How Are Internet Retailers Acquiring New Customers?
by David Fishman
Internet
retailers are spending almost one-half of their marketing
budgets on average to acquire new customers and another 18%
to retain existing customers, according to data reported by
The Internet Commerce Briefing. The remaining one-third of
the typical marketing budget is allocated to building brand
awareness.
Online advertising has
consumed an increasing share of budgets during 2000-2004 and
now accounts for more than 60% of the average Internet
retailer's marketing expenditures. These advertisers,
however, are no longer indiscriminately shoveling ever
increasing amounts into the medium...40% of them have
renegotiated or cancelled outright one or more of their
portal deals in favor of more targeted approaches. The share
of individual marketing budgets going towards offline
advertising appears to be declining, but aggregate
expenditures through the first-half of 2004 increased by 88%
over a comparable period last year. The fastest growth has
occurred in syndicated television, Sunday magazine
supplements, and network radio advertising, each of which
expanded by more than 300%. Print periodicals, direct mail,
and event sponsorships are the most popular offline media.
Portal deals, which were once the almost exclusive territory
of pure-play Internet retailers, are now ranked by
multi-channel retailers among the most effective media for
customer acquisition, along with cross-catalog promotion and
targeted e-mail. Among pure-play Internet retailers, a large
plurality (44%) reported that targeted e-mail was the most
effective means of acquiring new customers followed in
distant second by television advertising and links on
partner sites. Among the publicly-held Internet retailers,
Intermarket estimates that the companies most efficient in
converting shoppers into buyers during the first-half of
2004, along with the approximate amount invested to acquire
each new customer, are: FTD.com ($20.00), BarnesandNoble.com
($22.00), Amazon.com ($25.00), Travelocity.com ($33.00),
Buy.com ($36.00).
As media providers how do we
tailor our opportunities to meet these demands? As
advertisers become smarter and more aware of customer needs
as well as costs, we must also provide better tools and more
targeted channels for these companies to utilize our
services.
