Retailers are planning to plough more and more spend into social media marketing as a way of tackling the perennial challenge of attracting new customers and driving loyalty, with smaller firms in particular eyeing up a greater TikTok presence.
In fact, customer acquisition and retention was named as one of the top three challenges facing their businesses over the next 12 months, along with managing increased costs and mitigating the impact of cost-of-living pressures on consumer spending, according to a survey of more than 500 UK retailers, carried out by American Express.
A third of retailers said they wanted to make the most of their social media channels to build a community among their customers, drive brand loyalty and keep their “marketing funnel” topped up.
And, as a result, investment in marketing and branding was pinpointed as the top area for investment; with over half (53%) saying they will funnel funds into social media activity.
However, while TikTok has built a reputation for showcasing new and popular product trends, the study reveals smaller retailers are about three times less likely to have a presence on the Chinese-owned platform than their larger counterparts (43% large retailers vs 14% SME retailers).
Even so, 29% of small merchants said they would like to launch their presence on TikTok this year.
Amex general manager of merchant services Dan Edelman said: “Social media is a key channel for retailers of all sizes, enabling them to reach new customers and build a community around their brand.
“That’s why, as part of our commitment to backing merchants, we’re helping them connect with more customers by tapping into the power of social.”
The survey chimes with WARC Media’s Global Advertising Trends report, published last month, which forecasts that social will overtake paid search last year to become the biggest by ad investment, predicted to reach $247.3bn in 2024, up 14.3% year-on-year.
In the UK, social media advertising spend grew 15.6% year-on-year in 2023, and is forecast to reach £8.8bn in 2025. Much of this growth is attributed to rising spend on social video formats, up 20.0% year-on-year, according to IAB UK.
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