What Are Five Marketing Strategies That Retailers Spend Half Of Their Annual Budget On [2025 Data]

Retailers allocate approximately 50% of their annual marketing budgets to five core strategies: digital advertising, local SEO, influencer and social media marketing, content marketing with SEO, and traditional advertising paired with in-store promotions. According to industry projections, retail media spend alone will exceed $62 billion in the U.S. by 2025, making strategic budget allocation essential for competitive success.

Marketing budget patterns across retail reveal distinct priorities. Digital advertising commands the largest portion at 25-30% of total spend, while influencer and social media marketing secures 15-20%. Local SEO marketing captures 10-15% of retail budgets, with traditional advertising and in-store promotions claiming another 10-15%. Content marketing combined with SEO rounds out these five strategies, accounting for 5-10% of retailers' marketing investments.

Over 200 Retail Media Networks now compete for advertising dollars, creating both opportunity and complexity for retailers. Amazon's market dominance—capturing 77.3% of retail media ad spend—demonstrates how platform concentration can determine marketing effectiveness across entire retail categories.

In this guide, we break down why these five strategies dominate retail marketing spend and how budget allocation varies by business type and industry. With these insights, you can optimize your marketing investments for maximum ROI and adapt your strategy as emerging trends reshape the retail marketing landscape.

Five core strategies dominating retail marketing spend

These five marketing strategies collectively capture 50-70% of annual retail budgets. Retailers strategically distribute resources across digital and physical environments to maximize both customer acquisition and retention throughout the purchase journey.

1. Digital Advertising

Digital advertising commands the largest share of retail marketing budgets, typically consuming 40-60% of total allocation. Advertisers invested an estimated $45.15 billion in U.S. digital retail media during 2023 alone.

This substantial investment encompasses several key components:

• Email marketing campaigns and newsletters

• Search engine optimization

• Programmatic advertising

• Retail media networks

Retail media has experienced explosive growth, with spending surging from $1 billion in 2016 to $30 billion in 2021. This growth trajectory outpaced video (9 years), social networks (11 years), and traditional search (at least 15 years).

Amazon maintains dominance within this space, accounting for approximately 77% of all U.S. retail media ad spend in 2024. Search-based retail media represents 62.2% of overall spending, though display advertising continues gaining ground.

What makes digital advertising particularly appealing is its proximity to purchase decisions.

Retail media sits close to where transactions happen, enabling advertisers to attribute ROI to specific campaigns or individual advertisements. This direct connection between marketing spend and sales results provides the accountability retailers increasingly demand.

2. Local SEO

Local SEO typically commands 10-15% of marketing budgets for brick-and-mortar retailers. This investment focuses on maximizing visibility within specific geographic areas to drive foot traffic and in-store sales.

Approximately 54% of customers search online for local solutions before purchasing in-store. Mobile searches account for over 62.5% of web traffic, making local SEO a critical bridge between digital discovery and physical shopping.

Google Business Profile (formerly Google My Business) sits at the core of local SEO strategy, significantly influencing how retailers appear in local search results.

Google determines local rankings based on three primary factors:

1. Relevance: How well a business profile matches search queries

2. Distance: Proximity between potential results and searcher location

3. Prominence: Business recognition both online and offline

Customer reviews heavily influence local search performance. Both review count and average rating factor into local search rankings. Maintaining an optimized Google Business Profile with accurate information, updated hours, regular review responses, and quality photos has become essential for maximizing local customer acquisition.

3. Influencer & Social Media

Influencer and social media marketing typically secures 15-20% of retail marketing budgets, making it the second-largest allocation for many retailers. Brands receive approximately $4.12 in earned media value for every $1.00 spent on influencer partnerships.

Consumer trust drives this strategy's effectiveness. About 61% of shoppers trust influencer recommendations compared to just 38% who trust direct brand recommendations. This trust translates directly into sales—97% of shoppers have purchased products discovered through social media.

Effective retail influencer strategies follow several emerging trends:

1. Content-first creator campaigns outperform traditional ad creative

2. Co-op creator influencer marketing accelerates as retail media networks grow

3. Video content drives greater engagement and conversions

4. Gen Z partnerships are becoming a top priority

Social platforms demonstrate distinct strengths. Instagram helps 83% of users discover new products, and 81% use it to research products before purchasing. TikTok's short-form video content remains visible longer, giving creators more time to reach their audience.

For retailers concerned about economic pressures, influencer marketing offers cost-effective solutions. Discount codes prove particularly effective, with 55% of consumers citing them as primary motivation for influencer-driven purchases. In the first half of 2024, 32.3% of influencer affiliate conversions included a coupon, up significantly from 8.8% the previous year.

4. Content & SEO

Content marketing paired with SEO typically receives 5-10% of retail marketing budgets but delivers outsized benefits. This strategy creates additional entry points to retail websites, increasing customer acquisition opportunities throughout the purchase journey.

Content marketing involves creating valuable materials—blog posts, videos, or guides—that spark product interest, while SEO ensures this content reaches potential customers through search engines. These components work synergistically, with content marketing providing substance that SEO makes discoverable.

Original content creation offers retailers multiple advantages:

1. Opportunities to target additional keywords, including long-tail phrases

2. Increased website traffic through organic search results

3. Higher conversions by reaching customers further along the shopping pipeline

4. Extended website engagement beyond immediate purchase intent

Quality content builds trust and establishes retailers as authoritative voices in their industries. This credibility translates into stronger customer relationships and loyalty over time.

Takeaway: Retailers who integrate content marketing and SEO effectively maximize their online presence without the continuous costs associated with paid advertising.

5. Traditional Advertising

Traditional advertising still commands 15-25% of retail marketing budgets. This category encompasses television, radio, print, direct mail, and increasingly, in-store media networks that blend traditional approaches with new technologies.

Physical retail environments offer unique advantages over digital-only channels. For many leading omnichannel retailers, in-store audiences are approximately 70% larger than their digital platforms. This significant reach, combined with immediate in-store messaging, delivers impact that purely online channels struggle to match.

Industry projections indicate in-store retail media spending will exceed $1 billion by 2028, with year-over-year growth outpacing online retail media. This growth reflects recognition that despite e-commerce expansion, physical stores remain dominant in consumer spending, with nearly 80% of purchases occurring in brick-and-mortar locations.

Traditional advertising also addresses growing concerns about brand safety in digital environments. Physical retail spaces eliminate risks of ad placements alongside controversial content that can damage brand reputation. This advantage becomes increasingly valuable as marketing budgets face greater scrutiny, with total allocations falling to 7.7% of company revenue in 2024, down from 9.1% in 2023.

Traditional advertising maintains its value by reaching demographics less active in digital spaces and reinforcing brand presence at critical touchpoints throughout the customer journey.

How budget allocation varies by business type

Business size, operational model, and industry vertical create dramatic differences in how retailers distribute their marketing investments. These variations explain why the five core strategies receive different funding priorities across retail categories.

Small vs large retailers

Financial constraints shape every marketing decision for small retailers. Budget limitations force these businesses into strategic choices that larger competitors never face. Small retailers typically operate with marketing resources that get cut first when expenses rise, creating a necessity for maximum impact from minimal spend.

Small retailers concentrate their efforts on cost-effective channels:

• Social media marketing and organic content creation

• Word-of-mouth and referral programs

• Email marketing campaigns

• Content marketing and SEO

The numbers tell the story clearly. Small retailers spend approximately $30,000 annually on marketing, while larger companies invest roughly twice that amount. This financial reality forces smaller businesses to target narrower, more specific audiences with their limited resources.

Large retailers operate from a position of abundance. Substantial marketing budgets enable simultaneous campaigns across multiple channels, including expensive options like television, radio, and print advertising. These companies maintain specialized marketing teams—sometimes entire departments—dedicated to individual campaign elements.

Most significantly, large retailers access advanced marketing tools and sophisticated data analytics that remain beyond smaller businesses' reach. This technological advantage creates precise targeting capabilities and accurate ROI measurement, producing more efficient campaigns despite higher overall expenditure.

Ecommerce vs brick-and-mortar

Operational models create fundamental differences in marketing budget priorities. The initial investment gap between these approaches is substantial: ecommerce stores require approximately $25-30 monthly for domain and platform fees, while brick-and-mortar locations demand significant investments in rent, construction, fixtures, staff, and physical infrastructure.

Ongoing marketing expenses reveal different strategic needs. Brick-and-mortar stores benefit from natural foot traffic and physical visibility, requiring less marketing spend to attract initial customers. Their location functions as passive marketing. Online retailers must invest heavily in digital marketing simply to become visible in crowded marketplaces.

These operational differences create distinct budget priorities:

Brick-and-mortar retailers focus on:

• Local SEO and geographic targeting

• In-store experiences and promotions

• Community engagement initiatives

• Traditional advertising with local focus

Ecommerce retailers prioritize:

• Digital advertising across multiple platforms

• Website optimization and user experience

• Logistics and fulfillment (often categorized as marketing expenses)

• Shipping and returns policies as marketing differentiators

Retailers combining both channels see synergistic benefits. Opening a physical store creates a "halo effect," increasing online sales by approximately 6.9%. Newer retailers experience nearly 14% lifts, while established brands still see around 6.8% growth. Average online order values also increase after opening physical stores—from $94 to $104 for established retailers and from $111 to $120 for emerging brands.

This cross-channel synergy explains why 91% of consumers prefer brands offering seamless omnichannel experiences, though only 56% of retailers successfully deliver this integration. Forward-thinking retailers now allocate budgets to create cohesive experiences rather than treating channels as separate entities.

Retail budget trends by industry

Industry sector creates the most dramatic variations in marketing budget percentages. Consumer packaged goods companies spend an average of 18.09% of revenue on marketing, while energy retailers allocate just 3.21%—a striking contrast that reflects different competitive landscapes, profit margins, and consumer behavior patterns.

The retail and wholesale sector generally invests around 5.46% of revenue in marketing, though specialized data indicates typical retailers allocate between 4-6% of gross revenue to marketing activities. These industry-wide figures mask significant variation based on retail subsectors.

Takeaways

Consumer packaged goods leads with 18.09% of revenue allocated to marketing, followed by education (14.59%), communications/media (13.82%), transportation (11.67%), and consumer services (11.25%). Banking/finance/insurance (11.18%), professional services (11.06%), and mining/construction (10.20%) all maintain double-digit percentages.

Moving down the scale, real estate invests 9.82% of revenue in marketing, healthcare 9.31%, tech software/platforms 9.16%, pharmaceuticals/biotech 8.21%, and manufacturing 6.67%. At the lower end, retail wholesale averages 5.46%, with energy companies spending just 3.21%.

Industry type also influences which marketing strategies receive priority funding. Retailers typically invest heavily in omnichannel marketing strategies that balance online and offline advertising. They emphasize personalized marketing and customer loyalty programs, using data analytics to customize promotions to individual preferences.

Amazon exemplifies industry-specific budget approaches, dedicating approximately $18 billion annually to marketing, primarily focusing on digital advertising, promotions, and Prime membership benefits to foster customer loyalty. This massive investment reflects both the company's scale and the highly competitive e-commerce environment.

Industry differences extend to workforce investments. Marketing organizations grew headcount by 5.3% overall in Fall 2024, with significant variation by industry. Education (25.3%), banking/finance/insurance (14.8%), and healthcare (9.8%) saw substantial growth, while mining/construction (-20%), retail/wholesale (-5.8%), and communications/media (-4.9%) experienced contraction.

Retailers must consider these industry benchmarks alongside their specific business characteristics when allocating marketing budgets. The five core strategies that typically receive half of retail marketing budgets receive different proportional allocations based on a retailer's size, operational model, and industry classification.

Why these strategies dominate retail marketing spend

Three fundamental drivers explain why retailers direct half their annual budgets toward these five marketing strategies. Performance accountability, consumer behavior shifts, and cross-channel effectiveness create compelling reasons for sustained investment in digital advertising, local SEO, influencer marketing, content with SEO, and traditional advertising.

High ROI and measurable impact

Marketing accountability has become non-negotiable for retail businesses. These five strategies maintain their budget dominance because they deliver trackable, significant returns that justify continued investment.

Consider the performance data: 33% of businesses report that maintaining brand consistency has increased revenue by 20% or more. Brands using effective retail media strategies receive approximately $4.12 in earned media value for every $1.00 spent on influencer partnerships.

Modern marketing technologies enable retailers to track conversion rates, average order value, customer acquisition costs, and customer lifetime value with precision. This level of measurement transforms marketing from an expense into a revenue-generating function.

Retail media marketing offers particularly compelling measurement capabilities through closed-loop attribution, allowing marketers to directly connect ad spending to sales. With U.S. retail media ad spend projected to reach $97.91 billion by 2028, proving ROI becomes essential for securing continued investment.

Industry benchmarks define clear success standards. A marketing ROI of 5:1 is considered strong—meaning net sales increases should exceed campaign costs by five times. Exceptional performance reaches 10:1, while 2:1 falls short for most retail categories due to product and operational costs.

Consumer behavior and channel preferences

Shopping behaviors directly influence marketing budget allocation decisions. Consumer expectations have evolved dramatically, with 75% of global shoppers expecting consistent experiences across all channels.

Omnichannel shopping behaviors reshape retail marketing investments. Today's consumers integrate online and offline experiences seamlessly:

• 73% of shoppers use multiple channels to research before buying

• 91% of consumers prefer brands offering seamless omnichannel experiences

• 54% of customers search online for local solutions before purchasing in-store

Gen Z exemplifies this integrated shopping approach. Despite heavy social media influence, Gen Z's in-store mass merchandise and grocery purchases account for nearly 50% of their total spending. This makes them the most authentic "omni" shopping generation.

Personalization drives purchase decisions. According to research, 80% of consumers are more likely to purchase when brands offer personalized experiences. Additionally, 91% of consumers prefer brands that recognize, remember, and provide relevant offers and recommendations.

Mobile searches now account for over 62.5% of web traffic. Retailers must invest in strategies that reach consumers across multiple touchpoints, explaining substantial budget allocations to these five dominant approaches.

Cross-channel synergy and brand consistency

Retailers allocate half their budgets to these strategies because of the powerful synergy created when channels work together. Breaking down marketing silos enables stronger brand identity, consistent customer experiences, and higher returns on investment.

Brand consistency across channels drives consumer trust. Specifically, 90% of American consumers prefer purchasing from brands they trust, and 46% will pay more for products from trusted brands. Trust develops through consistent branding that creates familiarity and reliability.

Data proves the effectiveness of integrated approaches. Businesses combining email, in-app messages, mobile push, and web push achieve 126 times higher average sessions per user compared to single-channel approaches. Using mobile push, in-app messages, email, and SMS together produces 88.3 times more purchases per user than push notifications alone.

Cross-channel impact extends beyond engagement metrics. Companies running both Google Search and YouTube ad campaigns experienced a 420% increase in Google-branded search interest. This demonstrates how marketing channels amplify each other when used strategically.

Maintaining brand consistency requires establishing clear guidelines that outline messaging, design elements, and values. This enables teams to access unified knowledge bases, ensuring consistent standards across all marketing initiatives.

Consistent branding elements—logos, colors, typography, and tone of voice—create immediate recognition and reinforce consumer trust. When customers encounter consistent messaging, service levels, and quality commitments across every interaction, they become advocates who share brand stories.

This consistency builds familiarity—the foundation of customer trust. As retail environments become increasingly complex, these five dominant marketing strategies offer proven pathways to maintain coherent brand identities while reaching consumers across their preferred touchpoints.

How to allocate your marketing budget effectively

Strategic budget allocation determines the success of retail marketing campaigns. According to 2023 data, retail companies devoted approximately 13.6% of their total budgets to marketing efforts, with retail and e-commerce businesses typically allocating 5-10% of revenues to various marketing initiatives. Distributing these funds effectively across the five dominant strategies requires strategic planning, continuous monitoring, and timely adjustments.

The 70/20/10 rule for marketing investments

Industry giants like Google and Coca-Cola rely on the 70/20/10 rule to balance risk with innovation while maximizing marketing returns. This framework provides retailers with clear guidance for distributing marketing resources across different risk levels.

The rule breaks down budget allocation into three distinct categories:

70% to proven strategies that consistently deliver results. These established campaigns have reliable performance history—primarily through platforms like Google, Facebook, radio, or TV advertising. This foundation provides consistent returns while minimizing risk.

20% to competitor tactics or emerging opportunities that show promise but haven't been fully tested by your business. These might include OTT commercials, TikTok campaigns, or email marketing initiatives you haven't previously explored.

10% to experimental initiatives that encourage creative thinking. This smallest portion funds truly innovative approaches that might yield exceptional results or long-term benefits. Examples include supporting local causes, trying new platforms, or testing unconventional messaging.

Seasonal businesses can adjust these proportions temporarily—possibly shifting to 90/10/0 during peak seasons when focusing on reliable results becomes essential. This flexibility ensures marketing stability through proven channels while maintaining room for strategic exploration.

Objective-based versus ROI-based budgeting approaches

Two primary approaches dominate marketing budget allocation decisions: objective-based and ROI-based budgeting. Each serves different business needs depending on growth stage and market position.

Objective-based budgeting begins with clear marketing goals, then estimates the budget required to achieve them. This approach works effectively when launching new products or entering untested markets where historical performance data is unavailable. The process starts by identifying stakeholder objectives, establishing SMART goals (specific, measurable, achievable, relevant, time-bound), then allocating resources accordingly.

ROI-based budgeting prioritizes investments based on expected financial returns. This data-driven approach maximizes efficiency by directing funds toward activities with proven performance. If analysis reveals that email marketing delivers $42 for every dollar spent while social media generates only $6, budget allocation would heavily favor email campaigns.

Smart retailers increasingly combine both methods—using ROI calculations where historical data exists while setting aside portions for objective-based initiatives that support long-term growth. This balanced approach ensures both immediate results and strategic advancement.

Tools for tracking and adjusting marketing spend

Marketing budget management requires continuous monitoring and data-driven adjustments. Several specialized tools help track marketing expenditures and optimize returns across campaigns.

AdForum enables retailers to create company profiles while monitoring competitors' advertising activities through real-time notifications. The Advertising Research Foundation (ARF) provides empirical research and objective market tests that add substantial value to competitive analysis. Critical Mention tracks brand mentions across broadcast TV, radio, online news, podcasts, and social media platforms.

Spend management software eliminates manual calculations and reduces human error in expense tracking. Marketing dashboards offer customizable views of key metrics—including traffic, retention, and conversion data—allowing retailers to visualize campaign performance in real-time.

These tools support data-driven decisions that maximize marketing budget effectiveness. Through campaign performance analysis and customer acquisition cost evaluation, retailers can identify which strategies deliver the best return on investment and adjust allocations accordingly.

Successful retailers create marketing calendars to plan key initiatives throughout the year, capitalize on seasonal revenue opportunities, and spread investments across different campaigns to mitigate risks. This approach, combined with regular performance reviews, ensures marketing budgets remain aligned with business objectives while delivering measurable results across the five core strategies that dominate retail marketing spend.

Emerging trends reshaping retail marketing budgets

Three emerging trends are positioned to reshape how retailers allocate their marketing budgets beyond 2025. These developments promise to alter the balance of spending across the five core strategies, potentially creating new priority channels or transforming how existing approaches are implemented.

Retail media networks expand beyond Amazon

Retail media networks have grown from a handful of platforms five years ago to over 200 networks globally, with a current market size of approximately $90 billion excluding China. This explosive growth outpaced traditional digital advertising channels, establishing retail media as the third significant evolution in online advertising.

The profit potential drives retailer interest in developing their own networks:

• On-site advertising offers approximately 80% profit margins

• Off-site advertising delivers around 30% profit margins

• In-store advertising represents the next frontier, with some retailers already generating up to 10% of retail media revenue from physical stores

Amazon maintains approximately 77% of the U.S. retail media market, but other retailers are rapidly building their capabilities. By 2028, retail media is projected to account for nearly a quarter of all U.S. media spend, redirecting funds from traditional marketing allocations.

Takeaways

• Retailers can monetize their customer data and shopping environments

• Marketing dollars will shift toward owned retail media properties

• The five core strategies may need to accommodate retail media as a sixth category

AI enables personalization at scale

AI-powered personalization is changing how retailers connect with consumers. According to a Bain survey, over half of shoppers indicated that generative AI-powered personalized recommendations would be valuable when shopping online. Retailers experimenting with AI-powered targeted campaigns see a 10% to 25% increase in return on ad spend.

Modern AI enables hyper-personalization through on-demand content generation, holistic customer profiles, and real-time decision engines. This allows retailers to create unique, tailored experiences that feel authentic rather than intrusive.

Consumer reception remains positive when personalization adds value.

Approximately 45% of shoppers don't mind sponsored ads if they're relevant to their interests, and 40% say these ads can actually be helpful when shopping. This creates opportunities for more effective advertising without alienating customers.

Social commerce creates new shopping experiences

Social commerce represents a trillion-dollar opportunity projected to surpass $1 trillion by 2025. This approach merges ecommerce capabilities with social media platforms, creating seamless shopping experiences where consumers discover and purchase products without leaving their preferred networks.

The scale of opportunity is significant. Currently, 5.22 billion people worldwide use social media, with 94.5% of internet users engaging with social platforms monthly. The average user actively engages with 6.8 platforms each month, creating multiple touchpoints for retailers.

Live shopping—combining livestreaming with e-commerce—shows particular momentum. Livestreaming e-commerce generated nearly $682.50 billion in sales in China during 2023, up from $57.12 billion in 2019. This trend is expanding globally, with U.S. livestream commerce sales reaching an estimated $50 billion in 2023 and projected to grow by 36% by 2026.

The five marketing strategies that currently dominate retail spending will need to accommodate these innovations—either by creating new budget categories or transforming how existing strategies are implemented and measured.

Strategic budget allocation for retail success

The five marketing strategies that command half of retailers' annual budgets—digital advertising, local SEO, influencer and social media marketing, content with SEO, and traditional advertising—represent more than industry convention. They reflect proven pathways to measurable retail success.

Budget allocation decisions ultimately depend on your specific business characteristics. Small retailers benefit from focusing resources on cost-effective channels that deliver immediate impact, while larger companies can spread investments across multiple high-impact strategies simultaneously.

Similarly, brick-and-mortar businesses see stronger returns from local SEO and in-store experiences, whereas e-commerce retailers maximize growth through digital advertising and website optimization.

The 70/20/10 framework provides a practical starting point for budget distribution. Allocate 70% to proven strategies with reliable performance history, 20% to promising opportunities that competitors are testing, and 10% to experimental initiatives that could yield breakthrough results.

This approach balances stability with innovation while maintaining accountability for marketing spend.

Key strategic considerations:

• Combine objective-based and ROI-based budgeting approaches for both immediate results and long-term growth

• Monitor emerging trends like retail media networks, AI-driven personalization, and social commerce that may reshape future allocations

• Maintain flexibility to adjust spending based on performance data and changing consumer behaviors

• Focus on cross-channel synergy rather than treating each strategy as an isolated investment

Successful retailers will adapt their marketing investments as new channels emerge and consumer preferences evolve. The most effective marketing budget isn't necessarily the largest—it's the one strategically allocated across channels that reach customers where they actually make purchasing decisions.

FAQs

Q1. What are the five main marketing strategies retailers invest in?

The five core marketing strategies that typically receive half of retailers' annual budgets are digital advertising, local SEO, influencer and social media marketing, content marketing with SEO, and traditional advertising including in-store promotions.

Q2. How does marketing budget allocation differ between small and large retailers?

Small retailers often focus on cost-effective channels like social media and email marketing due to limited resources, while larger retailers can invest in broader strategies including television and print advertising. Large retailers also benefit from advanced marketing tools and data analytics that smaller businesses may not be able to afford.

Q3. Why do these five strategies dominate retail marketing spend?

These strategies dominate because they deliver measurable ROI, align with evolving consumer preferences, and create powerful cross-channel synergies. They also offer the ability to track key performance indicators precisely, transforming marketing from a cost center into a revenue-generating function.

Q4. What is the 70/20/10 rule in marketing budget allocation?

The 70/20/10 rule suggests allocating 70% of the budget to proven strategies, 20% to promising competitor tactics or emerging opportunities, and 10% to experimental initiatives. This approach balances risk with innovation while maximizing marketing returns.

Q5. What emerging trends might shift retail marketing budget allocations in the future?

Three key trends that may reshape budget allocations are the rise of retail media networks, AI-driven personalization, and social commerce with live shopping. These innovations are showing significant growth and effectiveness, potentially creating new priority channels that demand increased funding.