Sales Strategy
How Retailers Allocate Half Their Marketing Budget Across Five Core Strategies April 28, 2025 (0 comments)
New York, NY--Retailers today face a more challenging environment than ever, with online shopping surging and foot traffic in stores declining. According to Trend Writes, about half of a typical retailer's annual marketing budget now focuses on just five proven strategies.
[Image via iStockphoto.com]
Here's a closer look at how retailers prioritize spending for maximum returns.
Digital Advertising: The Cornerstone of Modern Retail
Digital advertising has effectively become the new storefront for most retailers. As highlighted in the article, retailers invest between 20% and 25% of their marketing budget in digital advertising, drawn by the ability to precisely target and convert customers.
Why It Commands Big Budgets
Digital ads generate a high ROI—$8 for every $1 spent on Google Ads, an 800% return. Retailers favor formats such as:
- Pay-Per-Click (PPC): Accounts for 10-15% of total marketing budgets due to its measurable results and purchase intent targeting.
- Retargeting Campaigns: With 10x higher conversion rates than standard display ads, retargeting typically grabs 5-7% of the spend.
- Video Advertising: As per Trend Writes, video drives better engagement, with product videos boosting purchase likelihood by 144%.
Real-World Application
As the article notes, Target's shift towards heavier digital ad spending resulted in a 24% surge in digital sales, underscoring how digital campaigns drive measurable retail success.
Social Media, Email, and SEO: The Core Trio
Social Media Marketing: Merging Shopping and Scrolling
Social platforms command 15-20% of retail marketing budgets today. Platforms like Instagram, TikTok, and Facebook dominate because they blend engagement with direct shopping experiences.
- Instagram: With shopping tags and in-app checkout, Instagram is key for fashion and lifestyle retailers.
- TikTok: Retailers invest in TikTok Shops and creator partnerships, fueled by the platform's viral potential.
- Facebook: Despite perceptions of an aging user base, Facebook remains a powerhouse due to its targeting and sales features.
The article notes that brands like H&M attribute 30% of online sales to Instagram traffic, while ASOS draws 40% of web visits from social channels.
Email Marketing: The Highest ROI Channel
As reported, email marketing consumes 12-15% of retailer budgets. Despite being one of the oldest channels, email remains incredibly effective, generating $36 for every $1 spent.
Retailers focus heavily on:
- Abandoned cart sequences (recovering up to 15% of lost sales)
- Post-purchase emails (driving repeat business)
- Personalized product recommendations (boosting click and conversion rates)
According to the Trend Writes article, Wayfair, for example, credits email campaigns with driving 40% of its online revenue.
Search Engine Optimization (SEO): The Long Game
SEO may be a slower strategy, but it captures 10-15% of retail marketing budgets. As highlighted, SEO remains crucial because:
- 93% of online experiences start with search engines.
- 43% of retail web traffic comes from organic search.
- SEO leads close at nearly 10x the rate of outbound marketing.
Retailers prioritize:
- Technical SEO (site speed, mobile optimization)
- On-page SEO (optimized product pages)
- Content SEO (helpful guides and buying tips)
- Local SEO (especially for chains with physical locations)
Home Depot's SEO strategy, featuring over 4,000 project guides, is a standout example of the power of long-term search investment.
Content Marketing: Fueling the Entire Funnel
Although content marketing accounts for only about 10% of retail marketing spend, Trend Writes notes that it supports every other strategy—SEO, email, social, and even ads.
Effective Content Types Include
- Buying Guides: Help convert hesitant shoppers.
- Product Comparisons: Reduce returns and boost satisfaction.
- How-to Articles: Increase customer lifetime value.
- User-Generated Content: Builds trust and drives organic traffic.
The article highlights brands like REI and The Ordinary, which have used content to build strong, loyal customer bases without heavily relying on traditional advertising.
How Retailers Structure Their Overall Spend
As per the article, a typical marketing budget splits roughly as follows:
- Digital Ads: 30%
- Social Media: 20%
- Email Marketing: 15%
- SEO: 15%
- Content Marketing: 10%
- Other (tools, tech, agencies): 10%
Retailers integrate these strategies through CRM tools and marketing automation platforms, ensuring a seamless experience across customer touchpoints.
See more in this article on Trend Writes.