December 31, 2009, 12:00 AM

Retailers are getting more bullish on interactive marketing, report says

Retailers spent $4.67 billion this year on interactive marketing efforts. That number is expected to reach $8.6 billion by 2014 as retailers seek to drive more web sales, says a new report.

Retailers spent $4.67 billion this year on interactive marketing efforts, a number that is expected to climb to $8.6 billion within five years as retailers seek to drive web sales, improve their search programs, personalize display ads, and launch mobile marketing programs, says a new Forrester Research Inc. report.

The reason? E-commerce has outpaced traditional retail channels. And 70% of retailers in Forrester’s “The State of Retailing Online 2009: Marketing” report said they intend to increase or maintain their interactive marketing spend, particularly for search and e-mail marketing.

Moreover, the report suggests that retailers will spend on search engine optimization to improve the efficiency of their search marketing campaigns, rather than expand their keyword lists. For instance, Buy.com boosted its revenue from paid search 75% by working with Adlucent to optimize its buys based on available inventory and spending trends.

Mobile will also continue to grow-and retailers will integrate it with their web commerce and in-store point-of-sale technologies, says the report. As a result, Forrester expects mobile spending to increase from $59 million this year to $193 million in 2014.

“Retailers today denote 49% of their online budgets to acquisition-too much in our book,” Forrester says in the report. “We think that as retailers mature their interactive marketing efforts, they can spend more efficiently by remarketing to repeat customers rather than constantly trying to attract fresh ones.”

To do so, retailers should ensure that their sites’ content includes all the essential information shoppers need, as well as clear privacy policies. After doing so, they should channel at least 10% of their existing acquisition dollars into on-site content, such as updating their product pages and offering customized pricing, says the report.

Retailers also need to find tools to measure their interactive marketing campaign’s effectiveness beyond just the sale. Doing so can help retailers identify how much they need to spend to influence new or repeat customers’ shopping behaviors.

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