How fierce competition in digital channels is reshaping marketing budgets

(Source: Klaviyo)

Competition in digital marketing is fierce: 81 per cent of retail marketing executives expect it to increase even further this year, and 69 per cent plan to raise their spending accordingly.

That is but one of the key conclusions in a new research publication – the 2024 Marketing Spend Report – that provides a timely overview of where companies see their marketing priorities during the first half of this year and entering the next – and which underlines the importance of digital marketing channels in companies overall marketing spend. 

The report was commissioned by Klaviyo – an intelligent marketing automation platform – in partnership with Inside Retail

To prepare the report, more than 100 leading Australian and New Zealand retail marketing leaders from various industries, roles, and budget levels were surveyed or interviewed to understand their marketing spending priorities. Among the participating executives were representatives of leading retail brands July, Esmi Skin Minerals, LSKD, DecoRug, Koh and Frankie4.

The overriding finding that market competition is intense is hardly surprising, the report concludes. 

Amid significant shifts in shopper buying behaviours throughout last year and already this year, retailers are working hard to stay in front of existing customers and attract new ones.

Economic uncertainty and customer purchasing habits are weighing heavily on marketing leaders’ minds. While many prioritise customer retention and increasing order frequency, even more place customer acquisition as a top-tier concern. However, the acquisition is only half the story. How retailers engage and connect with shoppers is what makes the difference between today’s success and sustainable growth.

The report found that marketing leaders see ongoing economic uncertainty and shoppers’ shifting purchasing habits as having a considerable impact on driving fierce competition, which in turn is forcing a focus on acquisition. 

There is also an increasing recognition of the importance of AI, with retail executives across the board agreeing that AI helps improve the customer experience faster than is possible without the new technology. 

Here is a sample of some of the many findings outlined in the report: 

  • About three in four (72 per cent) of marketing leaders place customer acquisition among their top three priorities, showing it’s the most important internal focus for retailers, with customer retention the next-most critical factor. 
  • An overwhelming 81 per cent of marketers expect the level of competition in digital marketing to increase or increase significantly this year with just 16 per cent expecting competition to remain the same and a mere 3 per cent that it will ease. 
  • Among smaller businesses surveyed (with under $1 million annual marketing budget), 85 per cent see email marketing strategies as the most important digital marketing strategy, while for companies with larger marketing spend, both search engine optimisation and email marketing were rated highest at 76 per cent. 
  • Both small and large brands nominated social media advertising and content marketing as the most strategically important of their digital marketing channels, with influencer marketing a distant third.
  • While most companies are running lean marketing budgets, investment is increasing, with three in five marketing leaders planning to increase or significantly increase their marketing budgets this year. Most respondents deploy 5 to 10 per cent of their company’s revenue towards marketing initiatives, with 25 to 50 per cent of that budget dedicated to digital marketing activities.

The report concludes with six key findings that retailers can act on, incorporating them into the campaign planning strategies and executions, each outlined in actionable detail: 

  • Set the framework for long-term ROI.
  • Explore emerging opportunities. 
  • Connect your data across channels to maximise ROI.
  • See things from an omnichannel perspective.
  • Test and prove underutilised channels.
  • Let data guide your strategy this year. 

Moving forward, there may be more twists and turns ahead, however, three enduring strategies can create a significant competitive advantage: a customer-centric mindset, a data-led approach, and technology-focused investment.

The report concludes that with a keen focus on these strategies, all marketing leaders can drive more authentic, personalised marketing that effectively attracts, converts, and retains customers – this year and beyond.

Ready to power smarter marketing spend and maximise ROI? Download a copy of the free 2024 Marketing Spend Report today.