Search and email marketing continue to dominate marketing budgets for online retailers, making up almost half of the spending, the latest State of Retailing Online report finds. Why? Because they’re effective and cost-efficient.
Search engine marketing accounts for 33% of digital marketing budgets among retailers surveyed for the report, released in July. Search engine optimization receives 16% of the average and email gets 14% of the marketing dollars, the report finds. Merchants report the average cost per order is $6 and $15 for email and search, respectively. Surveyed retailers, on average, dedicate approximately 6% of their online revenue to web marketing, with the median marketing spend at $950,000, the report states.
For the State of Retailing Online 2015 report, Forrester Research used data from the State of Retailing Online survey, conducted in May and June, in conjunction with Shop.org and Bizrate Insights, a division of Connexity. It was authored by Forrester analyst Sucharita Mulpuru with Carrie Johnson, Laura Naparstek and Laura Glazer. Respondents numbered 224, with 61% having $25 million or less in online sales per year, 20% more than $100 million in annual online revenue and 19% with $25 million-$100 million in online sales.
In addition to paid search ads, SEO and email, online retailers find ongoing success with affiliate marketing, according to the report. Affiliate networks sometimes are viewed as the Rodney Dangerfield of online marketing, seeming to get no respect. But they are doing yeoman’s work and “continue to remain strong in the web marketing arsenal,” according to the report. Affiliates are website operators that publish links to advertisers’ e-commerce sites and earn a commission on any sales generated from the traffic they send.
Among other findings:
Retailers were asked to rank their most effective customer acquisition methods, and this is how the channels fared:
- 58%, search engine marketing (mobile and desktop).
- 55%, SEO and natural search optimization.
- 52%, email to a house list.
- 38%, affiliate marketing.
- 31%, online marketplaces, such as Amazon, eBay or Rakuten.
- 27%, remarketing and retargeting through online ads.
- 25%, Facebook.
Online retailers continue to be challenged by how to measure consumers who switch devices during the shopping journey. Only 22% of those surveyed say they have resolved device attribution in marketing efforts, according to the report.
When deciding where to give credit for an online sale, 38% of retailers of 203 retailers attribute it to the “last touch” marketing channel, so if a shopper clicks through an email and completes a transaction, that marketing channel receives credit for the sale. Only 3% of retailers give credit evenly across all touches and 19% of retailers say they don’t know how sales are attributed, the report finds.
Site merchandising, which involves efforts to improve product presentation on an e-commerce page, is gaining more attention. 63% of retailer surveyed said they are increasing online merchandising budgets this year, and 49% are adding staff dedicated to web merchandising. The most common improvements mentioned are site redesigns and improved product detail pages, where consumers spend the bulk of their time on merchants’ site, the report states.
While it’s important to keep an eye toward the future, the report urges online retailers to disregard distractions and buzz, such as that surrounding Buy buttons that “promise to finally unleash the commerce of social networks and mobile wallets, which purport to snap the anemic conversion rates of mobile devices.”
A retailer’s website should be a priority because it drives organic traffic and organic traffic builds a web business, the report advises. Experimentation and new technology can be good, but not at the expense of the basics: “Search and email are still the lion’s share of online marketing. Merchants should ensure that those programs are as strong as they can be,” the authors write.