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Bells Beginning to Jingle?

  |  November 5, 2002   |  Comments

A none-too-spectacular holiday season is upon us, but online's under the mistletoe. A projected mild spending increase sure beats last year's lump of coal.

I was shocked to be in a shopping mall just before Halloween only to hear Christmas music and see Christmas trees and loads of those tacky sweaters embroidered with just about every Christian icon. Though the heat is on and online media sells for bargain-basement prices, the online world hasn't succumbed to Jingle Bell euphoria quite yet.

Or have we?

As online advertising folk, we tend to associate fourth quarter traffic spikes and more online spending to the holidays. Many of us have been ultraconservative with our wallets, held back dollars, and now need to spend it or lose it. Face it, no money is ever new this time of year.

Let's take a look at worldwide spending projections. According to Lane Leskela, research director of GartnerG2, "The fourth quarter is increasingly becoming a holiday shopping season in Asia-Pacific. Christmas has penetrated the local culture of many non-Christian societies as a gift-giving celebration."

Findings from the research firm include the following:

  • Europeans are expected to spend $15.77 billion in the fourth quarter. North Americans are expected to spend $15.66 billion.

  • Total online holiday sales should rise 48.4 percent to $38.2 billion.

  • The Asia-Pacific region is expected to experience modest growth for online holiday shopping. Estimated sales are $3.32 billion for Q4.

  • Countries such as China and India will see an increase in new Internet users.

A survey by global market information company NPD Group found 89 percent of American consumers will spend the same or less during the upcoming holiday shopping season this year as they did last year. Findings from 2,300 respondents also include:

  • 20 percent of consumers say they plan to spend less this year.

  • Respondents plan to spend an average of $661 this holiday season.

  • Households with combined annual income under $30,000 plan to spend $379.

  • Households with income between $30,000 and $74,000 plan to spend $618.

  • Consumers earning $75,000 or more plan to spend $956.

  • Value will be important this year. Consumers will delay purchasing until retailers offer sales.

  • Shopping at discount stores, warehouse clubs, outlets, and online is preferred.

  • 79 percent of consumers plan to shop at the Big Three this holiday season (Kmart, Target, and Wal-Mart).

Jupiter Research (a unit of ClickZ's parent corporation) predicts consumers will spend less on a per capita basis this holiday season:

  • Overall online sales will increase at almost half the pace of last year.

  • Overall online retail sales will grow 17 percent this holiday season.

  • Consumers are projected to spend an average of $306 online this season, down from a $313 average of previous years.

You may have seen a barrage of email from retailers pushing wares. There are fewer shopping days this year, that is, the time between Thanksgiving and Christmas. Retailers need time to ramp up, fulfill orders, and ship for on-time delivery. Shipping and handling costs may be reduced or even absorbed entirely by retailers. Net users tend to look less for drastically reduced prices and more for convenience.

"This is going to be the year of email marketing," declares Jared Blank, a Jupiter senior analyst, noting the price of email messages continues to drop. He says HTML messages receive 1 to 1.5 times the response of plain text email.

Juliana Deeks, a Jupiter associate analyst, says 85 percent of online advertisers indicate they intend to maintain or increase their online advertising budget. The average increase for the holidays is 3 percent.

About 12 percent more retailers are using multichannel platforms this season. The Internet as a sales channel will continue to grow over the next few weeks.

Bottom line: no big news in holiday sales. Consumer spending will likely be flat. The upside for us is online ad spend should increase (if it hasn't already).

Last year was bad. The shopping season was difficult, and consumer confidence was way down post-September 11. This year, the economy is still weak, consumer confidence has dipped yet again, but it's still possible for bells to jiggle online.

Fingers crossed, dear readers.

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Seana Mulcahy

Seana Mulcahy is vice president, director of interactive media at Mullen (an IPG company). She's been creating online brands since before the first banner was sold. Her expertise includes online and traditional media planning and buying, e-mail marketing, viral marketing, click-stream analysis, customer tracking, promotions, search engine optimization and launching brands online. Prior to Mullen, Seana was vice president of media services at Carat Interactive. She's built online media services divisions for three companies and has worked with clients spanning financial, telecom, high-tech, healthcare and retail. Not surprisingly, she has taught, lectured and written about the industry for numerous trade associations and publications.

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