Northbeam's Definitive Guide to Q5 2023

Think the holiday season and peak shopping time is over after Christmas? Think again. You know we're all about arbitrage here at Northbeam.

If you’re a savvy advertiser, you’re probably already familiar with Q5 (the “hidden” quarter) and have been actively squeezing more performance "juice" out of the proverbial holiday promotional season lemon. In fact, both Meta and TikTok are vocal about encouraging more brands to increase spend in Q5 to capitalize on opportunities.

The good news is, even if you’ve never heard of Q5, it’s not too late to take advantage of this unique selling time. In this guide, we’ll give you our take on Q5, why you should care about it, and how you can make the best use of Q5 with your campaigns. 
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What is Q5?

Ask a couple of marketers what Q5 is and you’ll likely get slightly different responses. At Northbeam, our definition of Q5 is the period from late December to early-to-mid January. The fifth quarter is that hazy period between Christmas and the proper start of the New Year where the days blend together as people relax and unwind with family and loved ones. Most brands are replenishing BFCM investments and reducing campaign budgets across the board with (at best) only top performers active.

This is when most marketers take their vacations after the absolute gauntlet of Black Friday, Cyber Monday, and Christmas sales. While the competition is taking a break before Q1, this relatively quiet time in the year can help propel you past the competition if you’re well prepared. 
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Why is Q5 important?

It can seem counterintuitive to keep spending during “down” time, but there are several good reasons why brands should consider Q5 as part of the holiday season:

• Since most marketers will be slowing down after Christmas, there’s naturally going to be less competition in ad auctions.
  
  This not only means fewer promotions and other advertisers to compete against, but also considerably lower ad costs vs. peak holiday CPMs. Adweek estimates that Meta CPMs were 28% lower during Q5 YoY, with ad fees in the last week of December at least 12% cheaper than previous weeks.
  
  This is a great way to get the most bang for your buck, or get an even larger share of voice with the same amount of spend.
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• Engagement on social media and digital devices remains high as people relax and spend time at home during the holidays.
  
  ‍Not only are people using their devices to disconnect more, but new devices that were gifted are also coming online. Usage peaks around Christmas and stays elevated all the way through early January for these reasons.
  
  According to Snapchat, although engagement is highest on Christmas day, a surge of app downloads follow. 81% of TikTok users expect to spend the same amount of time or more on the app in Q5, and during the week after Christmas, TikTok views actually increased +24% vs the Q4 average. This means that even though ad costs are lower, customer engagement is in the same ballpark as more expensive weeks. 
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• Shopping intent also remains high after peak holiday sales are over.
  
  Survey data shows that 92% of customers intend to keep shopping into Q5 as people exchange and return unwanted gifts for something they actually want. According to the National Retail Foundation, 70% of customers this year expect to shop in the week after Christmas, driven by continuing sales.
  
  Gift cards are often used during this time to take advantage of ongoing sales, which explains why shopping behavior during Q5 shifts from gifting to more personal buying (which is better aligned with most brand messaging) as we approach New Years resolutions season.

In summary, not only is there less noise in the market from other ads and sales, but you’ll also enjoy high customer engagement and shopping intent at a healthy discount. Not a bad time to think about efficient customer acquisition.
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Take advantage of Q5 with these strategies

Because of the dynamic of lower CPMs with high engagement, there’s an opportunity to get a discount on ads and unlock some incremental revenue at the same time. Let’s discuss a few scenarios that are perfect for Q5. 

1. People begin shifting from buying gifts to purchasing for themselves after Christmas and as we approach New Years.
   
   We start thinking about resolutions and unsurprisingly “New Year New Me” brands generally see an uptick in conversions and performance at this time. If your brand is in the health & wellness, fitness, financial management, or other similar spaces tied to New Years Resolutions, you’re missing out by not taking advantage of cheaper ad fees at a time when people are actively looking for your products.
   
   We’re advising our "New Year New Me" clients to double down and aggressively pursue revenue goals this Q5; you should, too. 
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2. Seasonally relevant and consumable stock-up brands also do well during this time.
   
   Winter clothing & accessories, ski & snowboard, beauty & skincare are just some examples of verticals that should seriously consider ramping up or at least extending spend through early-to-mid January. One of our best clients is a beauty brand powerhouse that has consistently made smart choices around their Q5 media mix and budget allocation.
   
   In 2022, they actually spent 6% more in Q5 than the prior month, but efficiency metrics like ROAS (+2%) and CPA (-5%) were healthy due to high device usage and shopping intent. Best of all, revenue from Q5 was +8% higher vs. the traditional Q4 period which included Black Friday/Cyber Monday. 
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3. Q5 is a great time to run awareness plays and retargeting campaigns because A/B testing will cost even less than usual.
   
   Get a leg up on Q1 by using this period to start on your learning agenda to test creative, audiences, channels, copy, and so on. Ideally you’d want to have a large diversity of creative running not only to narrow down on themes that work, but also to start building up your pipeline for the rest of the year.
   
   Brands can use this time to begin filling the top of their funnels for 2024 while their competition is asleep at the wheel, especially smaller brands who have the rare opportunity to outbid larger advertisers (those brands will largely have exhausted spend by this point and are in planning mode for next year). Be bold when others are fearful. 
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4. Finally, Q5 is perfect for liquidating excess inventory or older SKUs.
   
   We’d advise switching up the offer from your previous holiday promos and launching new creative to avoid customer fatigue. Make it clear this is a sale specifically for Q5 that will only run for a limited time to generate a sense of urgency. 
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How leading brands use Northbeam to tackle Q5

We surveyed our power customers on the ways they use Northbeam in Q5. Here are a few of our favorites: 

1. A big advantage of having infinite lookback windows is that customers acquired in Q5 will stay in your funnel even if their purchase intent comes later.
   
   Unlike most other attribution solutions that have a limited lookback window (usually 7 days), Northbeam allows you to target all of the people in your pipeline regardless of when conversion actually happens. For example, let’s say your client is a swimsuit and summer essentials brand who traditionally has ignored Q5 in their media plan.
   
   Using Northbeam, cohorts recruited or acquired during Q5 at a lower cost thanks to decreased CPMs can be integrated into the funnel once the high-selling season starts in spring and summer. With a shorter attribution window, those Q5 customers would get lost in the shuffle even if they were likely to convert down the line. Make sure you don’t miss out on revenue with shaky attribution modeling. 
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2. Using the Customer LTV tab, you can track the average value of customers acquired during Q5 vs BFCM or any other time in the year. Let your own data tell you whether Q5 is a good time to increase spend or not. 
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3. Although Q5 offers lower CPMs, this can easily be offset with worse efficiency or conversion rates. To carefully monitor and manage your ROI, you need a single source of truth that you can rely on to make budget allocation decisions.
   
   What’s the good of doubling down on a campaign if your data is faulty and you weren’t investing in a winner to begin with?
   
   Top brands including The Ridge, Hexclad, and Jones Road Beauty trust Northbeam’s expertise in attribution and customer journey analysis to capitalize and get even more value out of Q5 because they trust the accuracy and integrity of the data and modeling. 
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Bonus: Northbeam is a retention tool and value add for marketing agencies 

With platform-reported data and GA4, Digital Marketing Agency partners often view Q5 as the season of churn as clients invest a majority of their available budget into BFCM and the holiday season before going dark. Northbeam can help agencies with retention efforts by building on the momentum from Q5 and applying learnings into their larger 2024 strategy.

We asked a few of our best partners on how they’re advising clients on Q5:

• Sol8: “Take advantage of the low CPMs on the Google TV network, optimizing for reach targeted to TB screens. At a time where there is a large amount of time off for families, you can leverage all the Google Ads audience targeting to multiply your viewership to multiple people in a household. The best part? It’s 81% cheaper than the CPMs on Hulu.”
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• Blaze Digital: “Q5 is the time to push as ad costs plummet after the Christmas holiday. Really effective promotions tend to be 'end of year clear out sale.' This is also a big time to push the use of gift cards.”
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• Embrace E-Commerce: "From an Amazon marketing perspective, leverage the Q5 period as a strategic opportunity that extends beyond low CPMs and CPCs. Its about comprehensive preparation and seizing a competitive advantage over other brands."
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So should your brand or clients keep some cash on the sidelines for Q5 this year? If any of the above strategies or tactics resonate with you, reach out to us and we'll give you our take on whether or not it makes sense for your marketing team. 

Featured photo by Karsten Winegeart on Unsplash