Reflections on Black Friday 2024
My bet is the makeup of companies that take part next year will look different.
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3rd June.
That was the date I received my first email telling me it was time to start getting ready for Black Friday.
The global peak for Black Friday, according to Google Trends, was 2019. But for almost everyone I spoke to this year, it felt like it was a much bigger thing.
2019 was by many definition, the last year of the old normal. The 12 year long rise since the financial crash where, as 80s outfit Yazz would say, “the only way is up.”
Even without looking at prediction data or until we get proper macro review data, it really felt like 2024 was back with a vengeance.
I speak to hundreds of founders each year and beneath the default position of optimism, it feels hard.
Fundraising in particular remains tricky. I’ve heard of seasoned second time founders struggling to raise as quickly as they once might.
There is plenty of capital around though. I was speaking to a private equity investor this year who told me there is plenty of it out there, but just nowhere to deploy it. There’s been some notably large VC funds raised this year as well.
But if you’re building consumer companies, it’s likely to feel far harsher. The recent news that Allplants was entering administration has become the next in a long line of consumer businesses to shutter doors.
It feels like companies are pushing hard to drive topline again. And the place this played out was on Meta.
A harsher spike in Black Friday 2024 than 2023
Consider this chart. This shows weekly CPA of a brand that does not advertise Black Friday discounts. I’ve normalised this and adjusted for anonymity.
Takeaways here:
2023: 17% increase in CPA between peak week and 4 weeks before
2024: 39% increase in CPA over the same period of time
This is an extreme example, but we saw similar patterns amongst lots of no-discount clients.
Now consider this chart, again normalised and adjusted for anonymity.
This client is a Black Friday advertiser.
Last year for them they saw minor reductions against the October peaks, but this year, a 30% CPA reduction between weeks 44 and 47 – the same period that the above client saw a 39% increase in CPA.
Black Friday 2024 began 18th November
The real spike began week commencing 18th, which on the ground felt like the period most advertisers started their campaigns.
The creative that stood out? In your face, bright bold discounting.
Messaging was often reduced to the biggest % number the brand was offering in starkly contrasted images, often more garish colours than usual. These work, we know, we did some ourselves.
This year we saw a big spike in competition and much earlier, and with more noise, only the starkest contrasts stood out.
How affordable are offers over 50%?
I lost count of the number of offers that were well over 50% this Black Friday. Rivals to two of our clients both ran 65%+ discounts, but it wasn’t limited to them, we were seeing it everywhere. 65%, 70%, even one 80% offer on a welcome pack.
How can this sustainably work from a contribution margin perspective?
There are very few brands out there who have more than 65% or 70% of CM2 available to them, and then when you do are the improvements in CPA really offsetting those differences in CM3?
Modelling this stuff out reveals there’s a very high requirement on your CPA shift for Black Friday to be as profitable.
To say nothing of the fact that a customer buying on a 60% discount will have at much worse retention. In fact I was discussing this on X recently.
Maybe you can achieve an 88% discount owing to BF sales, in which case this becomes about affordable awareness or sampling. But I’d wager for the majority this is just burning money.
Is this peak Black Friday for most premium brands?
Why did this come around?
Here’s my hypothesis:
A lot of brands are struggling this year: 2024 has been incredible for some but tough for many
Those cash balances are getting trickier than they were before
Brands need more direct relationships with customers again as they focus on long term viability and that means DTC
Investment now predicated on bigger milestones
Premium physical brands have a much lower ceiling to retail than US counterparts do
Revenues are down against forecast and therefore brands are doing what they can to maximise Q4 – a big BF is a huge part of that
We’re in an odd consumer climate. It’s not a recession, but cost of living is up, inflation is high, we’ve had a budget that caused disruption for much of the year, plus election cycles, etc etc.
The result of all of this was going harder on Black Friday than they have previously.
Sales periods are tricky in general.
The question I come back to increasingly is how incremental is this sale?
Now we know there are lots of industries such as fashion, where impulse purchasing is a core aspect of the buying psychology. We also know that in areas where product offerings are particularly new, then the right offer can help mitigate risk and anxiety for the consumer.
But there are lots of times when sales aren’t incremental either.
Last week I got targeted by Nike with 25% off everything.
I buy a pair of Pegasus trainers about three times per year. They are my trainer of choice and ever since a podiatrist said to me ‘once you find a shoe that works, stick with it,’ I’ve been loyal ever since.
In January I was likely to have bought a new pair at full price, instead I bought a pair at 25% off this weekend. I’ve no idea their margins but presumably they’d have preferred that £30 of CM in January rather than £0 today.
The backlash
The backlash against Black Friday feels bigger too. Clients like Mother Root took a specific stance against it. As did lots of sustainable fashion and homeware brands I follow on Instagram. There may be noise than ever, but there’s a distinct group of brands standing out in their refusal to partake.
The future?
One of my 2025 predictions already is Black Friday will be different next year. In many categories, and for many brands, it obviously makes sense.
But it doesn’t make sense for everyone. And it feels to me like this year it’s been taken up by a wider selection of company’s for whom it doesn’t naturally work as well.
And for those where the unit economics make sense – where the CPA improvements offset the lost contribution margin – how much of those sales were incremental? Is anyone doing holdouts on this stuff? Is it even possible at lower levels of spend?
My overall view of this year was: it started earlier, it started bigger, platforms were more expensive, and there’s a good chance for many brands it wasn’t the best idea. I think next year may be different. Let’s bookmark this and review in December 2025.