Peak special
Introduction
Peak is make or break for many retailers. Despite improved economic conditions, we have noticed a lot of fear in the market over the summer. Inertia is the death blow for failing strategies. Take a deep dive into the latest trends and opportunities for ecoms in the October edition of the Readout.
Will Ashton CEO, Nest Commerce
Q4 is here. Last year, many retailers went into peak expecting the worst - but last BFCM weekend ended up being a strong one.
Make no mistake: this has been a tough summer for UK retail. Apparel, in particular, has struggled with the unusually wet weather. IMRG data shows that ecom revenue growth has been negative for most of the year, only picking up in early September.
That said, many retailers have been overly cautious in their response to a modest slowdown. Investment in acquisition and TOF is necessary to prepare your brand for peak.
And now peak is here. We are optimistic about this Q4 after strong performance in September and early October.
Zooming out, we have been through several years of economic and political challenges. Yet UK ecommerce continues to grow every year as a share of the total retail market.
Nest is the home of high volume, high spend online retail. We've seen that, time and time again, brands that hold their nerve and drive through are successful.
What does a fear-driven strategy look like? One big signifier is overindexing in BOF channels like Search. These brands are setting themselves up to fail.
Brands that are winning today are full-funnel and social-first, with continuously rotating creative.
This strategy necessitates a cross-channel approach that covers the whole funnel to enable max efficiency and scale.
Brands are increasingly coming to us to diversify their international strategy. Whether that is UK brands that are concerned about economic challenges at home, or US brands that see Europe as their next growth avenue.
That is why we are hosting a virtual event on 5th December, where we will outline our framework for international growth in 2025.
Ignore the naysayers, peak always performs
After close to five years of negative headlines about the state of online retail, two things remain consistently true: every year, peak performs; and every year, ecommerce grows.
Although there were mixed results across all of last year, Adobe Analytics reported that online spending increased by 3.7% YoY during November to December 2023.
The picture looks stronger across our clientbase. According to Nest data, between BFCM 2022 and BFCM 2023, we saw a 26% increase in Meta ROAS alongside a 58% increase in spend.
The picture is even rosier in the US. Again, according to data from Adobe Analytics, ecommerce spend has grew YoY in every single US holiday season without fail since 2019.
We outlined our plan for Q4 performance this summer in our Peak Planning report, including plans to build demand and manage tests over the summer, how to reduce the risk of creative blockers and manage resourcing during peak.
While it may be too late to completely turnaround your Q4 strategy, there are still tactics available to brands from October up until right before BFCM weekend. We will outline these later in the report.
KEY TRENDS: BFCM 2024
Meta ROAS (BFCM 2022 vs BFCM 2023)
BFCM ROAS 2023
BFCM ROAS 2022
Full-funnel brands grew 15% between Q2 and Q3
While both ROAS and revenue looked healthy YoY across our portfolio, we saw a QoQ boost in Q3 for brands leveraging a full-funnel performance strategy.
Usually, Q2 to Q3 is a slow period for online retail, with performance picking up again in Q4. However, we saw an uptick during the summer instead for brands deploying this strategy.
Revenue was up by 15% QoQ, whilst ROAS improved by 22% QoQ for this group of retailers, setting them up for a strong Q4.
A case study in holding your nerve with brand
With a recent client, we grew investment in upper-funnel to help them scale and sell to new audiences in the build up to Q4.
For the first 13 weeks of increasing awareness spend, CAC rose in tandem. However, CAC gradually decreased while upper-funnel spend was maintained, and is now 29% lower than at launch.
Meanwhile, the brand can afford to invest 17% of their budget in upper-funnel, with all of the benefits that this will bring during the competitive peak season.
KEY TRENDS: CHANNEL MIX
Meta ads drive significant search lift
Incrementality should be the North Star of your marketing activity. However, proving incremental gains can be challenging.
Tests such as lift studies can help bridge the gap in understanding. For example, across multiple Nest tests, use of Meta’s Search Lift tool showed how upper-funnel ads directly impact brand search.
Running Meta awareness ads for a month drove an average of 3,359 incremental branded search visits, or a 22.3% search lift, alongside 5,082 incremental non-branded search visits, or a 9.4% search lift.
Funnel before channel
Overinvesting in one channel jeopardises your ability to show up where your customers are, or where they’re browsinga surefire way to see your marketing budget go up in smoke.
Brands that want to ensure that every pound works as hard as it can should adopt a channel-agnostic approach.
Instead of making a predetermined channel section, map out the entire funnel - awareness, consideration and conversionand identify the best mix of channels for each stage of the funnel.
In cross-channel set-ups, adopting a ‘funnel before channel’ mentality comes with an additional benefit in the form of improved insight sharing. Whereas relying on separate teams can lead to biased budget recommendations, keeping things under one roof and focussing on the overall customer journey.
The future of digital marketing success lies in flexibility. It’s not about pitting different channels against each other - it’s about implementing a cross-channel, full-funnel marketing strategy that leverages all channels to uncover new growth and engagement opportunities.
Interested in this strategy but unsure how it would work in practice? Find out more in our cross-channel strategy report.
Chris Howard, COO, Nest Commerce
How LeMieux broke the Google cycle: a video case study
Leading equestrian brand LeMieux enjoyed significant growth in the three years prior to partnering with Nest without investing in marketing. The brand saw 150% growth over three years, driven by the pandemic ecom boom, but recognised that this wasn’t sustainable in the long-term.
As a private equity-backed business, growth was mandatory for the retailer. This meant that it initially focused on BOF channels – predominantly PMax – with spend aggressively scaled from zero to £100k in a matter of months. Unfortunately, short-term gains were followed by dwindling returns.
Nest recommended a full-funnel strategy that allowed LeMieux to reach wider audiences while maintaining strong conversions. Overseeing both Paid Search and Paid Social enabled Nest to seamlessly share insights across channels, with audience observations and conversions on Google informing audience targeting on Meta, improving overall efficiency.
With Nest’s partnership, LeMieux achieved 212% overall growth, with plenty of road for further scale. Want to find out more?
Watch the full video case study with Shaun Loughlin, Head of Ecommerce & Technology at LeMieux here.
A VIDEO CASE STUDY: LEMIEUX
KEY TRENDS: CHANNEL MIX
CPM starting to rise after summer discount
After initially rising above 2023 levels, Meta CPM dipped in July and stayed low before, again, rising in September. Acquisition costs were even lower QoQ, and CPA was down by 26%.
This summer has been a great opportunity for brands to build awareness as others retreated.
Usually CPM starts to rise again in mid-October, and we are seeing signs of this happening. A whole-year outlook to Meta is key to getting the most out of the channel.
Conversion rate picks up after slow summer
Average CVR was relatively flat throughout the summer following a challenging few months for online retail, but we are seeing signs that it is improving following a strong September.
We seem to be at a tipping point, as this trend is continuing into October, which is up 13% MoM from September.
With peak just weeks away, it is essential to increase brand awareness now, as consumers are becoming more intentional in how they purchase.
QoQ in Q3 2024
KEY TRENDS: REELS
Is your brand asleep at the Reel?
Reels is looking like the biggest point of arbitrage on the internet. Competition remains low despite the channel’s efficiency.
We saw a 30% QoQ fall in Reels CPM, versus a 13% QoQ increase for non-Reels. The fact that overall CPMs are down by 17% QoQ demonstrates the integral role that Reels plays in improving efficiency.
This decrease could be due to audiences spending more time watching Reels, creating more opportunities to deliver ads and therefore lowering competition.
NEST STUDIO AD FOR NADINE MERABI
Creator content is now possible for premium
One of the biggest challenges that premium brand's face with UGC is balancing the delivery of a clear marketing message whilst maintaining the natural, relatable tone that makes UGC effective.
It is difficult to ensure creators adhere to brand guidelines and maintain control of content while still allowing them the freedom to express their authentic voice. This complexity is extended by the strict standards associated with content for premium brands.
We have developed the Nest Creator Program to overcome this challenge and now it’s scaling up - we are shipping out hundreds of pieces of unique on brand UGC per month, with a 262% YoY increase in UGC ad spend in Q3.
What does it entail? With the Nest Creator Program, brands just need to sign off on a set strategy, creators and briefs. We then start the engine, and optimise based on creator and brief.
This is also one of simplest and most effective solutions for international localisation. We can get local people speaking about your brand in just 4 weeks.
KEY TRENDS: CREATIVE
NEST STUDIO UGC AD FOR AG1
KEY TRENDS: TIKTOK
Creative volume is key to scaling TikTok
Our approach to paid media focuses on the funnel first, rather than specific channels. Therefore, we deploy TikTok only when it aligns with the funnel’s needs and supports our clients' objectives.
Launching TikTok has a few challenges, mostly around creative volume. Similar to UGC ads on Reels, TikTok requires volume of a specific type of creative to be able to scale.
The Nest Creator Program has been adopted by 30% of our clients. Correspondingly, we are seeing a 144% YoY increase in TikTok spend across our portfolio.
NEST STUDIO TIKTOK AD FOR LEMIEUX
Total TikTok spend QoQ
Google mops up higher demand from full-funnel
For our clients that implemented a coordinated cross-channel fullfunnel ads strategy across both Google and Meta, we are seeing a dramatic increase in efficiency on both channels.
A greater proportion of spend for these clients is now targeting new audiences, with upper-funnel Meta spend up dramatically. Correspondingly, we saw a 125% ROAS increase on Google for these brands, as the channel captured the increased demand.
YouTube drives efficient US brand lift in test
The results of a YouTube test in the US for a Nest client showed that the channel was effective in driving a 22% uplift in new customer acquisition during the two-month period.
98% of users reached by the ads were incremental, with a 287% search lift in branded search as well as a 2% absolute lift from upper-funnel activity. With low CPMs, YouTube is an important channel for brand building in new markets.
KEY TRENDS: GOOGLE
KEY TRENDS: YOUTUBE
It’s not too late to save your peak
Performance strategies to deploy during Q4
What to expect on Meta in Q4
It should be no secret to retailers that peak is starting earlier and earlier. Modern Retail has designated the entire month as ‘Black November’.
We repeatedly see this in platform metrics. After remaining low for most of the summer, CPM starts to rise in midOctober, before soaring at the end of November in the lead up to BFCM.
Furthermore, Nest data shows that click-through rates on Meta start to increase in mid-September before Q4 even starts as consumers consider purchases in the autumn.
There is a spike in browsing in the period after Christmas, dubbed 'Q5' by Meta. This is a good opportunity to reach audiences, as CPM also declines in late December.
We also see conversion rates spike sooner in the quarter. Usually, conversion rates start to climb in mid-October, before spiking dramatically a few weeks before Black Friday.
Keep an eye on this metric and be prepared to scale your BOF ads to capitalise on demand when conversions jump in mid-November.
Strategies for funnel and creative
Whether you spent the summer planning, testing and validating your strategies for peak – or not – there remain tactics you can deploy to improve your performance.
In the build up to BFCM weekend, you should upweigh brand and
traffic spend to help drive more people through the funnel and fuel retargeting audiences.
This pent-up demand will be crucial during the period around BFCM when conversion rate soars.
Once you start to see conversion rates soaring in November, brands then
upweigh performance to focus on ROAS and volume efficiency.
Worried about your performance?
Creative is your quickest lever to turn around Q4.
Your first step should be setting out a testing roadmap. It's important to have the right volume and diversity planned, and that there is clear differentiation between sale and step-up assets within this.
Next, there’s always pressure on design availability during peak. You should lock in your design resources in advance, agree on peak-specific concepts, and brief them in early.
Finally, you’ve still got time to commission paid social-specific creator content for BOF.
Average Meta ROAS during BFCM weekend in the US market (2022/23)
International opportunity
American consumers spent a record $9.8B during BFCM weekend last year. Indeed, across our portfolio, we saw a 52% YoY ROAS uplift in the American market on Meta for our clients over BFCM weekend in 2023.
Consultancy Bain & Co predicts this
upcoming peak will smash records, with a YoY growth of around 5% in the US , outpacing their overall holiday sales growth forecast of 3% for the entire holiday season.
This signifies a big opportunity for UK and European brands which are scaling in the American market.
We are also seeing promising signs in the EU, with a 57% YoY increase in EU Meta spend in Q3 2024.
Despite persistent inflation and slower economic growth than the US, European consumers are still predicted to spend more during Black Friday, according to research from Klaviyo.
Have your eyes set on international expansion next year, but not sure where to start? We are hosting a virtual event on 5th December, where we will bring Nest experts and friends of Nest together to discuss the opportunity.
Going global in 2025 A seminar on international scaling
5th December, 2pm (GMT)
A Nest virtual event
The UK has historically ranked as one of Europe’s most lucrative ecommerce markets. However, with economic uncertainty at home and significant opportunities emerging in the US and EU, many UK retailers are looking abroad for growth.
With 2024 rapidly drawing to a close, brands are naturally keeping one eye on the new year. The question is: how can UK brands mitigate the risk of their home market?
Join us on 5th December to find out:
• Why now is the optimal moment to explore international scaling opportunities
• How to build a market entry plan that accounts for both the US and EU’s nuances
• The key barriers preventing brands from gaining traction in new marketsand the strategic considerations that can ensure these problems remain on paper
Click here to sign up to the virtual event
Going global in 2025 A seminar on international scaling
Schedule
2:00pm - 2:20pm
Opening Keynote: Economic Outlook for 2025
Ian Whittaker
Ian is an equities analyst and board advisor with 20 years’ experience, twice City AM Analyst of the Year, and media spokesman and commentator.
2:20pm - 2:40pm
Approaching International Scaling from a Business Perspective
Luke Jonas
Luke is co-founder and CGO of Nest. With 20 years experience, he is a leading industry commentator on ecommerce, digital marketing and digital brand building with a 23k following on LinkedIn.
2:40pm - 3:30pm
The Playbook for International Growth
Natasha Billing
Natasha is a brand and marketing director and independent marketing consultant, with previous roles at MADE.com, NA-KD and ASOS.
Lily Thistlewood
Lily is Head of Digital & CRM at athleisure brand Adanola. Prior to this, she was the founder & MD of paid media agency Reform The Fold.
Victoria Woodman
Victoria is Chief Marketing Officer at Wourth Grouphome to leading brands like Hotter, WoolOvers, Pure, Scott’s of Stow, Thought, and Bloom.
Simon Hofmeister
Simon is Head of Fashion, Retail & Ecommerce at TikTok. He has also worked brand side at ASOS.
3:30pm - 4:20pm
Considerations on Operations & Logistics for International Scaling
Craig Walsey
As CEO of Brand Access, Craig's global ecommerce solutions business runs the logistics for brands like Ridge and HexClad.
Shubhi Khare
Shubhi is Senior Partner Consultant at ZEOS/Zalando. She has held previous roles at Amazon and has an MBE from HEC Paris.
Patrick Boström
Patrick is Operations
Development Lead at razor subscription brand Estrid, with previous roles at Lexington, Stadium and IKEA.
Finn Stenberg
Finn is Global Brand Advisor at Centra, global-first commerce platform for fashion brands. He was previously VP at Nudie Jeans.
4:20pm - 5:10pm
Germany: a guide to Europe’s economic powerhouse
Maximilian Rast
Maximillian is co-founder & MD of Klar, the reporting and attribution solution for ecommerce brands
Rachel Bowditch
Rachel is the director of Melber Consultingsimplifying international expansion, regulatory and M&A.
Luke Costley-White
Luke is marketing director at Project A Ventures, the leading early-stage tech investor in Europe.
Christoph Schliecker-Magnani
Christoph is the agency partner for the DACH region at Meta.
5:10pm - 6pm
Breaking into the US market: strategies for UK & European brands
Preston Rutherford
Preston is cofounder of Chubbies Shorts, Loop, and more recently Marathon Data - measuring brand impact from DR & Organic.
Yael Zwanziger
Yael is VP of Brand and Marketing at Organic Basics. She has held previous roles at Bare Necessities and Zohara Tights.
Jamie Bolton
Jamie is VP of Growth at Fospha, the leading marketing attribution solution for ecommerce brands.
6pm - 6:10pm
Building an international business: recap, reflections, and getting ready to scale
Luke Jonas CGO, Nest
Click here to sign up to the virtual event
There is a European opportunity for American brands, too
Winning in the US market gives American brands a competitive advance in European markets, which are both less saturated and less developed than the US.
And it’s not too late to tap into the European opportunity, with its large, wealthy consumer market and a growing ecom presence.
However, Europe is far from homogenous, with powerful cultural nuances alongside 24 languages. That means localising your approach.
Scaling into Europe won’t often require you to reinvent the wheel with your creative, but simply to adapt your concepts to ensure that the language is nuanced and the imagery is relevant enough to resonate with a domestic audience.
Localisation of your strategy is also fundamental. That means reviewing your key communication pillars and identify how they tie to European preferences and behaviors. This process involves a combination of customer research -
speaking to consumers, running focus groups, and identifying how they feel about the brand and its positioning - and experimenting with new approaches.
Recent success stories, such as Nest clients Hims, AG1 and Ridge, have proven that there is a very tangible, lucrative opportunity to diversify to European markets - as long as you have the right skills, processes, and partners in place.
Want to find out more? We just released a report on scaling Europe for American brands. Find out more in the full report.
What’s happening on Meta?
CPM
CPM has decreased notably QoQ amidst reduced competition over the summer. This creates an opportunity to invest in awareness and brand building before CPM inevitably rises again during peak.
CTR
CTR is flat YoY and QoQ, ending the trend of declining CTR as strategies shifted to video (as most brands have now adopted it). This holds true across all markets except the US, where both CTR and CPM are lower YoY.
CVR
Conversion rate has increased notably QoQ, and is holding up well. This metric usually dips in the build up to BFCM before spiking in November. It's worth taking advantage of lower acquisition costs now before peak.
Meta market breakdown
What’s happening on Google?
CTR
Average click-through rates are down by 24% QoQ, although they remain 7% higher YoY. This decline is biggest in regions where we are scaling YouTube activity, which has a far lower CTR than Search.
CVR
We have seen a huge 70% increase in conversion rates YoY, reflected across both Search and Performance Max, while CVR is effectively flat QoQ. In particular, we have seen a big increase in CVR in the ROW.
CPC
Traffic costs are down 11% YoY and 2% QoQ. The biggest decrease has been for PMax, which is down by 20% YoY. Combined with this uptick in CVR, we are seeing a strong 48% discount in CPA on Google.
Google market breakdown
The Nest Index
The data in this report comes from the Nest Index: our online advertising index that draws on aggregated data from our portfolio of ecommerce clients. It’s used by our teams daily to benchmark your brand’s performance and uncover what’s working, what’s not, what you should do differently, and where you need to be bolder.
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