Paid search rules retailers’ digital outreach efforts

The retail industry is awash with digital innovations, but traditional paid search programs continue to dominate retailers’ digital marketing tactics, according to the 2014 Shop.org/Forrester Research State of Retailing Online study.

Roughly 85% of the 81 retailers surveyed in May and June of this year identified search engine marketing as one of their most effective customer acquisition tactics. In fact, retailers spend more of their interactive marketing budgets on paid search programs than on any other tactic, and four out of five retailers said they are spending more on pay-for-performance search placement this year than last, according to the study.

“While much of the ground work has been laid for perfecting paid search and how well it works for retailers’ customer acquisition goals, the fact of the matter is that retailers still have plenty of opportunities to learn more about their customers’ needs,” said Shop.org executive director Vicki Cantrell. “As customer touch points expand, retailers continue to investigate other ways to diversify their marketing spend, including budgeting for increased spend for text advertisements, display ads, social, and attribution models.”

To acquire new customers, retailers also cited organic traffic (41%), affiliate programs (40%) and remarketing/retargeting of shoppers in online ads (29%) as effective vehicles – all of which they’re also investing in more this year than last, according to the study. Another noteworthy finding is a resurgence of display ads, specifically remarketing, retargeting, and behavioral targeting among retailers’ leading customer acquisition tactics. Display ads now collectively rank as the second highest area of marketing spend behind paid search, according to the study.

While online retailers reported spending more on mobile this year, the focus remains on fundamentals like email, despite its reputation as an antiquated form of communication among younger shoppers. The survey found that on average, 42% of retailers’ email opens now happen on smartphones, up from 28% in 2013, while email open rates on tablets advanced slightly from 17% to 16%.

Social media is also getting increased attention from retailers with Facebook proving valuable for customer engagement. More than 62% of retailers surveyed said they plan to spend more on Facebook interactive marketing efforts this year than last. Additionally, nearly half of retailers surveyed say they will dedicate more spend to social sites such as Instagram, YouTube, Pinterest, and Twitter in the coming year.

“Thanks to the effectiveness and renewed budget focus on display advertising, Facebook cannot be counted out from a retail advertising stand point,” said Forrester vp and principal analyst Sucharita Mulpuru. “People think of Facebook as a social network, but in reality it’s another medium for personalized display advertising – likely explaining why Facebook has surfaced so high in planned budget spend this year.”