What are Five Marketing Strategies that Retailers Spend half of their Annual budget on?

Strategy 1: Digital Advertising – The Workhorse of Retail Marketing

Digital advertising has become the virtual storefront for most retailers. When’s the last time you bought something without seeing an ad for it first?

Why Retailers Can’t Ignore Digital Ads

The numbers tell the story: the average American sees between 4,000 and 10,000 ads daily. That’s wild. But more importantly, digital ads work. They drive traffic, build brand awareness, and most importantly—create sales.

A recent retail study found that for every $1 spent on Google Ads, businesses earn an average of $8 in profit. That’s a 800% return on investment. No wonder retailers are pumping money into this channel.

Types of Digital Advertising That Actually Work

Not all digital ads are created equal. Here are the ones retailers are betting big on:

Pay-Per-Click (PPC) Advertising

PPC remains king for many retailers because it’s measurable and targets customers actively searching for products. Google Ads leads this space, with retailers typically allocating 10-15% of their total marketing budget here alone.

What makes PPC so effective? You only pay when someone clicks your ad. This creates a direct link between spending and potential customers.

A furniture retailer I talked to recently mentioned that during major sales periods, they bump their Google Ads budget by 200%. Why? Because the intent is there—people searching “black leather sofa” are much more likely to buy than someone who just happens to see a sofa ad.

Retargeting Campaigns

Ever look at a pair of shoes online, then see those exact shoes following you around the internet for days? That’s retargeting, and it works crazy well.

Retailers love retargeting because it targets people who’ve already shown interest. The conversion rates speak for themselves:

• Regular display ads: 0.07% conversion rate
• Retargeting ads: 0.7% conversion rate (10x higher)

This explains why retailers typically dedicate 5-7% of their marketing budget to retargeting campaigns.

Video Advertising

Video ads are expensive to produce but deliver serious results. Retailers are spending more here because:

• 72% of customers prefer learning about products through video
• Video ads have 1.84x higher click-through rates than static images
• Product videos can increase purchases by 144%

YouTube, Connected TV, and social media video ads are taking larger chunks of retail budgets every year.

How Much Are Retailers Really Spending?

Based on industry reports, retailers typically allocate 20-25% of their total marketing budget to digital advertising. For a mid-sized retailer with a $1 million marketing budget, that’s $200,000-$250,000 annually on digital ads alone.

The breakdown often looks like:

• Search ads: 40% of digital ad budget
• Display and retargeting: 25% of digital ad budget
• Video ads: 20% of digital ad budget
• Other digital formats: 15% of digital ad budget

What’s Working Now: A Real Example

Target dramatically shifted their advertising strategy in recent years. They increased digital ad spending by 30% while cutting traditional advertising. The result? A 24% increase in digital sales.

What they did right:

• Created highly personalized ads based on previous shopping behavior
• Invested heavily in Google Shopping ads for product searches
• Used video ads to highlight their private label brands
• Focused on mobile-first ad experiences

The lesson? Digital advertising works when it’s targeted, measurable, and focused on platforms where your customers already spend time.

📌 See this Also: Digital Marketing Strategy that Tracks users Across the web?

Strategy 3: Email Marketing – The Old Reliable

Email marketing might seem old school, but retailers still spend 12-15% of their marketing budgets here. Why? Because it continues to deliver the highest ROI of any digital channel.

The Numbers Don’t Lie

Email marketing generates $36 for every $1 spent, according to industry averages. That’s a 3,600% return on investment.

Other compelling stats:

• 81% of retail shoppers say they’re more likely to make a purchase after getting a targeted email
• Email drives an average of 15% of online retail orders
• 59% of consumers say marketing emails affect their purchase decisions

For context: while social media gets all the hype, email typically converts at 3x the rate of social media.

What Makes Email So Powerful For Retailers

Email works because it’s:

• Permission-based: People have opted in to hear from you
• Direct: No algorithm deciding who sees your message
• Personalized: Can be tailored based on past purchases
• Actionable: Clear path from message to purchase
• Measurable: Easy to track opens, clicks, and purchases

The Email Campaigns That Drive Retail Results

Retailers aren’t just blasting generic newsletters anymore. They’re focusing on high-performing automated email sequences:

Abandoned Cart Emails

The average cart abandonment rate is about 70%. A good abandoned cart email sequence recovers 10-15% of those sales.

Best practices include:

• First email within 1 hour of abandonment
• Product images and clear return links
• Potential discount in follow-up emails
• Mobile optimization

Post-Purchase Sequences

Retailers make 65% of their profit from repeat customers. Post-purchase emails boost repeat business through:

• Order confirmations with recommended products
• Shipping updates with bestsellers featured
• Review requests that link to related items
• Replenishment reminders for consumable products

Personalized Product Recommendations

Emails with personalized product recommendations see:

• 26% higher open rates
• 14% higher click-through rates
• 10% higher conversion rates

Amazon attributes 35% of their revenue to their recommendation engine, which powers their email marketing.

Budget Breakdown: Where The Money Goes

For a retailer with a $150,000 email marketing budget, the typical allocation is:

• Email platform/technology: $30,000-$40,000
• List building and management: $20,000-$25,000
• Content creation: $40,000-$50,000
• Testing and optimization: $20,000-$30,000
• Integration with other systems: $15,000-$20,000

Real Results from Real Retailers

Home goods retailer Wayfair credits their sophisticated email program with 40% of their online revenue. Their approach focuses on:

• Customer lifecycle stage targeting
• Browse and abandonment triggers
• Household profile building
• Category affinity scoring

These advanced tactics pay off with open rates 2.5x industry average and conversion rates 3x higher than their other marketing channels.

📌 See this Also: Professional Email Address: How to Create One?

Strategy 5: Content Marketing – Building Trust, Not Just Sales

Content marketing accounts for about 10% of retail marketing budgets. While this might seem small compared to other channels, content actually powers everything else.

Why Content Marketing Matters for Retailers

Content marketing works because it builds relationships before asking for the sale:

• 70% of consumers prefer getting to know companies through articles rather than ads
• Content marketing costs 62% less than traditional marketing but generates 3x as many leads
• Retail sites with quality content have 6x higher conversion rates

Content also supports other marketing strategies:

• Feeds SEO with keyword-targeted material
• Provides material for email marketing
• Creates social media posting opportunities
• Builds trust that drives paid ad conversions

Types of Content That Drive Retail Sales

The most effective retail content comes in several forms:

Product-Focused Content

This content directly supports purchase decisions:

• Buying guides (increases conversion rates by 30-50%)
• Product comparisons (reduces return rates by helping customers make better choices)
• How-to content (shows products in use)
• Product care information (increases customer lifetime value)

REI’s expert advice section contains over 1,000 in-depth articles and videos about outdoor activities and gear. This content generates 25% of their site traffic and has a 3x higher conversion rate than their product pages alone.

Brand Story Content

This content builds connection and loyalty:

• Behind-the-scenes content
• Founder and team stories
• Mission and values content
• Social responsibility initiatives

Patagonia‘s content around environmental activism has built a fiercely loyal customer base willing to pay premium prices. Their “Worn Wear” content about product longevity actually increases sales despite encouraging people to buy less.

User-Generated Content

This content leverages social proof:

• Customer reviews and testimonials
• User photos with products
• Customer stories and case studies
• Q&A content

GoPro builds their entire content strategy around user-generated videos, spending minimal amounts on product-focused content while getting massive engagement from customer-created material.

The Content Marketing Budget Breakdown

For a retailer allocating $100,000 to content marketing, the typical breakdown is:

• Strategy and planning: $10,000-$15,000
• Content creation: $50,000-$60,000
• Distribution and promotion: $15,000-$20,000
• Measurement and optimization: $10,000-$15,000

Content Marketing That Actually Works: The Proof

Skincare brand The Ordinary built a billion-dollar business with minimal traditional advertising. Their strategy centers on educational content about skincare ingredients, creating informed customers who trust their straightforward approach.

They focus on:

• Detailed ingredient education
• Transparent product information
• Routine-building guides
• Community Q&A

This content-first approach has built passionate customer loyalty and generated massive word-of-mouth marketing that paid advertising simply couldn’t buy.

Bringing It All Together: How These Strategies Fit

So, how do these five strategies work together? Imagine a customer: they see a Facebook ad (digital advertising), click through to your site (SEO), read a blog post (content marketing), follow you on Instagram (social media), and get an email with a discount (email marketing). Each step builds on the last.

Retailers split their budget roughly like this: 30% digital ads, 20% social, 15% email, 15% SEO, and 10% content. But it varies. Technology—like a CRM system or marketing automation software—ties it all together. You need a team or agency to manage it, too.

The Challenges Retailers Face

Here’s the hard part: budgets are tight, and measuring success across channels is messy. Platforms change fast—TikTok’s hot today, but what about tomorrow? Retailers also struggle to balance quick wins (like holiday sales) with long-term goals (like brand loyalty). It’s a juggle, but these strategies make it doable.

Wrapping Up

These five strategies—digital advertising, social media marketing, email marketing, SEO, and content marketing—are where retailers put their money because they work. They hit customers at every stage, drive sales, and build brands. Looking ahead, AI, video, and privacy changes will shake things up, but the core idea stays the same: meet customers where they are.

If you’re a retailer, take a hard look at your current strategy. Are you using these tools? Are they delivering? Adjust, test, and keep learning. Retail marketing strategies like these aren’t just trends—they’re the keys to staying in the game.