Nineteen percent of retailers surveyed spent more than half of their marketing budget on paid search alone. Eighty-five percent listed paid search as a top-three most effective source for new customers, far above the second-best organic traffic (41%) and affiliate programs (40%). Seventy-six percent said paid search was more effective for revenue in 2013 than the year before.
Google is the obvious beneficiary of paid search’s popularity. The report also found that its product listing ads (PLAs), a hybrid search and comparison-shopping tool, continues to eat up more marketing budgets.
Google "has come out of nowhere and taken a huge percent of the total market” of comparison-shopping engines, Mulpuru said. “We saw that comparison shopping engines are on the wane and I think the budget that once went to comparison shopping engines is now going to PLAs.” PLAs ranked fourth in terms of percentage spend for online retailer’s marketing budgets, ahead of SEO, affiliate programs and mobile messaging.
The report also showed staying power for email marketing. All respondents emailed house lists for marketing, and 72% of retailers planned to spend more on the tactic in the next year – ranking fourth among categories behind Google PLAs (77% plan to spend more), retargeting (77%) and pay-for-performance search placement (82%).
Email marketing is proving effective for mobile as well, with retailers on average seeing 42% of emails opened on smartphones vs. 41% for desktop and 17% for tablets. This may be why retailers are “still optimizing the basics” for mobile, as Forrester said, instead of investing in newer technology like beacons. The survey found “beacons are widely overstated,” Mulpuru said. “There’s more buzz than reality there.”
Forrester and Shop.org’s study included 81 retailers surveyed in April and May of this year. Most were multichannel retailers, and nearly half were large web retailers with over $100 million in online revenue.