Retailers have been shifting their advertising and marketing dollars away from traditional media for years. A new study by the National Retail Federation and Forrester shows just how much their priorities have changed. While retailers have been talking about social media for some time, more retailers in 2016 — 92 percent — put dollars into social marketing.
Survey participants said that social media is doing more than starting the conversation — it’s driving revenue. And the cost-per-order of social media is lower than paid search, $16 versus $24.
About 68 percent of retailers reported seeing greater conversion rates from their paid Facebook efforts and 40 percent claimed that Instagram is increasingly aiding conversion. Social media efforts on Pinterest, YouTube and Twitter are also increasing conversion for some retailers.
Facebook is the king of social media, with 71 percent of retailers surveyed saying they plan to invest more on the site.
About 46 percent of the online and multichannel retailers surveyed said they spend more than $1 million annually on digital marketing, while one quarter of respondents spend more than $10 million a year.
Most of the money is being spent on smartphones, with 66 percent of retailers reporting that they’ll spend more. Beacons seem to have lost their luster, with only 8 percent planning to use them and half the respondents saying they have no plans to use beacons. Tablets are growing in importance to only 29 percent, less than half the number of retailers investing in smartphone marketing.
E-mail is the most popular digital marketing investment with 90 percent of retailers using it more than any other strategy. Consumers now open about 45 percent of the e-mails they receive on smartphones, according to the survey.
Participants said e-mail also has one of the lowest costs of implementation, $5 per order on average, compared with mobile messaging, $25 per order, and search engine marketing (SEM)/search engine optimization (SEO), $24. While e-mail is usually considered a retention tactic, 16 percent of retailers said it’s their best means of acquiring new customers; 13 percent said search is most successful for attracting new shoppers.
Paid search and SEO are nonetheless a priority, with Google being a key driver for retailers, and the study found that investing in it pays rich dividends as consumers continue to use search engines such as Google on their mobile devices to discover and find products, especially during the holidays. Mobile paid search programs have been optimized by 48 percent and 26 percent said they’re working on it.
Optimizing checkout for smartphones, which is now anemic, is a top goal, followed by site redesign, improving site content and personalization. The latter seems to be easier said than done. While 66 percent said they’re investing in personalization this year, many acknowledged that finding the resources to manage various data sources and work streams is a challenge.
The survey asked retailers which department is responsible for online budgets. Responses were almost evenly split between e-commerce/web teams and marketing departments. Only 23 percent reported using mobile marketing efforts to drive store traffic, which the survey called a missed opportunity.