Our Digital Commerce 360 survey of 73 online retailers conducted in April and May 2022 sheds light on digital marketing budgets, the tactics employed, their effectiveness, along with customer acquisition strategies. The burgeoning social media marketing is also addressed including the role of influencers. Lastly, the retailer’s ability to analyze data and the technology that underpins all marketing efforts is also covered.
Digital marketing budgets are wide-ranging. They are impacted by the retailer’s size, and whether they are digital only or if they have a store footprint. How long they have been selling online may also be a factor, as experiences evolve and digital may assume an ever-changing role. Aggregating these numbers suggests the following:
% overall marketing dedicated to digital
- 1-10%: 16%
- 11-50%: 32%
- >50%: 44%
- None: 8%
Knowing where digital budgets stand today allows us to pause and reflect on how they have changed year over year. It’s there that we see 66% of retailers’ digital marketing budgets have increased in 2022, though 23% remain unchanged.
Thinking ahead and following similar growth patterns, 72% of retailers forecast their digital ad spending will increase next year.
Digital marketing tactical usage is widespread
Let’s start by taking a look at what strategies retailers are employing. As part of their digital marketing strategies, 7 in 10 retailers employ email, search engine and content marketing along with Facebook. Both Instagram and YouTube are in place for 60%, and other influencer marketing gets a nod from 58% of retailers. Mobile is important too, as significant shopping is taking place on that channel and comes in at 60% as well. Amazon ads (49%) and marketplace ads other than Amazon (51%) reflect the heightened role marketplaces have in ecommerce.
Spending was divided into those who spend 11% or more of their budget on a particular tactic. Under this model, paid search comes is at 41%, while search engine marketing is close behind at 38% and email at 36%.
The most effective marketing tactics are email, paid search, search engine and content marketing. Socially speaking, Facebook (39%) followed by Instagram (21%), YouTube (2%) and TikTok (18%) reflects the wide range of results that retailers are realizing. And from a marketplace perspective, Amazon ads perform well at 38%. Other marketplace ads are only effective for 26% of those surveyed.
Retailers always need to prime the pump. As such, more than half of retailers spend over 30% of their marketing budget on customer acquisition. A lucky 29% are spending just 20% or less to acquire customers. This is an opportune time to leverage and optimize those tactics that are performing the best to ensure a constant flow of new customers.
The top three tactics for acquiring new customers: paid search (45%), search engine (41%) and content marketing (34%)
Social media advertising
We now turn our attention to social media advertising. We wanted to understand how it works in aggregate for those retailers who were surveyed. The findings suggest that more than half of retailers use social media advertising to drive sales and increase brand awareness.
Taking a look from a “successful” standpoint, Facebook delivers ROI for 52% of online retailers. Close behind we find Instagram at 42% and YouTube at 38%, with LinkedIn rounding out that group at 32%.
Retailers take different paths to optimize social media. When asked how they would describe or qualify the effort required to optimize social media marketing by platform, we start by addressing the people involved. Many (44%) had one internal person, while 21% had multiple people involved. One in three relied on an agency to optimize social media efforts. Other insights gleaned: 26% find it difficult to quantify results, and social is forever changing, with 25% of survey respondents always finding themselves in catch-up mode. Only 12% cited relying on technology to drive programs, surprising particularly as a subsequent question’s answers suggest otherwise.
A digital marketing survey would not be complete without talking about influencers. The influencer’s role is multi-faceted, helping retailers build brand awareness (40%), drive traffic to websites (30%) and generate sales (26%). It’s challenging for some retailers, as 25% are concerned influencers might be too expensive. 21% find them interesting but aren’t seeing the desired ROI. And then there’s the fit factor, as 23% have found that it is hard to find the right influencers. 14% don’t find influencers to be a good fit for their company, and 10% are still figuring it out, spending time to understand if their businesses should use influencers at all. And if so, how?
Retailers use multiple platforms to support marketing efforts, starting with analytics and data visualization. Many of the technologies cited may already be in place, serving multiple roles.
Drilling down into one specific technology, 28% of retailers plan to or will have AI in place this year to enhance their marketing initiatives.
The dilemma is that retailers are mixed in their ability to analyze marketing data and attribution. Looking at the findings, 61% see themselves as above average (6-10). 39% self-assessed as not performing up to par and reported at average or below (1-5). It is imperative that all retailers get the training and tools they need given the impact this can have on the success of their business.
Challenges abound to achieve marketing prowess. The ability to effectively analyze efforts tops the list of challenges for 41% of respondents, while 30% cited effectively analyzing data. More frustrating for retailers may be constant rule changes, diversifying the marketing mix, and profitability. They top the list of marketing challenges. Respondents understand that a mix of tactics is ideal, but determining how best to deploy them is tough. And then there is profitability. Spending is easy to do, but often without regard to the bottom line. 30% cited the expense of marketing campaigns.
One in three online retailers are still assessing the best way to address the elimination of third-party data
Another challenge facing retailers is the elimination of third-party data. One can safely say the jury is out. Based on the findings from our survey, 32% of marketers are still assessing the best way to address these issues while 27% have not changed their strategies. That compares with the 21% who say they are making adjustments. Others are looking for creative ways to encourage signups (26%) and making first-party data a higher priority (25%).
Retailers employ a range of strategies regarding values-based marketing
There is a lot of traction about retailers embracing values, so we sought to understand this trend as well. Retailers are split in their approaches, as 33% have no strategy. On a positive note, the same number are integrating cause-based marketing into their ecommerce experience (33%). 32% use it in social media efforts, and 25% communicate values as events warrant. Looking ahead, there is another faction that is testing to see how it resonates (14%) and the last group who is positively building out for 2022 deployment (11%).
As ecommerce slows, digital marketing budgets will likely be in flux. Honing in on the right tactics and being able to measure their effectiveness will be more critical than ever. It’s worth leveraging the traditional, including email, and the continually evolving social options. Online retailers will embrace technology to do some of the heavy lifting as they tweak and optimize for the best performance for their brands.
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