Retail is an intensely competitive space. To stay visible, relevant, and profitable, retailers allocate a significant portion of their annual budget to marketing. But where exactly does that money go—and why? The answer lies in five core strategies that dominate marketing spend. These strategies are not only proven to deliver ROI, but they also help retailers build brand equity, drive foot traffic (online and offline), and retain customers in the long term.
For entrepreneurs looking to scale or enter the retail game, understanding where industry leaders focus their marketing dollars is crucial. Whether you’re launching a physical storefront, expanding your eCommerce presence, or testing the waters of hybrid retail, you’ll need to be strategic with your marketing investments. This article breaks down the five marketing strategies retailers spend nearly half their budgets on, and why each tactic is essential to business growth.
1. Why Do Retailers Invest Heavily in Paid Advertising?
Retailers allocate a large chunk of their budget, often upwards of 20%, to paid advertising. This includes pay-per-click (PPC) campaigns, paid social ads, display advertising, Google Shopping campaigns, and programmatic advertising. The reason? Paid advertising delivers fast, measurable results. It allows brands to get in front of highly targeted audiences at scale and drive conversions quickly.
In today’s digital-first world, organic reach is declining across platforms. Paid advertising helps cut through the noise by putting the right message in front of the right customer at the right time. And when well-optimized, the return on ad spend (ROAS) can be significant. For entrepreneurs, especially those testing a new market or launching a product, paid ads provide invaluable data and feedback loops.
Key Paid Advertising Channels:
- Google Ads: Search, Display, and Shopping
- Facebook/Instagram Ads: Ideal for visual storytelling
- YouTube Ads: Great for brand awareness and product demos
- TikTok Ads: Perfect for younger demographics
- Amazon Ads: Crucial for eCommerce retailers
Why It Matters:
- Fast-track customer acquisition
- Data-driven targeting and retargeting
- Supports product launches and seasonal promotions
2. What Makes Influencer Marketing a Worthwhile Investment?
Influencer marketing isn’t just a trend—it’s a strategy that delivers solid ROI when executed correctly. Retailers spend an average of 10-15% of their marketing budget on influencer partnerships because they can drive high engagement and conversions, particularly in niche markets.
Today’s consumers trust people more than brands. Influencers bridge that trust gap. They humanize the brand, showcase products authentically, and often have tight-knit communities that hang onto their recommendations. For entrepreneurs, micro-influencers (1,000 to 50,000 followers) often provide better engagement rates than celebrity endorsements, all at a lower cost.
Influencer campaigns can take many forms—from Instagram reels and YouTube unboxings to TikTok challenges and sponsored blog content. The key is authenticity and relevance.
Effective Influencer Marketing Tactics:
- Product reviews or demos
- Giveaways and discount codes
- Brand ambassadorships
- Affiliate partnerships
Why It Matters:
- Builds trust and social proof
- Accesses niche or hard-to-reach audiences
- Drives direct and referral traffic
3. How Do Loyalty Programs Justify Their Budget Share?
Retailers devote another 10-12% of their marketing budget to customer retention strategies, especially loyalty programs. While acquisition gets a lot of attention, retention often brings a higher return. It costs five times more to acquire a new customer than to keep an existing one, making loyalty programs a smart long-term investment.
Retailers design loyalty programs to reward repeat purchases, collect valuable customer data, and enhance the customer experience. The best programs are simple, mobile-friendly, and integrated across digital and physical channels. They create emotional connections and foster brand advocacy.
For entrepreneurs, loyalty programs can start small with punch cards or referral bonuses, and scale into sophisticated systems with tiered rewards, app integrations, and personalized promotions.
Types of Loyalty Programs:
- Points-based systems
- Cash-back or store credit
- Tiered VIP experiences
- Gamified programs (spin the wheel, challenges, etc.)
Why It Matters:
- Improves customer lifetime value (CLTV)
- Reduces churn and builds brand community
- Enhances marketing personalization efforts
4. Why Do Retailers Prioritize Email and SMS Marketing?
In a world full of flashy marketing tactics, email and SMS marketing remain budget staples. Retailers allocate about 8-10% of their marketing spend to these direct communication channels for one simple reason—they work.
Email marketing delivers a whopping ROI of $36 for every $1 spent. SMS, while newer in mainstream retail, boasts even higher open rates (90%+ within minutes). These channels allow brands to deliver personalized content, drive repeat sales, and engage customers with minimal cost per message.
Entrepreneurs should focus on building quality email/SMS lists from day one. Offering value-driven opt-in incentives (like 10% off first orders or early access to sales) can accelerate list growth. Segmenting your audience by behavior, purchase history, or preferences can also significantly boost campaign effectiveness.
Common Campaign Types:
- Welcome sequences
- Abandoned cart reminders
- Flash sale alerts
- Product recommendation emails
- Re-engagement or win-back messages
Why It Matters:
- Low-cost, high-return communication
- Boosts conversion rates through personalization
- Nurtures long-term customer relationships
5. Why Do Retailers Invest in Content and SEO?
The fifth pillar of a strong retail marketing budget is content marketing and SEO. While this strategy may not have the instant gratification of paid ads, it’s a long-term powerhouse. Retailers spend 7-10% of their annual budget on content creation, blogging, video production, product page optimization, and technical SEO enhancements.
Good content improves organic visibility, builds authority, and attracts customers throughout the buyer’s journey. For example, a blog post comparing product types can capture top-of-funnel users, while optimized product descriptions convert ready-to-buy visitors.
Entrepreneurs benefit from content marketing because it compounds over time. Each blog post or video acts as a permanent asset that can continue to bring in traffic and leads months or even years after publication. The key is consistency and alignment with customer search intent.
Types of Content Retailers Invest In:
- How-to guides and tutorials
- Product comparison or review videos
- User-generated content and testimonials
- FAQs and evergreen blog posts
Why It Matters:
- Drives long-term organic traffic
- Builds brand authority and thought leadership
- Supports SEO and conversion goals
Why Do These Five Strategies Dominate the Budget?
Now that we’ve outlined the five core strategies, it’s important to understand why they consume such a large portion of retailers’ marketing budgets. Each of these strategies contributes to a full-funnel approach—bringing in new leads, converting them, and keeping them engaged over time.
Combined Benefits:
- Omnichannel Reach: Ensures visibility across search, social, mobile, and email
- Data Collection: Informs better decision-making through first-party data
- Brand Consistency: Keeps messaging and tone aligned across channels
- Scalable Growth: Allows brands to adjust based on performance insights
Retailers don’t just throw money at these strategies blindly. Budgets are constantly reviewed, optimized, and tailored to seasonal changes and customer behaviors. The synergy of these tactics ensures that retailers maintain both short-term momentum and long-term brand loyalty.
How Should Entrepreneurs Approach Their Own Marketing Budget?
For entrepreneurs, especially those just entering the market, replicating a full-scale retail strategy might seem overwhelming. The key is to adapt these strategies to your stage of growth and available resources. Here’s how:
Budget-Savvy Tips for Entrepreneurs:
- Start small with paid ads on one platform before expanding
- Collaborate with micro-influencers for affordable partnerships
- Launch a simple loyalty program with a punch card or email list
- Use free tools like Mailchimp or Klaviyo to begin email marketing
- Publish consistent blog content and optimize for local SEO
You don’t need a Fortune 500 budget to be strategic—you just need focus, creativity, and data-driven thinking.
(Bonus) Omnichannel Customer Experiences
Why Omnichannel Marketing Dominates Retail Budgets
Omnichannel marketing is where retailers invest the most money, and it often ties together all the strategies we’ve mentioned so far. This approach provides a seamless customer experience across online, mobile, and in-store channels. Whether a customer browses on a mobile app, sees an Instagram ad, or walks into a physical store, their experience is connected and personalized.
Budget Share
Retailers can spend up to 30% or more of their marketing budget on omnichannel experiences, which involve:
- Integrated POS and CRM systems
- Personalized recommendations via AI and data analytics
- Click-and-collect or BOPIS (Buy Online, Pickup In Store)
- Unified brand messaging across all platforms
Tools That Power Omnichannel Marketing
- Salesforce Commerce Cloud
- Shopify Plus with integrated apps
- HubSpot for automation and tracking
- Adobe Experience Manager for personalization
Benefits of Omnichannel Marketing
- Increased customer lifetime value
- Higher conversion rates
- Consistent messaging that builds trust
- More data for smarter future campaigns
Entrepreneur tip: Even without a large budget, you can create a mini-omnichannel experience by integrating your email, website, and social media with consistent branding and offers.
Conclusion: Investing Wisely for Long-Term Retail Success
Retailers know that effective marketing is not a cost—it’s an investment. The five strategies highlighted above—paid advertising, influencer marketing, loyalty programs, email/SMS marketing, and content with SEO—form the backbone of retail success. Together, they account for roughly half of a retailer’s annual budget, and for good reason: they are measurable, scalable, and proven to drive results.
Entrepreneurs who take the time to understand these strategies, prioritize based on their business goals, and invest with intention will be well on their way to building not just a business, but a recognizable brand that grows sustainably over time.
