The holiday is an especially competitive time for advertisers, as brands of all sizes and industries try to get consumers’ attention, aiming to capitalise on seasonal demand. In fact, Christmas increases seller’s metrics, driving up the cost per click (CPC) and cost per thousand impressions (CPM) in industries like retail and e-commerce.
Recent WGG statistics indicate that the average CPM in the UAE is approximately AED 100-150 during the holidays, which can vary depending on the niche. For instance, technology-related niches may see CPMs exceeding AED 50 due to higher demand. Nevertheless, businesses that strategically optimise their campaigns during this period can achieve stronger returns on investment. So, how can you save your marketing budget this holiday season?
Higher CPM: Auction system dynamics, increased competition, budget, and user value
The holiday season’s dramatic rise in CPM results from several converging factors. One of them is the auction-based pricing mechanism behind platforms like Meta and Google. The math behind it is simple: when multiple advertisers compete for the same audience, the cost per impression rises. Meta, for instance, prioritises advertisers willing to pay a premium. This rise affects retail, e-commerce, as well as related sectors like logistics, delivery, gifting, financial services, and travel.
This leads to auction bids rising rapidly, pushing the CPM higher. A vivid example of this is the presence of gifts or holiday decorations in product areas. During this period, CPM can increase by 30-100 per cent depending on the niche and region, but with proper campaign setup, the ROI can justify the higher costs as increased sales typically outweigh the rise in advertising expenses.
Fluctuating CPM: Retail, e-commerce, entertainment, and travel lead the way
Rising CPM affects a range of industries, especially retail and e-commerce, with demand for electronics, clothing, cosmetics, and toys reaching peak levels. For example, search interest for “home decoration” rose by 25 per cent in December compared to November, and “personalised gifts” saw a 140 per cent increase. The entertainment industry also experiences a surge of interest – tickets for events, streaming service subscriptions, and other forms of leisure become particularly popular.
The travel sector, however, shows different dynamics, as most people plan trips in advance, with the bulk of activity and bids occurring in October-November. However, demand for “last-minute” services such as short getaways, gift vouchers, or holiday accommodation increases as the New Year comes closer. Advertising for trips planned for January-February also rises as many seek a break after the busy December period. For instance, search interest for terms like “New Year’s Day” and “Christmas” has risen by 20 per cent in the UAE, Saudi Arabia, and Egypt over the past two years. As a result, CPM fluctuations in this sector tend to be more targeted and depend on specific offers.
Interestingly enough, consumer behaviour transforms markedly during this period. Users spend more time online, actively hunting for deals and comparing products. According to recent data, mobile internet penetration in the MENA region is projected to reach 57 per cent by the end of 2024, with users averaging 3.5 hours daily on social media.
On one hand, engagement increases, but so does attention fragmentation due to the number of offers. In an environment like that, advertising costs inevitably rise, as sellers need tailored and compelling advertising to capture buyers’ interest. However, by understanding changes in user behaviour and offering highly relevant products, CPM increases often result in higher conversions, justifying the investment.
So, how do you optimise campaigns this season?
Businesses must adopt agile and data-driven strategies to navigate the challenges posed by increased CPM. Audience segmentation allows advertisers to identify and effectively target high-value user groups. Geographic targeting further enhances efficiency, as understanding regional differences, such as holiday dates, ensures more relevant and cost-effective messaging.
Experiment with creative campaigns. Small changes in imagery or ad copy can impact performance – that’s why it’s better to calculate ROI in advance and assess whether the potential profit justifies the increased advertising cost. For instance, switching focus to mobile ads, which generally have lower CPMs than desktop ads, could benefit certain contexts. In particular, mobile ads typically have a lower CPM (around AED 16) compared to desktop ads (approximately AED 19) due to differences in user engagement across devices.
Choosing the right advertising channels is another critical factor. Social media platforms excel at capturing initial interest, while search ads often drive conversions. Different social media platforms like Facebook, YouTube, and Instagram have almost 25 million users. Remember that each channel requires its approach, and ROI calculations are essential. In 2023, mobile advertising accounted for 28.1 per cent of the total digital ad spend in MENA, a figure expected to grow as the region’s digital advertising market expands, reaching $44.83 billion by 2032.
Plus, at WGG, we observed that CPM rates could drop significantly after the holiday season, particularly during January, often referred to as the “January blues,”. This seasonal fluctuation highlights the importance of strategic planning around these key advertising periods.
Bonus tip: budget planning
Effective budget planning during the holidays requires precision and flexibility. Analysing historical campaign data is a valuable starting point. Which channels worked last year? Which days brought the highest sales? These insights will guide you on where to put the most of your budget to avoid wasting money.
However, even the best-laid plans may require mid-campaign adjustments. Constantly monitor campaigns and reallocate funds from underperforming ones to those showing better results. Choosing the right channels is also crucial. Social media will help capture attention, while search ads will help to close the deal.
Keeping a portion of the budget for last-minute advertising is a smart move. The final days before the holidays often surge consumer activity, making this an opportune moment to maximise visibility and conversions.
Think about the future too. The holidays may end, but your customer relationships can continue. Post-holiday campaigns, loyalty programmes, personalised offers and promotions will help maintain contact and encourage customer-business connection. A well-planned campaign delivers results that justify all the effort.
The holiday season presents advertisers with both challenges and opportunities. Rising CPM demands careful planning and innovative strategies. Businesses can transform seasonal advertising into a powerful growth driver by understanding the factors, tailoring campaigns to shift user behaviour, and optimising budgets. So, use these strategies not to let the Grinch steal your budgets this season.
By Sergei Vinogradov, CEO of WGG, a Dubai-based marketing agency.
