• by Jack Loechner , Staff Writer, December 2, 2015

A 2014 survey, by Gigaom Research with Extole, of digital marketers across all industries, drawing on a broad palette of digital tactics to achieve their objectives, found that the four most popular are email marketing, social media marketing, search engine optimization (SEO), and content marketing. A new study by Extole finds that retail marketers use many of these same tactics, but not necessarily to achieve the same goals. There are also some critical differences in how retail marketers spend money on digital marketing vs. the broader landscape of marketers.

To understand how retailers deploy the digital marketing mix, people involved directly in marketing and technology within retail companies of various sizes, geographical footprints, and budgets were surveyed.

Social media and email marketing are now the leading tactics; both are used by 85% of respondents. Display advertising and SEO also rank high, while mobile and digital video are seeing wide adoption.

The survey revealed:

• More than 60% of retailers will increase digital marketing budgets next year.
• Retail marketers’ top digital priority is customer acquisition, followed by retention, conversion, and awareness
• Social media and email are among the most effective tactics for all objectives
• Most marketers year will spend as much as or more on them this year than they did last year
• Paid search, affiliate marketing, and content marketing are among the least effective tactics for retail goals. Marketers will spend less on these this year than they did last year

The survey also uncovered details of how retail marketers are using referral marketing, or refer-a-friend programs that acquire new customers at scale by rewarding existing customers.

• Retail marketers find referral marketing effective for priorities across the marketing funnel, particularly conversion
• Referral marketing acquires a relatively high percentage of retailers’ new customers
• Referral marketing generates strong ROI for retailers

Retailers now spend 58% more of their total marketing budget on digital than the average company does, says the report. Moreover, 20% of retail marketers report that digital now accounts for 50–75% of their total spend, and 19% say that it constitutes 75–100% of their marketing budget.

 “Digital” isn’t just one thing, says the report. The term encompasses a variety of tactics, programs, and technologies. Coupons, for example, are a traditional retail tactic but have become digital by being adapted for modern distribution platforms. Social media, on the other hand, is a phenomenon that can’t be understood outside of the digital world, says the report.

Half the retailers surveyed spend between $100,000 to $1 million per year on digital marketing. A little under a quarter spend under $100,000 per year, while slightly more spend at least $1 million per year.

Overwhelmingly, retailers expect to increase their digital marketing spending levels next year. Nearly two thirds of them plan to spend more, and 76% of those marketers plan to spend 6-20% more. About a third of marketers expect spending to remain steady. Meanwhile, fewer than 5% expect to spend less next year.

41% of retailers say they’ll spend more on Social media this year than last. Supporting social’s rise, Forrester Research found that 62% of retailers plan to spend more on Facebook interactive marketing efforts this year. Mobile advertising, email marketing, digital video advertising, and display advertising round out the top five tactics seeing increased spending this year.

Retail marketers’ primary goal is customer acquisition, followed closely by retention and conversion. Coming in noticeably behind, in fourth place, is branding and awareness.

Share Of Respondents Ranking Objective As "Fairly" Or "Extremely" Important

• Awareness    77%
• Acquisition    86%
• Conversion   84%
• Retention      85%

Source: Extole, November 2015

The various digital tactics perform differently depending on marketers’ objectives. Social media and email marketing are at or near the top of the list across all four funnel goals.

Referral marketing and display advertising also appear consistently near the top of retail marketers’ list of effective tactics for awareness, acquisition, conversion, and retention. Both are top-five tactics across all four goals. Referral marketing is a top-three tactic for marketers’ two most important goals, acquisition and retention.

At the other end of the spectrum are paid search, affiliate marketing, and content marketing. These three appear at the bottom of the list for every objective, save for acquisition (for which paid search makes it out of the bottom three but remains in the lower half of the list).

The report concludes noting those tactics that are on the rise, and those in retreat.

Rising: When compared with other tactics, social media marketing, retailers’ most effective digital tactic for acquisition wasn’t responsible for acquiring the largest share of customers. 31% of those who use it say it’s responsible for generating at least 36% of new customers. By this metric, it comes in behind mobile advertising, digital video advertising, and email marketing.

Retreating: Paid search, content marketing, and affiliate marketing show the correlation between effectiveness and investment at the other end of the scale. They are the least commonly used digital tactics and, retailers say, the least effective for reaching all goals. Though paid search’s effectiveness for acquisition is the lone exception, it still falls in its lower half.

To see more of the Executive Summary, please visit Extole here.