SEM Tops Online Retail Customer Acquisition Tactics

Jul 22, 2014 3:07 PM  By

SEMDespite the arsenal of digital marketing tactics now at every retailer’s fingertips, one customer acquisition tactic still stands above the rest: paid search programs.

According to the 2014 Shop.org/Forrester Research State of Retailing Online study, which surveyed 81 retailers in May and June, search engine marketing is lauded by 85% of retailers as one of the 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 surveyed are also spending more on pay-for-performance search placement this year than last.

“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 Executive Director of Shop.org 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.

Display ads are seeing something of a resurgence, specifically remarketing, retargeting, and behavioral targeting ranked among retailers’ leading customer acquisition tactics, and display ads now collectively rank as the second highest area of marketing spend behind paid search.

Mobile and Social Marketing Still a Work In Progress

While online retailers report increased marketing spend dedicated to mobile in 2014, the focus remains on fundamentals like email. But in spite of email’s reputation as an antiquated form of communication, particularly among younger shoppers, email is proving its staying power. 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 grew from 16% to 17%.

Social media is also getting increased attention from retailers. While Facebook may not be the direct money-maker retailers originally hoped for, it is proving valuable for customer engagement. According to the survey, 62% of retailers surveyed 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 Vice President 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.”