A new study conducted by DesignRush explored the marketing channels that eCommerce businesses invest in and where they saw the best ROI in 2018.
Over 150 companies provided feedback about where their marketing dollars were best spent in 2018 and where they foresee their budgets shifting in 2019.
In addition, eCommerce small businesses shared other valuable information regarding the difficulty of channel management and the use of marketing agencies.
Survey respondents had a variety of annual sales income, ranging from under $500,000 to over $40 million, with 48% of respondents earning less than $500,000. A majority of companies surveyed had ten employees or less.
The five marketing channels explored were organic search, paid search, social media, email, and offline advertising.
- A majority (54%) of total respondents said that social media had the greatest ROI in 2018.
- This included 64% of companies with annual sales of between $1,000,001 - $5,000,000. Paid search was a distant second at 18% overall, followed by email, offline advertising, and organic search.
- Half of respondents spent more on social media than any other marketing channel, with email and offline advertising following at around 19%.
- More than half of companies surveyed plan on increasing their overall marketing budgets in 2019.
- 48% of our respondents anticipate that they’ll spend more on social media than any other marketing channel.
- 42% of respondents said that social media is the easiest channel to manage, while 33% referred to it as the most difficult to manage.
- More companies said they use a marketing agency to manage their social media more than any other marketing channel, including those who don’t use a marketing agency at all.
- Companies that plan to have a marketing agency manage their social media in 2019 increased by 3%.
As a whole, social media marketing was seen to be the strongest marketing channel for eCommerce companies to invest in throughout 2018. Social media marketing for eCommerce brands is projected to grow in importance in the future, too.
Social Media Is Driving Conversions
Survey respondents clearly acknowledged that social media was the driving force behind conversions in 2018:
- 54% of businesses surveyed claimed that social media had the best ROI for them in 2018.
- This number tapered slightly for businesses making over $10 million a year, but remained at or above the 50% mark.
- This suggests that eCommerce businesses of all sizes can benefit from increased social media investment, with smaller companies potentially having an even greater relative ROI.
- Other studies have supported the finding that social media offers a higher ROI than any other marketing channel for small businesses.
- In a survey conducted by Ignite Visibility, over 40% of businesses that take in under $1 million a year claimed that social media gave them the most conversions in the last 12 months, while email marketing followed at just 28%.
- Confidence in social media marketing appears to be high.
- As for specific social media channels, Facebook remains the leader in online conversions.
Increasing Investments in Social Media Marketing
The investments that companies make into social media marketing reflects the finding that it has the greatest ROI. Our survey found more companies spent a majority of their marketing dollars on social media versus other marketing channels:
- Half of all respondents claimed social media as their primary marketing investment, with email following at 19%.
- This number was even higher for companies with sales of less than $500,000 per year, of which 61% claimed social media to be their biggest marketing cost in 2018.
- The dominance of social media as a marketing investment is corroborated by a 2017 survey by The Manifest that found that nearly all respondents planned to invest more time and money into social media in 2018.
The trend of social media being the primary marketing expense is slated to continue into 2019, as found by our survey:
- Nearly half of companies surveyed still plan on social media being their biggest marketing cost in 2019.
- 57% of companies with annual sales between $1,000,001 and $5,000,000 foresee spending a majority of their marketing dollars on social media.
- A slight increase in organic and paid search spending in 2019 can be observed, although social media spending remains strong.
- This data is complemented by the finding that over half of our respondents plan on increasing their marketing budgets in 2019.
Perceived Difficulty for Managing Social Media
Managing social media requires consistent engagement with the platform in order to be effective. Unlike other advertising avenues which can be “one and done,” social media strategies rely on daily communication with prospective customers. This dynamism may explain our finding that many respondents see working with social media to be a challenge:
- Nearly a third of companies surveyed said that social media is the most difficult marketing channel to manage, followed by offline advertising.
- According to Sage Advice, the main social media challenges for small businesses are time management, consistency, and content creation.
Social listening, scheduling posts, launching ads, and other tasks that are integral in social media management require consistent engagement with the platform in order to be effective.
Interestingly, our question about the easiest channel to work with produced similar findings:
- Nearly 10% more respondents said that social media is the easiest — rather than the most difficult channel — to manage.
- This polarity highlights the fact that some eCommerce businesses find social media much easier to handle than others do.
- The use of social media management tools could affect the ease of which these platforms are utilized.
- It’s possible that these findings have some correlation to the following section, which will look into the use of social media marketing agencies.
Marketing Agency Utilization
Our survey also explored whether marketing agencies were used to manage the channels in question. We found that more eCommerce businesses used marketing agencies for social media than any other channel in 2018:
- Two-thirds of those surveyed worked with a marketing agency of some kind in 2018.
- Only 17% of companies worked with an organic search (SEO) agency, versus the 45% which partnered with a social media marketing agency.
We then asked our respondents about their plans to use a marketing agency in 2019, and found that an increased number of respondents were looking to partner with an agency:
- 46% of eCommerce companies surveyed plan to use a social media marketing agency in 2019.
- 73% of respondents planned on using a marketing agency in 2019, versus the 67% which utilized them in 2018.
- SEO, paid search ads, and social media all saw increases, while email and offline advertising investments remained flat.
- The trend is moving toward increased adoption of digital marketing agencies, particularly involving search and social media.
Summary of Findings
In this study, we see that eCommerce businesses report social media marketing as their highest ROI, and this is reflected in the investments they make. According to Ignite Visibility, the high ROI of social media is primarily due to its very low cost.
The trend of social media marketing being the primary marketing investment for small businesses is slated to continue into the future, as spending on offline advertising stalls out.
While many eCommerce businesses find social media accessible, a comparable amount of companies find it as the most difficult advertising channel to manage. This may explain why the use of marketing agencies is on the rise, particularly for social media channels.
The importance of investing in social media marketing cannot be overlooked. eCommerce businesses will continue to see a higher ROI than other marketing channels into the foreseeable future. We can conclude from this study that partnering with a leading social media agency is one of the best investments that a small business can make.
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