Online Marketing Increases for the Holidays

Businesses are reporting an increase in online marketing budgets as part of their plans to capture more customers for the holidays, according to a Responsys.com/IntelliQuest survey of marketing decision makers.

“Internet businesses are now much more focused on cost-efficient ways to reach customers,” said Anand Jagannathan, chairman and chief strategy officer of Responsys.com. “In this years’ high-stakes holiday season,companies are looking to the benefits of email marketing and other targeted, measurable online techniques to drive sales.”

This appears to be particularly true for smaller companies. Businesses with revenues under $1 million will spend a greater proportion of their holiday marketing budgets for online marketing than companies with more revenue. More than 80 percent of respondents from small businesses intend to use online marketing this holiday season, compared with 72 percent of those from medium and large businesses. On average, among those using both traditional and online marketing techniques, about one-third (32 percent) of holiday budgets will be used for online marketing; however, smaller businesses report they have allocated 43 percent of their holiday budgets for online marketing while larger companies indicate they have allocated 27 percent of their holiday marketing budgets for online techniques.

Among those participating in the survey, there was an increase in the proportion of holiday marketing budgets allocated for online marketing. On average, respondents report that 25 percent of last year’s holiday budget was earmarked for online marketing, while 32 percent of this year’s holiday budget is designated for online marketing. E-mail marketing appears to be an increasingly popular tool for online holiday marketing.

Thirty-eight percent of respondents using both traditional and online marketing techniques plan to use email marketing to contact customers during the 2000 holiday shopping season, while 26 percent of those currently using online marketing report their company used email during the previous holiday season.

Among businesses with annual revenues less than $1 million, 45 percent plan to use email marketing this holiday season, compared to 33 percent of medium and large businesses. Last year, 39 percent of small businesses utilized email marketing for the holiday season, while only 17 percent of businesses with revenue of more than $1 million used online holiday marketing. And email marketing appears to be gaining popularity as a general marketing tool: Of the 352 survey respondents using either online or traditional marketing throughout the year, 43 percent percent currently use email marketing. Among businesses not currently using email marketing 36 percent plan to utilize email marketing in the future.

At stake is a growing number of consumers who plan on using the Internet to make purchases this holiday season. Approximately 20 percent of the US population (55 million people) are expected to visit online shopping sites this holiday season, according to Nielsen//NetRatings. The 2000 season will also feature some of retailing’s biggest names trying to make splash with online shoppers.

“Holiday season 2000 will be the revenge of the brick-and-mortars,” said Sean Kaldor, VP of eCommerce at NetRatings. “Battle lines on the Internet are being drawn between the offline ‘brick and mortar’ stores and the Internet pureplays. Offline giants such as Old Navy, Kmart, and BestBuy, all of whom had little or no Web presence last year, are poised for extraordinary growth during this holiday season. The biggest question is, will these companies be able to survive the intense infrastructure issues that plagued many companies last year?”

Responsys.com commissioned Millward Brown IntelliQuest to conduct the survey among 352 marketing decision makers at businesses with an online presence, of which 248 have used both traditional and online marketing techniques. Respondents, members of the IntelliQuest Technology Panel, completed a Web-based survey between August 29 and August 31, 2000.

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