State of Retailing Online: Marketer Priorities Span Paid Search, Mobility

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Retail marketers are focusing most of their digital marketing efforts on paid search and email, according to new findings from Forrester Research and Shop.org’s joint State of Retailing Online 2013: Marketing and Merchandising report, released today. Mobile optimization, unsurprisingly, is another area of interest as more commerce companies look to the mobile device as a vessel to drive traffic to applications and sites.

In a survey of 65 multichannel retail companies with an average interactive marketing budget of $7 million, the dominant focus this year for online marketers is paid search and email with 40% of budgets being appropriated for paid search and 15% going toward email.

In 2011, natural search optimization topped the list of priorities for spend, but because of Google’s evolving search algorithms and increased device fragmentation, paid search and email are picking up for retailers that wish to better-manage inbound traffic to their sites, the report indicated.

Mobility, too, is playing a lead role in retail marketing strategy with 44% of respondents claiming that they optimize marketing campaigns in line with differing mobile device formats and consumer usage patterns.

By the end of 2013, more than seven out of 10 retail respondents expressed plans to deploy mobile-phone and tablet-specific search programs. When it comes to mobile impact on email planning, the effect is huge. On average, retail respondents said 28% of email opens stem from mobile phones with 16% happening on tablets.

Additionally, social marketing investments are expected to continue with more than half of the retail respondents planning to increase spend on Facebook initiatives this year. Pinterest came in second in social marketing efforts, with one in three retailers planning to up their spend on campaigns here. Twitter, YouTube and Instagram followed, with one in four planning to grow budget allotment on those three channels.

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AdExchanger spoke with Sucharita Mulpuru, VP & principal analyst at Forrester Research and lead author of the Shop.org/Forrester SORO 2013 report, in further detail about some of the survey trends.

 

AdExchanger: Did this year’s research yield any drastic changes compared to 2012?

SUCHARITA MULPURU: It’s annual research, so there weren’t any drastic changes here, but I’d probably say the two things that stood out the most are the level of focus on mobile email and the other is the growth of (Google Product Listing Ads) PLAs. I think there was a lot of uncertainty when they were announced and this data just showed that out of nowhere, Google basically created a new tool to monetize their site, so I think that was probably the big change from last year.

Speaking of Google PLA campaigns, which now account for 6% of retail marketing budgets, can you go into a little more depth on them?

I think it’s still limited, so if you’re ‘invited’ to be one of the (merchant companies), you’re going to take advantage of it. You don’t have a choice. I think, if you’re dependent on search, you can’t not participate in that path… from now, a lot of the terms are pretty cost-effective so (Google) took a product that was free and are gradually monetizing it.

No matter what your benchmark is, whether you’re comparing it to your cost-per-order for paid search or cost-per-order for comparison-shopping, they don’t need to make a ton of money to make it look really effective for the retailer. Any money they make is money they didn’t make before, so it looks like a win-win for everybody right now, but I think the inevitability is that it’s going to stabilize and the cost-per-order is probably going to approach the search cost-per-order because that’s the way Google is going to squeeze more value out of the program for the next few years.

Mobile search optimization seems to be a key investment area for retail marketers. Are people drilling down to optimize search for smartphone vs. tablet devices?

I think that tablet is still very similar to the desktop, so I don’t know that there is as much that people are doing that’s explicitly different. It’s more the mobile device where there may just be different ad formats and different bids that people are putting on the grid through those sessions than those on the desktop. It’s not so much the creative or where things are clicking through to. It’s more, ‘What’s a click on a tablet vs. a phone worth to you?’ That’s what I suspect is happening. From an email standpoint, I think it’s more of a focus on email optimization on the smartphone, which is usually about which products are going to be at the top ad making sure that you don’t have extraneous content at the top of the email because the screen size is that much more limited.

The report talked of 40% marketing investment being put toward paid search vs. 15% for email. Is this surprising to you?

Email’s so cheap. It’s cheaper now than it was years ago and the fact that budgets are still going up has something to do with the fact that we’re just sending so many more emails. I don’t think that that’s surprising. The inflation rate of paid search terms is faster than the inflation rate of emails, so if email is keeping up with growth in interactive spend, that’s a big deal.

The report indicated 40% of retailers planned to increase their investment in marketing analytics talent in 2013. Is there a retail data problem?

They don’t know what they don’t know. There’s so much more data now. There’s testing, and all this interactivity amongst the channels and there’s attribution modeling and you just have a lot of reports that you constantly need, so that’s really where the heart of that goes. It’s hard enough to spend your time dealing with your team to get the creative and dealing with your agencies that you’re working with to make sure your paid search program is robust and getting the right budget and looking at the high levels, but then you need the right people to dig another layer deeper. Not only are there more things to consider, there’s more data, there’s more reporting and that’s why you need the analytics people.

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