Retailers Appear to be Shifting Dollars from Social to Search

February 9, 2023

Online sales performed worse than expected in 2022, and retailers have moderated their expectations for 2023, according to a study [download page] from CommerceNext. Only 44% expect online sales to grow by at least 10% this year, about half the share from last year, when 85% had that outlook.

The biggest risk by far that the digital marketers and e-commerce executives surveyed envision when thinking about their sales objectives this year is reduced consumer spending, possibly as consumers have to deal with higher expenses for food and utilities. Other key, though lesser-cited challenges, include lack of investment dollars and generating marketing ROI.

One of the difficulties with ROI is declining paid social KPIs. Fully two-thirds (68%) of respondents said that their KPIs in paid social declined to some extent in 2022, including 43% who said they declined by at least 10%. This appears to be a compounding problem, as paid social KPIs also declined in 2021, according to a similar survey released last year.

Perhaps as a result, retail marketers seem to be shifting their priorities away from paid social. When asked their top investment allocations for new customer acquisition, 81% cited paid search as being within their top 4, ahead of 63% who cited paid social. This represents a change from last year’s results, when paid social was the top investment allocation for new customer acquisition, ahead of paid search.

Among the two-thirds of respondents who said their social KPIs declined in 2022, two-thirds (66%) will cut their spend on Facebook this year, and almost half (46%) will shrink their spending on Instagram.

Other Survey Highlights

  • Retail digital marketers and e-commerce execs will focus more of their new customer acquisition investment dollars on affiliates/partners than on influencers this year, whereas the opposite was true in the previous study.
  • Retention (38% share) and acquisition (37%) marketing are the strategies the largest portions of respondents believe will drive the most revenue growth this year.
  • On-site personalization and mobile optimization are the site experience/conversion upgrades that the largest proportion of respondents plan to invest in to drive growth.
  • About one-third of respondents are considering 3rd-party marketplaces (35%), international (32%) and social commerce (32%) opportunities for added sales growth this year.

About the Data: The results are based on a December 2022 survey of 108 digital marketing and e-commerce executives spanning various retail models and annual sales volume.


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