When plotting out the marketing and advertising budget for the coming year, it makes good fiscal sense to allocate more advertising resources during the month of December. This may seem like a no-brainer on account of the increase in retail sales due to holiday shopping.
However, holiday sales aside, there are some compelling reasons that make it pragmatic to increase marketing and advertising expenditures during the final quarter, or even month, of the calendar year.
1. Competitive edge over rivals
If you don't want to get lost in the crowd, standing out among your business rivals relies heavily on advertising and marketing promotions. The fourth quarter, December in particular, is when many retailers pull out their "big guns" in terms of ads, whether these manifest in print, radio, or TV.
According to Jay Ewing, CEO of Bird Golf:
Businesses need to get creative on how they get their promotional messages out. We co-brand with leading hotels and we often discount our packages based on negotiated reductions in room rates. This tactic drives more business to us and the hotels as well as giving the consumer a better price.
Customer giveaways and promotions are another way to entice potential buyers to your door, and the way to guide them there is through advertising. Apparel, technology, and cookware retailers spent twice as much on their holiday advertising in 2013 than they did for the entire calendar year, making this a challenging time to compete if you have not prepared to assertively advertise your business.
2. Consumer shopping trends
It makes sense to increase exposure and put more funds into advertising during the months when more consumers will be making purchases. The fourth quarter typically encompasses the holiday shopping season, but interestingly enough, December is a hot-spot when it comes to catching those last-minute shoppers with alluring ads and enticing deals.
For instance, consider a husband who is shopping for jewelry to give to his significant other for Christmas. It is estimated that 70 percent of male shoppers wait until December to make these purchases. The increases that retailers and vendors see during the holiday shopping season should compensate for the increase in advertising costs, making such spending a wise business investment.
3. Anticipatory advertising
Anticipatory advertising is another reason to pull out the marketing stops in December. Even if consumers have completed their holiday purchases or spent their Christmas shopping funds, you can anticipate another peak immediately after the season. After-Christmas sales events, liquidated holiday merchandise, and even shoppers that receive gift cards and cash under the tree will be looking to spend on December 26th. Advertising during this period of time can result in some impressive sales figures following the Christmas lull.
4. Streamline and liquidate inventories
Another compelling reason to invest more in advertising during December relates to inventories. If you are trying to clear out and liquidate merchandise prior to December 31st, it makes sense to garner maximum exposure through rock-bottom pricing, promotions, or sales events, to try and catch these customers prior to the end of the calendar year.
Since the conclusion of the Christmas season typically evolves into new merchandise lines and products for the coming spring, this could be the last chance for many retailers to liquidate their holiday inventory before they are faced with taking a significant loss on season-specific items.
5. Tax purposes and preparations
Have you heard the expression, "if you don't use it, you will lose it"? This perfectly sums up the concept of spending more money on your advertising efforts during the final month of the calendar year. Since the majority of your marketing and ad expenses will be written off during the coming tax season, it makes sense to "go out with a bang", or optimize your efforts during December.
According to Shane Siederman, partner at CPA Tax Planning in Manhattan, New York, there are definite advantages to increasing your marketing expenditures during this time, and it jives perfectly with other factors that come into play for businesses during this time of year.
Another tidbit from Siederman: "A prudent move by accounting firms is to reduce data entry type work, so the technicians or CPAs can focus exclusively on tax planning and reduce the tax burden."
There are several reasons why it is prudent to utilize more of your ad budget during December, and amping-up your advertising budget during this time can gain valuable credits and deductions that will improve your tax situation in the spring as well.
Here's a parting thought from Stewart A. Alexander, the Authority Marketing Guy: "Whether you are managing a major retail enterprise or if you are an independent contractor or small business owner, plan on allotting more resources to the end of the calendar year. This will help you and your company compete with business rivals, circumvent consumer shopping trends, and optimize your business-related deductions for the coming tax season."