The augmented opportunity for retailers this holiday season

Snap head of emerging advertising solutions AUNZ Kate Gundelach
By Snap head of emerging advertising solutions AUNZ Kate Gundelach | 26 October 2021
Kate Gundelach

For many businesses, the holiday season is the busiest time of year. And with local lockdowns coming to an end, the upcoming season is set to be one like no other.

UBS economists report households have amassed an extra $120 billion in deposits since the pandemic first struck, with many suggesting consumers are ready to loosen the purse strings as the country re-opens and we head into Christmas.

While it’s exciting to see a predicted rise in consumer spending for the holiday quarter, we know retailers will be facing fierce competition as many brands compete and try to claw back lockdown-related losses.

As digital commerce increases, today’s creative technologies are a double-edged sword for retailers. While they can open up exciting new shopping channels, the online marketplace is an increasingly competitive one. Often, consumers will place more value on a convenient, personalised, and engaging retail experience than on a specific retailer or even a specific brand. Therefore, it both literally and figuratively pays to stand out from the crowd.

Within this context, today’s advancements in augmented reality (AR) will prove crucial in helping digital-savvy marketers win in the upcoming shopping season. These AR tools are far from just ad products — they are immersive and contextual experiences that can be part of a brand’s retail strategy.

AR is now emerging as a powerful tool for shopping, entertainment, engagement, and more. Globally, it delivers almost double the levels of visual attention compared to a non-AR equivalent – and we are seeing similar results here in Australia.
During the month of November 2020, for example Snapchat delivered a 10.2% ROI for digital first fashion and apparel brands when compared to the full year. A 22.2% ROI and a 14.2x average purchase value for e-commerce platforms was delivered during the same period, compared to the full year. These stats showcase how more and more brands today prefer Snap to meet their advertising objectives.

It’s helpful to think of such campaign effectiveness in the context of both entertainment and utility — something that AR is ideal to deliver against. A virtual try-on of cosmetics, or a new pair of sneakers, generates light-hearted, shareable content amongst consumers. But it also serves a utility function in enabling them to try products on the go, from anywhere. Almost half (45%) of Australian Snapchatters are using AR for shopping, and 37% are using AR to try products out1. Nearly three in four consumers2 say they’re willing to pay more for a product that promises the total transparency that AR can provide. This adoption of AR to solve eCommerce pain points is promising for the AUD$99.5 million return problem3, which AR can help fix.

That's not all, return rates on e-commerce have been massively affecting bottom lines and we all know AR is touted to be the answer to eCommerce's returns problem We know for example, that AR-guided purchases led to a 25% decrease in returns4.
Marketers live and breathe in a competitive world dominated by data, and ROAS provides a look at the bigger picture. This metric offers greater insight into not only what’s leading to conversions, but also the amount of revenue our conversion actions are generating. We at Snap are bringing the same level of data-driven measurement and management that’s available for video ads to AR. Brands running innovative AR campaigns can now optimise against many of the same goals offered for video ads, and thus more easily combine these tools to breathe life into their campaigns.

Working with Culture Kings, as an example, they saw a 1.54x increase in Return on Ad Spend across November and December 2020, compared to the rest of the year on Snap. This is just one example and it’s exciting to see us improve on those results year on year.

As the holiday shopping season approaches, retailers should ultimately stay focused on a consumer-centric plan based on creating experiences. Technologies like AR are no longer a new innovation or a nice-to-have, but something consumers expect.

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