Where Do the Biggest Brands Spend Their Marketing and Advertising Dollars?
There’s a lot we can learn about marketing by watching what the big players do.
They have marketing executives who manage big marketing and research budgets. They have data analytics. They have lots of people figuring out where should they spend their marketing dollars to get the highest rate of return.
So, for the rest of us, who are small local business owners and not one of the big players, what can we do to follow their lead?
Just mimic and pattern our marketing after them.
When we are looking at where the most valuable companies are spending their marketing dollars, we’re talking about Amazon, Apple, Home Depot, Progressive, Walmart, and Target.
Where are they spending their marketing and advertising dollars?
And surprisingly, that’s one area local business owners do not allocate marketing dollars.
Why is this? Search is a critical marketing strategy not just for Apple and Amazon. It’s the same with most major brands. They spend on search marketing. They understand the importance of marketing on the internet, marketing digitally in today’s highly digitized environment and marketplace.
The numbers are staggering, and the contrast is obvious. In one year, for example, Amazon spent $8 million on TV and radio. Sounds like a lot, right? Compare that to $54 million for print and $1.35 billion on search. That’s right, billion with a b. That’s 25 times as much on search as on print, and over 160 times as much on search as TV and radio combined.
Apple spent 86% of its marketing budget on search, and Etsy a whopping 91%.
And they have the profits to show for it. Etsy earned $1600 in sales for every dollar spent on search marketing.
Even though marketing spending has flattened in the past few years, search is growing. Digital marketing is now $30 billion more in the US than TV. Most of the growth in ad spend among the top two hundred advertisers in the US in 2018-2020 came from internet ads.
Here’s a graph to show what brands are spending:
These companies are spending millions of dollars on search marketing because they understand that’s the best way to get their customers’ attention.
Importance of Consumer Behavior
The reason big brands spend on search is they understand how consumers behave in our digital marketplace.
The process goes something like this. A person realizes they need a product or service. They don’t have a friend to ask, or none of their friends can make a recommendation. What do they do?
They go online and search.
Because the big brands understand that the traffic has moved online, they are spending on search.
Sure, they might still do some mass media or mass advertising, but these aren’t as important as before. These forms of advertising aren’t where the growth is.
For example, think about the music industry. They used to do lots of mass media campaigns to bring albums to the public, to gain exposure, and raise awareness. But now through digital marketing using search marketing strategies those same artists can go directly and specifically to the consumers who most likely will buy their music. No need to waste money on expensive, mass media campaigns. Most of the effort can go to targeting your marketing.
In other words, Google search just doesn’t get you more traffic, but it gets you the right kind of traffic. People who want what you have to sell. People who are actively looking for your product or service. People who are ready to pull out their credit cards and buy.
Now you might be thinking that paid advertising is all the internet marketing you need. But that line of reasoning doesn’t take into account an important aspect of consumer behavior: many people are using ad blockers.
So you can’t count on your ad being seen. With organic search, you have to think hard about what your customers are looking for, and to analyze and be thoughtful about it.
Besides, people are increasingly savvy about where ads are likely to pop up or display on their screens, and they develop blind spots to the ads. They also know how to spot organic results, and they pay more attention to them.
Also, consumers are doing more research. It used to be to do comparison shopping, you had to spend time going to stores, talking with salespeople, or making phone calls. Now for most products or services, you can do all this research quickly with an internet search.
Keep in mind most people won’t look at more than the first two pages on Google search results, and then they’ll call it quits. But even if they don’t buy from you, they’ve been exposed to your brand, which helps keep you in their minds for their next purchase.
The big brands recognize these changes in consumer behavior. They’ve responded by leveraging search marketing to generate traffic and sales.
Search Marketing vs Word of Mouth
Many business owners believe that search marketing in any of its various forms can’t compete with one of the most popular, effective forms of marketing: word of mouth.
But that’s missing the point. Search is word of mouth in the internet era. Digital word of mouth takes place through reviews and rankings in the search results. High rankings mean Google and people searching on your keywords have found your site to be relevant to their needs.
When we look at search as word of mouth, we can see that it is a whole new way to gain more referrals and leads for your business at a much lower cost than mass media advertising. Or to help keep your brand top of mind. Or drive not just online sales, but offline ones as well.
And by driving customers to your website, you are connecting with them and engaging with them in ways not possible with a simple ad or recommendation from a friend.
Also, traditional word of mouth advertising is not scalable like search marketing. In other words, the conventional wisdom has been that if someone likes a product or service, they will tell three people.
But high rankings in search results are shown to everyone who searches for that keyword, making search marketing much more powerful than traditional word of mouth.
Look around at the brands that are growing. You’ll see that every business owner determined to grow and expand is investing in a Google search marketing strategy. No longer can anyone consider search to be an optional part of a marketing plan. Instead, Google search is a critical part of an effective marketing strategy.
April 5, 2021