Online retailers are putting most of their marketing budget into search.
Research group Forrester and Shop.org released a report today on the state of online retail and how retailers are spending their marketing dollars.
Selling stuff online is a big business. E-commerce sales are predicted to reach $258.9 billion in 2013 and continue growing. But the e-commerce landscape is fragmented, and reaching relevant consumers remains a struggle for online retailers of all sizes.
In this survey, Forrester looked at how these companies are sending their marketing budgets. Paid search represents the largest areas of budget for web marketers. Changes to Google’s search algorithm and device usage fragmentation have made it more difficult to rely on organic search, and respondents said that search engine optimization was their strongest customer acquisition tool. Retailers are also allocating more money for Google paid listings now that the shopping feed is now made up entirely of ads.
E-mail is also a leading focus area. Retailers reported that more than 40 percent of their e-mail to customers gets opened on mobile devices and a majority of retailers are optimizing their e-mail for these channels.
Retailers are still paying attention to social media, although more in an effort to tell and distribute “brand stories” than drive direct sales. More than half of retailers surveyed are spending more in 2013 on Facebook initiatives than last year, one in three are increasing their spend on Pinterest, and one-in-four are raising their budgets for Twitter, YouTube, and Instagram. Online retailers are also placing a greater emphasis on using big data to make decisions.
Mobile devices are reshaping the e-commerce landscape, as consumers can increasingly be reached through their phones and tablets. While companies are adapting their paid search and e-mail strategies to this shift, Forrester found that a majority of retailers have resisted trying other tactics like in-store mobile targeting and location-based programs, mobile coupons, and QR and bar codes. Few retailers have reported success with these types of experiments thus far, but it is still early days and these strategies and technologies are still being figured out.
The survey received 65 responses across a range of industries including apparel, footwear, general merchandise, home furnishings, and personal care. Fifty-nine percent of the participants were store-based retailers, 13 percent were web-based retailers, 11 percent were selling direct to consumers, and 16 percent were “other,” meaning catalog-based or multichannel. Thirty-four percent of respondents generated more than $100 million in direct sales from their web channels in 2012; 30 percent generated $25 million to $100 million; and 36 percent generated less than $25 million.