US Insights

Advertisers go back to school

Jon Swallen

Chief Research Officer, Kantar Media Intelligence North America

TV 07.31.2015 / 13:00

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The secrets to Target's 2014 success and other insights into the #2 annual shopping event

While parents prepare to send children back to the classroom, advertisers race to win their share of a considerable pool of Back-to-School shopping dollars. According to the National Retail Federation, the 2014 Back-to-School season generated nearly $75 billion of retail spending, making it the year's second -largest spending event after the winter holidays. Approximately two-thirds of these purchases were connected to college students and one-third to the younger K-12 population. With so much at stake, Back-to-School is clearly a key battleground for marketers.

Back to school - in July. With schools and colleges starting the academic year in August or early September, the core shopping season typically gets underway in July and stretches past Labor Day. Marketers align their ad budgets to this calendar and make tactical decisions about the right investment levels, the right weeks to support, and the right messages to capture the sale. In both 2013 and 2014, Back-to-School ad activity started after the July 4 holiday. Accordingly, for this analysis, we focus on advertising featuring Back-to-School themes that appeared from July 7 to October 5, 2014.

However, some marketers have been shifting budgets within this period to create an earlier presence for themselves and target early-bird shoppers. This was noticeable in 2014 when spending during the week of July 15-21 jumped by more than 50% compared to the prior year. Total media spending on themed ads for Back-to-School reached $241 million in 2014, down 9% from the prior year. The Top 10 advertisers accounted for almost $150 million of this amount, a 62% share. (Note that these figures apply to ads with Back-to-School themes only, and total ad spend for the period would thus be higher.)

Head of the class: Target. Target won the overall season with spending of $34.9 million, nearly as much as the next two largest advertisers combined. Its leadership position in Back-to-School is striking because Target typically lags behind Walmart in overall ad spend, indicating a particularly strong strategic focus on this event. Target's advantage was due to its "tentpole" strategy of launching at a higher spend rate to get a jump start on rivals and then sustaining its budgets deeper into September. During the fiercely competitive stretch from July 14 to September 8, Target was the top spender in five out of eight weeks. Over the same period, Target won the week six times against its narrower competitive set of department stores and mass merchandisers.

Target and Walmart took very different approaches to the merchandise lines featured in their seasonal advertising and there was surprisingly little head-to-head competition. Target focused on apparel, school supplies and a cause marketing program to help underprivileged students. Meanwhile, Walmart emphasized computer products and accessories, food items for the lunchbox, and a general promotion message touting savings during its "Back-to-School Sales Event".

The new kids: financial services, food and beverages, telecom. Back-to-School is foremost a retail sales event, and the retail category accounted for $191.8 million of the total $241 million spent on themed advertising during the 2014 season. Department stores, apparel merchandisers and consumer electronics stores were the most active retail segments, consistent with the types of products shoppers spend their money on.

Besides retail, several other categories demonstrated significant spending, typically concentrated among a short list of marketers. Financial Services exemplified this phenomenon with $10.7 million of media expenditures, virtually all of it from American Express. The credit card issuer touted its plastic as a payment method for Back-to School purchases and the rewards card members could earn. A wide range of Food & Beverage advertisers spent a total of $8.9 million to promote items for student lunch bags and after-school snacks. The Telecom category was responsible for $7.5 million of media spend, principally from wireless service providers offering plans and equipment with "back-to-school savings".

Sales and savings in the lesson plan. Sales and savings were the name of the game for mass merchandisers and department stores as they competed to have their deals and steals stand out. Target advertised 20% off for school supplies, while JC Penney promoted savings on backpacks, apparel and footwear. Walmart took a different approach, comparing its rollback prices for school essentials to prices of the same items from Dollar General and calculating the savings.

When it came to targeting college students, advertisers did not fall short. Walmart showcased bright-colored designs for students to spruce up their dorm rooms, as well as affordable essentials for college cooking. Kohl's wanted to be students' college destination, promoting a variety of electronics, appliances, apparel and more. Best Buy portrayed students with all of the electronic essentials needed for schoolwork, entertainment and keeping in touch with family and friends throughout the semester. One advertiser with an unusual approach was the Southern California Honda Dealers Association. Using a hidden camera to capture the moment, its representative approached students at random in a campus bookstore and surprised them by paying for their textbooks.

Source: Kantar Media

Editor's Notes

The above article is excerpted from Kantar Media's Back-to-School Advertiser Insights presentation. To see the entire deck, click here. Journalists, for inquiries, contact us. Follow us @Kantar and sign up for our alerts.

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