eCommerce

Lead generation budgets were slashed by many companies in 2009, but now that the economy is on the upturn again, dollars are flowing and acquiring new customers is a priority.

According to the "2010 Lead Generation Optimization Key Trends Analysis" from CSO Insights, more than 91% of companies worldwide reported increasing new customer acquisition was one of their top strategic marketing objectives for 2010.

Based on the quantity and quality of leads generated, companies said email was their best lead generation program, followed by live events, website registrations and webinars. The effectiveness of online channels, coupled with the fact that prospects indicate the web is the first place they look for more information, makes it natural for companies to be increasing their investments in web design, email marketing and search engine optimization.

Investments in new media are also on the rise, even if it remains less effective than more traditional channels.

At the same time, the web was the area companies were most likely to say needed improvement in its ability to execute lead campaigns. For many marketers, there has already been significant improvement: 51% said the web did not meet expectations in 2010, compared with 68% who said the same in 2009.

In addition, marketers' ability to measure their own success affected whether they thought the web was an effective channel. Among those companies that had not adopted a lead generation management system, 65% were dissatisfied with the performance of web-based lead generation efforts. But among marketers that did have a system in place to track leads, only 37% agreed-putting the web on par in effectiveness with traditional media advertising and ahead of direct mail or telemarketing.

(eMarketer, July 2010)

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Open rates continued a steady decline around the world, according to MailerMailer's "Email Marketing Metrics Report," dropping from 12% in the first half of 2009 to 11.2% in the second half.

The report suggested several factors that might contribute to fewer opens, including cluttered inboxes, the rising use of mobile devices and the common habit of turning email images off, which can prevent an open being triggered.

Click rates suffered a much worse descent in the second half of 2009, dropping more than 38% from the first half and nearly 43% from the same period of the previous year.

Again, MailerMailer suggested inbox clutter or list fatigue was a problem, but also noted that anti-phishing security measures sometimes stop links from going live. Email recipients must then take two actions-one to enable the links, and a second one to click on them.

The industry breakdown was similar to the one for open rates, with religion, transportation, environmental and retail emails coming out on top. Legal, marketing, entertainment and restaurant industry emails had the lowest click rates.

According to MailerMailer, the vast majority of actions will take place in the first 72 hours after sending a message, including about 90% of opens. Experian Cheetahmail similarly reported that in March 2010, 92% of opens and 93% of clicks came within the first three days, with 98% of opens and clicks coming within seven days after sending the messages.

That study found messages from nonprofits saw the fastest opens, while catalogers were quickest to be clicked on. Marketers can speed up interaction rates with tactics like limited-time offers in email subject lines, but some industries, like travel, should expect a longer lead time due to the nature of their products and services.

(eMarketer, July 2010)

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Retailers are responding to the growing consumer appetite for online videos by adding them to their Websites both to differentiate themselves from competitors and to keep up with what consumers expect from their online shopping experience.

Although consumers rank other purchase decision-making tools, such as customer reviews, ahead of videos in importance, according to eMarketer. But that has not discouraged retailers from quickly adding videos to their sites. They find that videos boost sales conversion rates and reduce abandoned shopping cart and product return rates.

The proportion of the top 50 US online retailers offering videos jumped 378% in 2009 over the year before, according to a Forrester Research study, "Online Retailers' Adoption of Online Video Content Is Ahead of Consumers' Preferences," published in November 2009. In 2009, over two-thirds of the biggest online retailers hosted videos.

The adoption rate is poised to climb further, as revealed by a February 2010 Multichannel Merchant survey. Among the two-thirds of respondents who indicated they were planning a site redesign in the next 12 months, some 42.3% said they would add video to their site. That makes it the second-highest priority, well behind social media tools but ahead of other popular Website enhancements including customer reviews and personalized recommendations. (eMarketer, May 2010)

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Users of print and online directories are prepared to make a purchase after researching local businesses, according to research conducted by Burke and commissioned by the Yellow Pages Association (YPA).

About 8 in 10 users of either type of directory bought or planned to buy a product after their search.

US consumers who intend to make or made a purchase after searching print vs. internet Yellow Pages, 2009 (% of respondents):
- Internet yellow pages: 44% intend to make a purchase / 36% made a purchase
- Print yellow pages: 39% / 39%  

A Q1 2010 study from BIA/Kelsey and ConStat found that 48% of internet users looked for info in online yellow pages when researching local products and services, compared with 90% who used search engines.

But the YPA "2009 Local Media Tracking Study" found greater trust in both print and internet yellow pages than in online search. Two-thirds of respondents said directories were more trustworthy and accurate for local information.

Aside from the YPA's interest in print and online directories, respondents were asked about search in general rather than local search specifically. Research on local search behavior from TMP Directional Marketing and comScore indicated that for most business categories, internet users did use general search engines rather than specific local search sites. But users of local search were 12% points more likely to visit a store in person than users of online yellow pages or general search. Most internet directory users did contact a store by phone after their research. (eMarketer, April 2010)

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2009 US retail e-commerce sales will come in at $131.4 billion, representing a slight annual decrease of 0.6%, according to estimates by eMarketer. By 2013 sales are expected to rise to $189.3 billion.

This forecast is very similar to the one eMarketer issued in March 2009. In August, however, the 2009 prediction was revised downward to a drop of 3.1% after our benchmark, the US Census Bureau, released first-half figures that were worse than expected.

E-commerce was always expected to outperform overall retail, but positive growth in the second half seemed increasingly unlikely as consumer confidence, consumer spending and unemployment continued to worsen. Despite the greater savings and convenience usually found online, e-commerce was not immune from the effects of the recession. But the trend of negative growth rates was reversed when Q3 2009 Census Bureau figures released in November showed e-commerce sales up 2.1% versus the same period a year ago. Overall retail sales, meanwhile, posted a "less bad" 7.8% drop. After initial cutbacks made by consumers, e-commerce resumed positive growth as shoppers shifted their spending online. eMarketer expects the trend to continue and anticipates 5% year-over-year growth in Q4.

Although the situation is improving, these single digit e-commerce growth rates are a far cry from the 20%-plus annual growth rates seen prior to 2008. Within the next two years, increases will again hit double-digit levels, but will not reach the same heights as the channel continues to mature. (eMarketer, December 2009)

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ABI Research has revised upward its forecast of mobile sales of physical goods in North America. In January 2009, it projected m-commerce sales would reach $544 million in 2009, up 57% over 2008. But in late October 2009, ABI upped its forecast, saying sales would top $750 million in 2009, a massive 117% annual growth rate. M-commerce's time has arrived, and it is likely that sales in 2010 will pass the $1 billion mark.

Whereas consumers once limited their mobile phone purchases to downloadable ringtones and games, today they are using their devices to buy books, apparel and other items associated with online shopping on a PC.

Mobile ad spending will rise from $416 million in 2009 to $593 million in 2010 as more brands and agencies integrate mobile into their marketing mix. And if not an outright arms race, Google's $750 million purchase of AdMob is certain to prompt greater interest in the mobile space from agencies, brands and media companies alike. (eMarketer, December 2009)

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Two seconds is the new threshold in terms of an average online shopper's expectation for a web page to load, according to a study by Forrester Consulting.  The study found that 40% of shoppers will wait no more than three seconds before abandoning a retail or travel site.

Forrester Consulting indicates that this is worse than it used to be as a similar survey in 2006 found users were prepared to wait four seconds for a page to load.  

The research also concludes a poorly performing site has an effect beyond any online transaction. Almost half (46%) of the survey respondents said they would develop a negative perception of a company following a dissatisfying online-shopping experience. (Travelmole, September 2009)

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34% of US internet users who bought a product or service based on a recommendation got that tip from a friend or relative, while one-quarter bought based on advice from a spouse or domestic partner, according to Mintel.

Source of product recommendations among US internet users, 2009 (% of respondents):
- Friend/relative: 34%
- Husband/wife/partner: 25%
- Blogger: 5%
- Chat room: 5%

While bloggers may bring buzz to a product, converting the buzz to sales is another matter-unless, of course, the blogger is a friend. It is interesting to find that as much time as we spend online, we still prefer a personal recommendation from someone we know and trust, according to Mintel.

The most common reason that internet users recommended a product or service was price (64%), followed by quality (55%) and convenience (33%). (eMarketer, June 2009)

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US retail e-commerce sales (excluding travel) will contract by 0.4% in 2009, falling to $133 billion, according to eMarketer. But as the economy improves, online sales will return to the double-digit growth rates seen prior to 2008. Growth will come from online buyers who shift a greater share of their discretionary spending from stores to the Web. Pent-up consumer demand, especially among affluent online shoppers, will provide an additional sales boost.

By 2012, e-commerce sales growth will begin to decline, resuming another trend seen prior to 2008. This will be due to the inevitable maturation of the e-commerce sales channel, as growth in new online buyers approaches saturation. All told, from 2008 to 2013 retail e-commerce sales will increase at a 9% compound annual growth rate (CAGR).

US retail eCommerce sales, 2008-2013:
- 2008: $133.6 billion
- 2009: $133.1 billion (-0.4% on previous year)
- 2010: $146.1 billion (+9.8%)
- 2011: $165.6 billion (+13.3%)
- 2012: $184.5 billion (+11.4%)
- 2013: $203.5 billion (+10.3%)

eMarketer benchmarks against the US Department of Commerce (DOC) when forecasting e-commerce sales. The DOC estimated online sales rose 4.6% in 2008, reaching $133.6 billion. But most of this increase came in the first half of the year. After year-over-year growth rates of 13.3% in Q1 and 8.7% in Q2, sales grew only 4.6% in Q3 before plummeting nearly 5% in the important Q4 holiday season. (eMarketer, March 2009)

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Unlike in preceding years, business-to-consumer (B2C) e-commerce growth got sluggish in 2008.

Looking specifically at retail e-commerce, comScore found that sales grew by only 6% in 2008, the lowest rate since the dot-com crash in 2003. Of the total $221 billion in B2C online sales in 2008, $130 billion were retail e-commerce sales. The rest were travel sales.

Other sources reported numbers similar to comScore's, with Citi Investment Research, Collins Stewart and eMarketer all within $10 million of their retail projection.

The online retail categories that were hardest hit by the slowdown were computer software, digital entertainment and office supplies, while fitness equipment, books and furniture continued strong. (eMarketer, March 2009)

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"Talking to others you know" was the most often cited information or advertising source when it comes to making informed shopping choices, according to a Prophis eResearch January 2009 survey of 1,478 US online adults across 16 product and service categories.

Most important information or advertising sources in shopping or purchasing (16 shopping categories combined):
- Talking with people you know: 46%
- Physical store location: 44%
- TV: 32%
- Magazines: 32%
- Search engines: 29%
- Product catalogue: 26%
- Online ads: 25%

Producing and consuming content via various word-of-mouth (WOM) media in the past 7 days:
- Email: 95% consumed content / 78% produced content
- Text/SMS: 47% / 38%
- Chat/Instant messaging: 41% / 28%
- Social networks (FB,MS): 41% / 32%
- Blog: 23% / 11%
- Consumer ratings/ reviews: 21% / 8%
- Twitter: 4% / 3%
- Social Bookmarking: 3% / 2%
- Virtual world: 3% / 2%
- None of the above: 2% / 14%

While talking face-to-face is undoubted still the most important way to have a give and take on any given subject with one's circle of friends and acquaintances, internet-based communications technologies continue to revolutionize the way in which people can exchange information. Many of these technologies also contain the ability to communicate with people one knows less well or not at all. This grape-vine can quickly become more tangled than those people relied on even a decade ago.

Email, for example, has become almost as common-place as talking on the telephone or even in person for the majority of US adults with access to the internet. As of March 2009, fully 19 of 20 online US adults read their email in the average week. Among internet technologies, it ranks ahead of all others and ahead of cell phone texting in terms of producing content as well, with 78% of online adults writing emails every week.

Some technologies (e.g. email, chat, text/SMS, etc.) are typically used to enable one-to-one interactions between people who already know each other. However, these technologies along with several other internet-based technologies (i.e. social networks, blogs, consumer ratings and reviews sites, Twitter, social bookmarking, virtual worlds) may also be used as one-to-many communications tools.

In some instances, message recipients may also be less well-known or not at all known to the sender. Use of many of these tools is widespread. For example, as of March 2009, while 41% of online US adults have consumed content on social networks like Facebook in the past seven days, about three-quarters of them, or 32%, have created content there during the same time period. (imarketinsights, March 2009)

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Only slightly more than a quarter (27.6%) of US online retailers offered any type of personalized product recommendations on eCommerce sites in August 2008, according to Vovici. Until recently only large retailers had the money, expertise and time to develop the complex algorithms that drive personalized product recommendation systems. But the market has advanced and a number of vendors have proven they can deliver real customer value. Now the technology is affordable to even small retailers.

But that proportion could be changing, according to eMarkter as a growing number of success stories is spurring online retailers to jump on board.

Despite low adoption rates, 40% of online merchants surveyed by Internet Retailer said they planned to add personalized product recommendations to their websites by the end of 2008, second in priority to video functionality. (eMarketer, March 2009)

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US online retail sales are expected to rise 11% to $156 billion in 2009, excluding revenue from travel, according to Forrester Research. However, that will mark a slowdown in the overall growth rate, which was 13% in 2008.

Forrester Research said the majority of the 2009 growth in online spending will come at the expense of physical stores. They expect more consumer dollars to be spent online because it's easier for people to comparison shop and to find what they're looking for.

Online sales are expected to make up 7% of overall retail revenue in 2009, compared with 6% in 2008.

Forrester Research thinks that Web-based retailer Amazon.com Inc. is primed to benefit. However, some big retailers with a Web presence, such as Best Buy Co. and Macy's Inc., could continue to capture a disproportionate share, since consumers are familiar with those brand names. (HOTELMARKETING.COM, February 2009)

 

Internet Advertising

The majority of online news users in the US are accepting of online advertising, but most also claim to ignore it, according to data from the Pew Research Center's Project for Excellence in Journalism and its Internet and American Life Project.

The research, conducted during December 2009 and January 2010, found 81% of online news users "do not mind" online advertising. However, 77% of respondents also said they tend to ignore those ads, with 42% claiming they "never" click on them, and 35% claiming to do so "hardly ever."

The research also found 21% of overall users click on ads "sometimes" or "often," with 80% clicking "never" or "hardly ever".

However, a report issued by comScore last week suggested ads don't necessarily need to be clicked on to be effective. Citing the results of studies conducted in 2008 that found US users were 49% more likely to visit an advertiser's site having previously been exposed to a display ad. In addition, it found they were 40% more likely to conduct a search query on an advertiser trademark after seeing an ad, regardless of whether or not they clicked on it. (ClickZ Stats, March 2010)

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Online advertising revenues will increase slightly in 2009 only to drop in 2010 before recovering, predicts the Yankee Group in its "2009 Advertising Forecast: Getting the Consumer's Attention". The research firm estimates 2009 online ad revenues at $23.63 billion, a 1.8% year-over-year increase. In 2013 revenues will surpass $31 billion. Yankee Group attributes the up-down forecast for the next two years to the combination of increasing user attention, booming search advertising and falling ad prices due to inventory oversupply.

eMarketer is more bullish in its US online ad spending projections for the forecast period, predicting increases every year through 2013, when ad spending will hit $37.2 billion. eMarketer believes that $24.5 billion will be spent on online advertising in 2009.

US mobile advertising revenues will see faster growth, according to Yankee Group, which predicts a 60% jump this year to $184 million. By 2013 the research firm expects $566 million to go toward mobile ads. eMarketer's US mobile ad spending forecast is significantly higher, predicting $760 million in spending this year, rising to more than $3.3 billion in 2013. However, different research firms have widely varying estimates of mobile ad spending, unsurprising in a nascent market that is still difficult to measure. Figures for 2009 spending range from Yankee Group's low of $184 million to the more than $2.2 billion in spending predicted by JPMorgan in January 2009. (eMarketer, September 2009)

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Nearly all media sectors will experience advertising spending declines in the US in 2009, according to the "Media Advertising Forecast" from MAGNA. Hardest hit will be traditional media such as newspapers, radio, magazines and TV, each falling by 14% or more. Even the once-indomitable online ad space is faltering, with MAGNA expecting a 2.2% total spending decrease.

eMarketer projects digital ad spending will grow by 4.5% in 2009, while PricewaterhouseCoopers and Credit Suisse predicted a 4% decline and flat growth, respectively. MAGNA estimates that direct online media, which includes search, lead generation and internet yellow pages, will see a 2.9% increase.

National online ads, which encompass display, classifieds, mobile, e-mail and online video, will fall by 15%. Most of the drop will come from a weakening display ad market.

However, mobile and online video are going the other direction. MAGNA projections show mobile advertising revenues growing 36% to $229 million in 2009 and to $409 million in 2011. Online video ad spending will increase 32% to $699 million in 2009, and over $1 billion in 2011. (eMarketer, July 2009)

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Over half of adults in a 2008 TNS Global and TRUSTe poll were concerned about advertisers using their browsing history to serve relevant ads. 45% of internet users in a 2008 Harris Interactive study were uncomfortable with Websites that allow behavioural targeting. Despite that, Q Interactive, a provider of digital targeting services, found that 53% of Web users would view an advertiser favourably if ads were tailored to their interests. Only 5.6% of them said they would view the advertisers unfavourably.

In fact, with the exception of 18-to-24-year-olds, over 50% of respondents of all ages said they would view an advertiser favourably if they received personalised ads. Although there are still obstacles to getting personal information, 53% of internet users would rather have free online services and insider information in exchange for relevant targeting data.

On the other hand, 32% of the respondents said they would accept worse service in exchange for privacy, and 15% would prefer to pay for premium service and view no advertising whatsoever. In addition, users were not comfortable sharing all types of personal information. They were most at ease sharing their ZIP code, gender, age and marital status. Users were less inclined to give information such as income and phone and Social Security numbers. (eMarketer, June 2009)

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The online share of ad dollars will continue to grow, rising from nearly 10% in 2009 to slightly more than 15% in 2013, according to eMarketer.

US online advertising spending as a % of total media advertising spending, 2007-2013:
- 2007: 7.6%
- 2008: 8.7%
- 2009: 9.9%
- 2010: 11.2%
- 2011: 12.3%
- 2012: 13.8%
- 2013: 15.2%

The spending shifts predate the recession, according to eMarketer. But the current economy is reinforcing the new advertising models and making them more permanent. (eMarketer, April 2009)

 

mCommerce

While consumer usage of mobile shopping is still relatively low, it is increasing, prompting firms such as Coda Research Consultancy to predict a doubling of m-commerce revenues in the US in 2010, to $2.4 billion.

There has also been a doubling in usage of mobile shopping, according to PriceGrabber.com's "Smartphone Shopping Behavior" survey. In April 2010, 35% of US Web-enabled mobile phone owners said they had participated in some form of mobile shopping in the past year, such as browsing or researching but not necessarily purchasing products. That was up from 17% who said the same in 2009. Still, only 13% actually made purchases via mobile, up from 10% last year.

Among all mobile users, there was a marked willingness to adopt more mobile shopping behaviours over the next two years (such as download apps, compare prices, purchase items and scan coupons) , though a significant portion of the population indicated they would never be interested in such activities.

Consumers' greater willingness to shop on the mobile channel rather than buy is supported by other research. Retrevo found in February 2010 that across all age groups internet users were at least three times as likely to research or compare prices on their phones as they were to make a purchase.

In Q9 2009, four times as many internet users surveyed by ATG said they researched or browsed via mobile at least weekly than bought.

Among the mobile buyers surveyed by PriceGrabber.com, the top purchases were of digital content for their phones and consumer electronics, with both categories increasing over last year. PriceGrabber found some of the barriers to further mobile buying were inherent to the medium, with respondents complaining that mobile screens were too small and saying that they simply preferred using a PC because it was easier. About a third of respondents also said the mobile buying process takes too long, and one-quarter indicated transactions were too difficult to complete. (eMarketer, June 2010)

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Nearly 2/5 of US smartphone owners reported having bought something non-mobile over their mobile phone in the past six months, though many still report frustration with mobile site functionality, according to Q3 2009 data from Compete. And the top shopping-related smartphone activities are still research-based.

More than half of smartphone users checked out product descriptions, and many looks for reviews, coupons or better prices. About a third even bought the item on the mobile channel after seeing it in a store.

Android users said they would spend the most via mobile, followed by iPhone owners. Smartphone users with Windows, BlackBerry or Palm devices had similar, lower spending thresholds.

Usage of m-commerce features among smartphone users is higher than among all mobile subscribers. Deloitte found that 15% of US mobile users purchased products via mobile at least occasionally in 2009. The researcher also found that about a fifth of mobile users planned to use their phone for shopping activities this past holiday season. (eMarketer, January 2010)

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Despite retailers' efforts and consumer concerns about the difficulties of mobile shopping, consumers are willing to make some purchases via mobile phone. Items that appeal to on-the-go consumers in the US and involve small amounts of money, such as pizza (59%) and movie/event tickets (58%) are at the top of the list, according to a Billing Revolution survey conducted by Harris Interactive. Hotel rooms (43%) and tickets for travel (40%) stood in 3^rd and 6^th place respectively.

Selected purchases that US consumers are willing to make via mobile phone, April-May 2009 (% of respondents):
- Pizza: 59%
- Movie/event tickets: 58%
- Hotel rooms: 43%
- Fast food: 42%
- Music: 41%
- Tickets for travel: 40%
- Games: 34%
- Coffee: 25%
- Mobile video/TV content: 24%

Some early m-commerce adopters have used their mobile phones to buy higher-consideration goods such as consumer electronics, apparel and jewellery, according to a March 2009 PriceGrabber.com survey.

More than 70 million US mobile phone users will access the internet from their device in 2009, according to eMarketer. And a number of recognized retail brands have launched mobile commerce programs so they can be where their customers go. Nevertheless, mobile commerce is still immature. Web-enabled mobile phone users are much more likely to employ their devices to get weather forecasts, read news, find movie times and bank online than to buy products. Retailers cite capital constraints (44.4%) and issues with consumer privacy (26.7%) and security (26.7%) as the biggest obstacles standing in the way of further m-commerce efforts, according to an April 2009 survey by RIS News. (eMarketer, September 2009)

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Only 9.2 million US mobile subscribers purchased goods or services with their handset, according to a 2008 Nielsen Mobile poll. This is a low figure when compared with a JPMorgan projection of 233 million total subscribers. Even lower next to eMarketer's estimate of 270 million US mobile phone subscribers in 2008.

In fact, an Internet Retailer survey found that only 7% of online retailers had an m-commerce site in late 2008. Still, consumers are at least starting to grow comfortable with the idea of m-commerce. 71% of US adults felt that it was safe to make a purchase via their mobile phone, according to a poll conducted by Harris Interactive on behalf of Billing Revolution.

However, there is little consensus on what people are willing to buy on their "fairly safe" mobile devices.

In the Harris poll, 59% of respondents said they were willing to purchase pizza over a mobile phone; 58% said movie and event tickets, followed by hotel rooms (43%), fast food (42%), music (41%) and travel tickets (40%).

On the other hand, PriceGrabber.com research found that the most popular mobile purchases were digital mobile content such as ringtones and music, followed by consumer electronics, computers and related equipment, books, apparel and jewelry. (eMarketer, June 2009)

Last Updated on Thursday, 02 September 2010 15:22