A quarter of retailers rank Facebook as their top social media acquisition platform, according to a survey by the National Retail Federation, "The State of Retailing Online 2015: Marketing and Merchandising".
Retailers are boosting their social media marketing budgets, with half spending more this year than last on paid Facebook options like promoted posts and paid ads. Some 29% are opting for similar paid options on YouTube, 27% are spending more at Pinterest, 22% at Twitter, 20% at Instagram, and 6% at Snapchat.
The survey, conducted by Shop.org, Forrester Research, and Bizrate Insights in May and June 2015, also found that more retailers are exploring or using marketplaces to gain new customers. Those surveyed say that 16% of their digital marketing budgets go to online marketplace operations. They’re spending more on search engine marketing (33%) and search engine optimization (another 33%) but less on email marketing (14%).
Retail marketers' actions to increase their efforts on social media is no surprise, as the NRF notes, especially in light of tightening marketing budgets. The question there is how that could change if and when those social media efforts become more expensive to retailers. After all, retailers do risk ceding some of their own branding when they go through social media.
That’s even more true when retailers sell through marketplaces like Amazon, yet more retailers are exploring that channel to reach more people, this survey also finds.
That could have a negative long-term effect on retailers’ branding efforts and their relationship with their customers because that relationship shifts to the marketplace.
“The inability to remarket means that retailers are unable to achieve long-run advertising efficiencies,” Eric Roth, managing director at Lazard Middle Market, wrote last month. “While the up-front costs of customer acquisition can be material, as retailers mature, a large base of loyal customers often provides steady, predictable revenue without significant incremental advertising spend to retain the customer. This reduces advertising spend as a percentage of total sales, driving up profit margins. With no ability to scale against advertising expenses, long-term profitability is tempered.”
So while marketplaces can help attract new customers, they may not be the customers that stick around. Or maybe they’re sticking around, but with the marketplace, and not necessarily the retailer.