05/05/2009

RESEARCH

Online retailers are shifting their marketing from traditional advertising to less expensive tools like Facebook.com and Twitter and e-mail as they seek market share or just work to retain customers. 30% expect to cut their spending on Web operations for the year, while 24% would increase it and 46% would spend as planned.


The data comes from a report by Forrester Research for Shop.org.
The survey found that merchants believe online business is better suited to withstand an economic downturn than physical stores or catalogs, though they acknowledge challenges for both.
The companies reported scaling back hiring and their increasingly expensive paid search marketing programs. Online merchants whose business is doing well will likely fuel much of the e-commerce investments in the coming months.
Shop.org said businesses active online remain optimistic: "It's safe to say that it continues to be a bright spot in the economy."
Forrester Research forecast in January that total U.S. online sales, where growth has been slowing for a few years, will increase 11 percent to $156.1 billion in 2009, compared with a 13 percent gain in 2008. For 2010, Forrester projects 13 percent growth, and then 10 percent growth in 2011, 9 percent in 2012 and 8 percent in 2013. The figures exclude online travel sales.
About 30 percent expect to cut their spending on Web operations for the year, while 24 percent said they would increase it and 46 percent said they would spend as planned.
Online retailers said they are focused on e-mail marketing, which almost 90 percent listed as a top priority. But that doesn't mean shoppers should expect to be bombarded with even more spam in coming months.
Retailers are getting more sophisticated about using e-mail to attract and retain specific customers already known to them. Almost three-fourths of the surveyed retailers plan to send targeted e-mails based on customers' stated preferences or past purchases.
With questions lingering about the sales potential for marketing in social media like blogs and social networks, companies that are growing faster than expected are more likely to embrace such initiatives. Of 20 retailers whose business has beat expectations, 12 said they were going to invest more in social marketing initiatives this year.
Among retailers that expect to cut spending on their online business this year, only 24 percent plan to cut spending on social media, indicating a willingness to experiment in this emerging area, the study says.
Retailers faring less well said they plan to seek "quick wins" instead and delay large initiatives.

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