Report: Merchants Shifting Holiday Initiatives to E-Mail and SEM

Results of the Online Retail Holiday Readiness Report indicate a shift from price-based promotions to relationship marketing initiatives such as e-mail marketing and search engine marketing, which allow retailers to understand visitor intent and leverage behavior-based insights to target customers with relevant messages that strengthen relationships.

According to the report, released Aug. 8 by Portland, OR-based online solutions provider WebTrends, twice as many respondents (23%) indicated that they would not be using price-based promotions to generate online revenue from customers during the holidays, compared to 11% in 2005. Even free shipping has dropped in popularity, from 62% of retailers using it in 2005 to only 45% in 2006.

Overall, retailers ranked e-mail marketing as the most important demand-generation activity for holiday success, with search engine marketing (SEM) and search engine optimization (SEO) ranking second and third. The biggest increases in marketing spending for the holidays will be in e-mail marketing (52%), SEM (46%) and SEO (38%). The biggest decreases in spending will be in online banner ads (17%), print advertising (16%), and broadcast advertising (14%).

The survey shows small gains to the percent of retailers adopting best practices, including a 1% increase in retailers using true first-party cookies (25%) and 1% decreases in the number using vendor’s first-party cookies (9%) and third-party cookies (12%). But this year, a greater percent of retailers don’t know what they are currently using to identify unique visitors – 44%, compared to 32% last year.

Eighty percent of retailers said they use regular customer e-mails to build customer relationships, and the activity that the highest percentage of retailers plan to do in the future (31%) is to develop a database of clickstream-based information for campaigns targeted to customers’ interests.

While retailers are becoming more sophisticated as they look to search and e-mail marketing as ways to hook into visitor intent and cultivate valuable relationships, 27% of respondents don’t consistently measure demand generation activities, and 63% still evaluate campaigns using response metrics (clickthroughs) and activity-based metrics (page views, visits), all of which lack the visitor-centric insight necessary to target customers with highly relevant messages, the report said.

WebTrends 2006 Online Holiday Readiness Report includes data collected from 300 survey responses from June 26 to July 1, promoted through two outsourced, opt-in mailing lists.

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