Source: Where do the biggest brands spend their marketing dollars? | Search Engine Watch
Different retailers have different priorities when it comes to their marketing budgets, but the most valuable brands – Amazon and Apple – are banking on search.
We all know Amazon is the undisputed king of ecommerce. From November 2014 to November 2015, the company raked in more than $71 billion in online sales, which is more than Walmart, Apple, Macy’s, The Home Depot, Best Buy, Costco, Target, Gap Inc., Williams-Sonoma, Sears and Kohl’s sold.Combined.
What is Amazon doing that the others aren’t?
According to Fractl, a Florida-based content marketing agency which analyzed the marketing spend of these massive retailers, search gets the lion’s share of Amazon’s budget. During that year period, the ecommerce giant spent $8 million on TV and radio, a number that sounds very high in isolation. However, Amazon spent $54 million [≈ total US Soccer salaries for all teams, 2011] on print and $1.35 billion ≈ Mobile advertising spending, 2007″>[≈ box office sales of Bambi, 1942] on search.
Among the other retailers, only Apple – called the most valuable brand in the world last year – and Etsy prioritize search to such a degree. Apple spent far more on TV and outdoor advertising than Amazon, though search still made up 86 percent of its spend. Search was an even higher percentage for Etsy:91 percent, with 1.39 million going to search and $90,000 [≈ cost of Porsche 911] to other digitalchannels.
The Etsy finding was the most interesting to Lillian Podlog, project manager at Fractl, who noted that Etsy doesn’t have the same juggernaut status as Apple and Amazon.
“With Amazon and Apple, you can ask what came first, their success or where they put their marketing dollars. Maybe at this point, they can do anything, but Etsy has the same tactic and if you look at organic search rankings, it’s doing really well,” she says.
Etsy saw among the highest ROI in the study. For every $1 spent on marketing, the online marketplace saw $1,600 [≈ High-end bicycle] in sales. Additionally, Etsy, along with Apple and Amazon, had a disproportionately high SEMrush rankings compared with the others, which means they saw higher organic traffic.
That’s a common correlation among the brands analyzed by Fractl. Most of those with larger search spends have higher SEMrush rankings.
“So many people use ad blockers, so many people have blindness to display ads. Investing in search, whether its paid or building your SEO, requires you to really think about what kind of content you’re putting on the Internet that would appeal to users and boost your SEO,” says Podlog. “It requires you to be more thoughtful and considerate about what the customer really wants.”
Among the only exceptions to that rule are Williams-Sonoma and The Home Depot. Digital makes up51 percent of sales – and 57 percent of the marketing budget – for the former. Nearly a quarter of that budget goes to search, but Williams-Sonoma still doesn’t rank particularly high. On the other hand, The Home Depot does, despite only spending 11 percent on search, instead prioritizing TV and radio.
Where do some of the other major players put their money?
- Best Buy puts the majority of its dollars in TV and digital, favoring network channels and display advertising over cable and search.
- Costco, on the other hand, largely eschews TV. Instead, the warehouse retailer allocates 57 percent of its marketing dollars to display and nearly all the rest to magazines and newspapers.
- Macy’s is another one with a heavy print focus. The brand spends $16 million [≈ Most expensive car ever sold, Ferrari] on display and $32 million [≈ US Chamber of Commerce election spending in 2010] on search, which sounds like a lot of money, but is just a drop in the bucket by comparison. Macy’s spends 5.5 times as much on TV and more than 8 times as much on print.
“Macy’s is one of those companies that has an established name and an established consumer base, but if it wants to take some of Amazon’s chunk of online retail, it has to invest more in those other channels,” says Podlog. “Macy’s has been around for so long, but I personally think that unless it changes the shape of its spending, it’s going to suffer.”
- Nordstrom’s priority is similarly on print – $27 million [≈ Energy industry 2011 political donations] on magazines, compared with $6 million on search, $4 million on display, $5 millionon TV and $2 million on outdoor – but the strategy is a bit different from that of Macy’s. While Macy’s spends most of its money on newspapers, Nordstrom goes for magazines, a medium that meshes better with the brand’s luxury focus.
- Netflix, despite being heralded as one of the premier digital disruptors, doesn’t spend nearly as much money on digital advertising as one would assume. The streaming giant spends $1 million [≈ 1965 typical CEO pay] each on display and online video, and $17 million [≈ Most expensive car ever sold, Ferrari] on TV with a particularly heavy focus on network. It makes to sense to Podlog, who points out that “people are watching TV, they’re not on Netflix.”
- Target’s marketing budget is probably the most balanced. The retailer spends 46 on TV, 22 on print and 28 percent on digital. The majority of that digital spend is allocated to search, but $23 million [≈ Typical endowment, liberal-arts university] is still set aside for online video.