From Prime Day to Christmas: Capitalizing on Seasonal Consumer Behavior With Deep Learning AI

As the holiday shopping season approaches, consumer optimism is at its highest in years. Research indicates that 66 percent of shoppers plan to either maintain or increase their holiday spending compared to last year. With inflation easing and purchasing power strengthening, this year’s holiday season is projected to drive a 9.5 percent increase in online sales, with the Cyber Five alone expected to reach a record $40 billion. This presents a significant opportunity for brands. However, given the intense competition during these retail dates, brands need to stay ahead to generate the desired outcomes, particularly in their performance advertising efforts.

Adapting to Key Moments: Timing and Budgeting Strategy

In 2024, Thanksgiving falls at the end of November, pushing Cyber Monday into December and shortening the holiday shopping season by nearly a week compared to previous years. The key shopping window, typically wrapping up around Dec. 18, will leave brands with less time to capture consumer spending before Christmas. Therefore, it's essential to start sales supported by performance campaigns early.

Our internal data reveals that during Black Friday, user behavior in the apparel category — the most popular online and the second-largest sold during promotional periods — spiked dramatically, with 85 percent more unique visitors to brand sites and a 220 percent increase in total orders compared to October, a typical nonpromotional period. Cyber Monday saw a slightly lower boost, but still significantly outperformed regular shopping activity. Importantly, shoppers weren’t just active on these key dates — an elevated sales propensity began as early as the first week of November. This suggests a longer window of increased shopping activity leading up to major events. Additionally, over 50 percent of shoppers reported starting their holiday shopping three weeks to four weeks earlier than the Cyber Five, spreading their spending over a longer period and taking advantage of early promotions.

With this year's shorter holiday season, starting early will help brands make the most of sales opportunities. Securing enough budget and adopting an open budget scenario is key to maintaining flexibility and maximizing revenue, especially since juggling funds across two months can be operationally challenging. 

Discounts: The Right Percentage on the Right Product for the Right Customer

Customers are seeking discounts as early as October, anticipating the first significant sales around Prime Day. Price reductions are expected to grow larger in early November, peaking a week before Thanksgiving, with promotions potentially reaching as high as 30 percent off.

The allure of discounts not only attracts new customers but also encourages existing ones to return for additional purchases. Our data indicates that repeat purchases significantly increase during promotional windows. In the apparel sector, for example, the repeat purchase rate jumped by 26 percent when promotions were active, although the product categories driving these repeat purchases differed from the best-selling ones.

To maximize revenue, verifying the product feed to ensure the advertising covers the full product range is crucial. Even if 80 percent accuracy seems acceptable, every percentage point counts. Addressing issues across all items — not just top sellers and high-margin products — can significantly influence performance. Establishing sub-campaigns with distinct objectives for driving conversions or enhancing customer loyalty is also essential. With a full range of products available for advertising, deep learning-powered algorithms can present the right offer to the right user, boosting sales.

Deep Learning AI — Your Winning Marketing Stack for Incremental Outcomes

Effective performance advertising with personalized offers is key, as brands are likely to set different discount levels across various product categories based on users' or segments' preferences.

Utilizing campaigns powered by advanced technologies, such as deep learning AI or generative AI, allows for precise targeting and continuous optimization improvement. Deep learning AI increases performance efficiency by up to 50 percent compared to those using standard machine learning, driving incremental results like Neiman Marcus exceeding holiday season goals by over 60 percent with a 26 percent net uplift in incremental sales revenue.

Adding additional technology to your existing performance marketing stack, without disturbing the already successful ecosystem, is a great way forward. It allows engaging more user segments, as deep learning AI identifies nonobvious paths to purchase, often overlooked by other technologies. It displays ads with nontrivial product recommendations while maintaining optimal exposure to convert users and drive additive results.

Finding the Balance

In an increasingly competitive landscape, brands need to engage consumers strategically. While discounts are a proven method for boosting sales, the challenge lies in finding the right balance — determining the optimal discount amount on the right products and timing to maximize returns without conditioning customers to only buy during sales events. The key is mastering the art of promotions with the most effective technology on the market to drive revenue now without compromising long-term sales performance.

Bryan Hernandez is the director of client partners at RTB House, a marketing technology solutions provider.