Black Friday 2018: Predicting winners and losers using alternative data
Ahead of the 2018 holiday season – with Black Friday falling on 23rd November and Cyber Monday on 26th November – we look back to Black Friday 2017 and perform a proprietary analysis of how investors can utilise advertising and clickstream datasets to predict the performance of retailers over this period. In particular, we focus on three large US retailers: Walmart, Target, and Kohl’s.
NEUDATA QUICK VIEW
With Black Friday sales often serving as a barometer for retailers’ performance throughout the rest of the holiday season, investors can use datasets relating to spending and retail strategy over this period to derive leading indicators for a wide range of retail stocks.
Clearly, there are many different dataset types suitable for this use case. However, we will focus on the following two categories in our analysis:
- TV advertisement – data and analytics on media spend by retailers, advertisement performance, and audience impressions.
- Clickstream – online browsing activity of consumers including page visits, search activity, and, in some cases, the specific items they purchase.
BLACK FRIDAY TV ADVERTISING: ATTENTION IS KEY
In the months leading up to Black Friday, long before consumers visit physical stores or retail websites in search of deals, companies are inevitably competing to gain their attention through various advertising channels.
But how effective are these marketing campaigns? And, as an investor, can one use advertising metrics (e.g. spend, audience impressions) to gain an insight into company sales in a timely fashion?
By utilising data and analytics on retailers’ use of TV advertising in the run up to Black Friday, as well as the near real-time success of these advertisements in terms of viewership and engagement, investors can gain potentially useful data on:
- The extent to which a retailer is targeting the Black Friday market – based on the number of advertisements they run, their estimated media spend, and changes in these metrics YoY.
- Consumers’ awareness and interest surrounding a retailer’s upcoming Black Friday promotions – based on the number of audience impressions an advertisement receives and the attention levels of its audience i.e. the propensity of viewers to tune out or interrupt an advertisement while it is playing.