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Sarah Salky
(212) 584-5487

Wednesday, November 30, 2011

Chicago, IL – Despite the aggressive holiday advertisements consumers have already seen this year, chief marketing officers at leading U.S. retailers are not drastically adjusting their holiday spending. According to a recent BDO USA, LLP survey, 65 percent of CMOs say their 2011 holiday marketing and advertising budget remains the same compared to last year. Still, 20 percent of retailers cite an increased advertising and marketing budget this holiday season, a slight improvement from 2010 (17%). Overall, CMOs cite a budget increase of less than one percent (0.4%).

With holiday budgets holding steady, CMOs are unwilling to spend big on marketing platforms that still have much to prove. Despite all of the hype surrounding mobile commerce, just 36 percent of CMOs say they have included mobile in their holiday marketing strategies this year. Of the CMOs incorporating mobile, 84 percent say it accounts for less than 10 percent of their holiday marketing efforts.

"Mobile marketing is still in the experimental stage, and flat holiday advertising budgets do not leave much room to test new waters," says Steve Ferrara, partner in the Retail and Consumer Practice at BDO USA, LLP. "Still, mobile is hardly an afterthought for retailers. As consumers demand a more personal brand experience, we expect to see huge growth for mobile as it follows the same trajectory of the now-ubiquitous e-commerce channel."

These findings are from the most recent edition of the BDO Retail Compass Survey of CMOs, which examined the opinions of 100 chief marketing officers at leading retailers located throughout the country. The retailers in the study were among the largest in the country, including 12 percent of the top 100 based on annual sales revenue. The telephone survey was conducted in September and October of 2011.

Some of the major findings of the BDO Retail Compass Survey of CMOs include:

Social Media Now a Staple of Marketing Strategy. As consumers take to social media to connect with brands and share experiences, retailers are adapting accordingly. Overall, 82 percent of CMOs made social networks a part of their marketing strategies this year – an increase from 2010 (75%) and 2009 (51%) and a dramatic shift from 2007 (4%). Social media sites hold even more promise for retailers at the top 100 largest retailers (12% of the sample), all of which say they make use of social media in their holiday marketing. On average, retailers devote 16 percent of their marketing efforts to social networking sites.

Facebook Still Dominates Social Efforts. Following the move into e-commerce, Facebook is more appealing than ever to retailers. The vast majority (94%) of CMOs focus their social marketing efforts on Facebook. CMOs also report marketing via Twitter (47%), LinkedIn (12%), YouTube (11%) and Foursquare (8%). Twitter may have lost popularity overall this year (down from 61% in 2010), but it remains an important site for CMOs at the top 100 largest retailers included in the sample. Sixty-seven percent of these CMOs include Twitter in their social marketing efforts.

Broadcast Ad Spend Indicates Retailer Confidence. This year, 27 percent of CMOs are spending the bulk of their holiday advertising and marketing budget on broadcast, a slight increase from 2010 (25%). While CMOs remain cautious, increased spending on a pricier medium signals they are trying to reach a larger audience in order to capture more sales this season. Forty-four percent of CMOs say they spend most of their holiday budgets on print advertising (up slightly from 42% in 2010), proving that the traditional medium is far from dead. Other budget allocations include online advertising (23%) and outdoor advertising including billboards (5%).

Flash Sales Not Standard in the Marketing Mix. The majority of retailers are unsure of the benefits of flash sales (including group and daily deals). Only one-third say they make use of flash sales, while 67 percent have not yet included the strategy in their marketing efforts. According to Stephen Wyss, partner in the Retail and Consumer Practice at BDO USA, LLP, "Flash sales are an attractive marketing tool, but we’re seeing daily deal sites facing an identity crisis. The market is saturated, and retailers are not convinced that the strategy drives sales or creates loyal customers. Heavy promotional activity from retailers may also reduce the attractiveness of flash sales in the eyes of consumers."

Search Engine Results Vital to Online Traffic. This year, the majority of CMOs (53%) cite search engine results as the primary way their customers find them online, a dramatic increase from 2010 (30%). In 2010, retailers cited more traditional practices like previous shopping experiences (30%) and email promotions (24%) as the main catalyst for online visits from customers. This year a mere 8 percent of CMOs believe previous shopping experiences are the primary way their customers find them online and just 13 percent say email promotions are the top driver— a signal that retailers are shifting their mindsets when it comes to cyber strategy.

About BDO

BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. For 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm services clients through more than 40 offices and more than 400 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multinational clients through a global network of 1,082 offices in 119 countries.

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