By: Ann M. Mack
Less Advertising Dollars For TV
by Ann M. Mack
In an effort to increase the bottom line, dot-coms have shifted
marketing dollars away from relatively expensive television campaigns
to online advertising, a survey found.
According to a study released Wednesday by Internet retailing trade
association Shop.org and The Boston Consulting Group, the percent of
marketing budgets spent online increased sharply to 59% in Q2 versus
49% in Q1. About 28% of the companies reduced or canceled TV ads.
The findings, based on survey responses from 66 North American online
retailers, show that customer acquisition costs continue to decline
substantially from a high of $71 during Q4 1999, to $45 in Q1 2000, to
$40 in Q2, due in part to the re-allocation of dot-com marketing
dollars. However, customer acquisition costs still remain higher
compared to Q3 1999’s $35.
The study also noted that online retailers are spending less on
building brand awareness and more on customer retention — a move
that has paid off, the study said. Almost half of e-tailers’ revenues
came from repeat buyers in Q2.
‘The average online retailer requires three purchases to break even on
the acquisition cost of each new customer,’ said Kate Delhagen,
chairman of Shop.org’s Committee on Internet Shopping Research. ‘With
the high cost of acquiring new customers, many online retailers are
focusing their efforts on increasing the frequency of purchases from
existing customers, in order to reduce acquisition spending and achieve
profitability more quickly at an operational level.’
(c) Copyright 2000, Editor & Publisher