregated Nest data, retailers that partnered with our agency throughout the year or signed in the build up to peak saw a 155% higher ROAS on Meta in Q4 2023, compared to those that joined in September onwards. This underscores the importance of nailing the build up to peak.
Q4 ROAS for brands that signed with Nest in Sep-Nov vs brands that were with Nest all year
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Q4 ROAS for brands that were with Nest all year or signed before Sep
Q4 ROAS for brands that signed with Nest in Sep-Nov +155% ROAS
What happened in previous years?
It should be no secret to retailers that peak is starting earlier and earlier, with a recent Modern Retail article referring to the entire month as ‘Black November’.
Furthermore, Nest data shows that click-through rates on Meta increase in mid-September before Q4 as consumers consider purchases in the autumn.
This trend is also playing out in conversion rates, which start to climb in mid-October and increase dramatically a few weeks before Black Friday. Conversions also trended upwards YoY, and last year were up by 14% during BFCM weekend compared to 2022.
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Getting Q4 right
Our overarching message is clear:
By the time you reach Q4, your strategy must be precise, relevant, informed, and proven to maximise yield during the peak ecommerce revenue period.
However, achieving this is no straightforward task. Indeed, brands face numerous challenges in crafting and executing effective strategies.
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A key workshop at our Q4 event saw brands reflecting on 2023, identifying key challenges and discussing why certain strategies failed. Here are eight areas brands need to get right to succeed in Q4:
#1 Planning:
Numerous brands admitted to not establishing detailed plans early enough for Q4. Some lacked the necessary infrastructure, resources, processes or culture, and had no clear strategy for success. From creative planning and testing to budget allocation, many operated on a day-to-day basis rather than executing a predefined, clear plan. This meant that, when last-minute challenges arose, brands struggled to react.
Fixing this won’t happen overnight, which is why getting the right Q4 strategy in place by the end of the summer is crucial. The period from May to August should be dedicated to preparation and testing.
By this point, you should have already conducted baseline incrementality studies to prove your strategy.
#2 Testing:
There was inconsistency in how robust testing frameworks were perceived, such as the validity of methods like A/B testing or lift testing. Understanding the most effective testing methods for each individual business was cited as another pain point. Strategic tests need consideration and the right inputs (creative, budget, measurement) to be successful. They also need to be coordinated with your trading and marketing calendars to ensure you can test without a risk of having to pull back.
With that in mind, these tests tend to require a minimum of two weeks to produce statistically significant results – this needs to be incorporated into your timelines.
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#3 Creative:
Many brands were lacking a robust creative strategy. Challenges included acquiring quality creative assets in sufficient quantities, timely delivery, and getting enough testing done before platform costs increase.
The period from September to October is the best time to identify winning concepts. During this period you should A/B test new concepts (e.g. UGC v Polished, USPs, different video hooks) to see what resonates with your audience. It’s also important to put your Q4 messaging in front of your audience well before BFCM weekend to enable you time to fix losing assets.
#4 Budget allocation:
Determining the appropriate investment in brand versus bottom-of-the-funnel activities was a consistent theme in the session. For many brands, understanding the necessary budget to test this was also unclear, complicating decisions on spending across the funnel.
We suggest starting with brand by investing 5-10% of your performance total budget, with the aim of hitting more than 50% of your target audience, twice per week. This should be tested through a multi-cell conversion lift study.
If top-of-the-funnel awareness ads aren’t scaling well, you can move to middle-of-the-funnel traffic or lead generation ads. These ads can also be used as a seasonal tactic ahead of peak.
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#5 Measurement:
Budget cuts during the year often resulted from struggles with performance measurement. Brands found it hard to justify budgets for measurement solutions and demonstrate long-term revenue benefits.
Without the right measurement solution in place, it is difficult to have a sophisticated approach to testing, creative or budget allocation. There are numerous solutions out there, from low cost but challenging to implement solutions like platform proxies and lift tests, to out-of-the-box options like Fospha or Measured.com.
The right fit for your brand will depend on your level of spend, and smaller brands can hack measurement with statistical analysis and lift tests before having to invest.
#6 Buy-in:
Getting buy-in from all key stakeholders, particularly senior leadership, was also cited as a common pain point. Early planning is essential since CEOs require results to approve strategies. However, gaining support amidst other business priorities can be difficult.
A worst-case scenario is when senior leadership suddenly pushed to change marketing or brand strategy in the months, or even weeks, leading up to peak. At this point, testing is very expensive and audiences are more primed to purchase, making any strategies other than maximising sales a mistake.
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#7 Team capacity and resource:
Indeed, this emphasis on managing multiple spinning plates was also highlighted as an issue. With marketing budgets stretched thin for many retailers, it can be hard to sway internal stakeholders to prioritise strategies for many months when there are other fires that need putting out more urgently.
This issue is related to planning. Having a good plan, agreed between stakeholders in the first half of the year, will help ensure teams aren’t spending their time firefighting as peak draws closer.
#8 Agency challenges:
Managing timings with external parties was a recurring challenge. In particular, brands had difficulties working with creative agencies.
Challenges included delays in onboarding, understanding their brand, delivering assets and how this sets back testing ambitions, and overall strategy execution.
Onboarding these partners properly, as well as ensuring that they are aligned with roadmaps, is crucial. However, it is also important for your creative agency to understand the specific needs of paid social – this requires a far greater volume of creative to fuel testing and combat fatigue compared to traditional channels like TV or out-of-home.
One brand told us about how they prepare a monthly deck for their creative team, detailing audience reach, served ads, performance metrics and areas needing improvement. This strategy not only informs creative adjustments but also fosters greater cohesion and alignment between teams, ensuring adequate volume and quality of creative assets.
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