More NewsE-Commerce Companies Spending More on Marketing

E-Commerce Companies Spending More on Marketing

Internet commerce giants are actually spending a smaller percentageof their total budget on advertising and marketing -- but that still equalsa big leap in ad spending from last year.

Leading Internet commerce companies spent an average of $29.8 million building their brands and driving traffic to their sites during the first three months of 2000, says a report released Thursday from the eCommerce Almanac.

The Intermarket Group, publisher of the eCommerce Almanac, says it profiled more than 80 business-to-consumer and business-to-business e-commerce companies, and found a median first quarter sales and marketing budget of $21 million. This, Intermarket said, compares with a median sales and marketing budget of $34 million for all of 1999 and only $6 million the previous year.

But although the report found total advertising and marketing spending reached new highs among profiled companies, it also found that the share of top-line revenue allocated to sales and marketing declined during the quarter by 36 percent from fiscal year 1999.

According to the report, the top five sales and marketing budgets among Internet commerce companies for the first three months of 2000 were: E*Trade Group $177.5 million; Amazon.com $140.1 million; Charles Schwab & Company $100.9 million, Ameritrade Holding $54.8 million; and Priceline.com $40.4 million.

Intermarket said “offline advertising” now accounts for a sizable share of sales and marketing expenditures at the leading Internet commerce companies. The most popular offline media are television, which is used by 75 percent of companies, followed by radio (68 percent), consumer periodicals (53 percent), newspapers (52 percent), and direct mail (52 percent).

America Online is the most common online marketing partner, the report showed. More than one-half of the companies tracked by the eCommerce Almanac have made marketing deals with one or more AOL properties. Other popular portal partners include Yahoo and Microsoft’s MSN portal .

The most popular marketing partners among leading Web destinations and services are Netcentives‘ ClickRewards , Amazon.com, and Giftcertificates.com.

The median customer acquisition cost among companies tracked by the eCommerce Almanac is $78. The largest proportion of companies invest between $10 and $49 to acquire each new customer; a slim majority of the companies (51 percent) invest $100 or less per new customer while approximately one in twelve invest $500 or more.

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