Tuesday, January 17, 2006
Online shoppers are not only buying online, but using the internet as their major source of buying decisions, creating a new category of profitable shoppers (Web-to-Store) who are spending on average 60% more from Web to Shop than online or shop-based alone.
Wal-Mart, Target Vie for Web-to-Store Leadership - 3 Jun 2004 Internet Retailer:
Wal-Mart tops Target in web-to-store sales, study says A Forrester study that looked at credit card data found that Wal-Mart leads retailers in its ability to convert online shoppers to bricks and mortar shoppers. This might also be skewed by the fact that Wal-Mart is the largest retailer in the world, with big-box stores almost ubiquitous in many parts of the U.S., making many of these web-to-store connections coincidental. Target proved to be the retailer best at converting store visitors to web shoppers, with almost a quarter at least visiting its site.
For more information on this research, please go to: http://www.shoplocalllc.com/press20.html
Behind The Numbers: Growth Spurt for Local Ads
by Lynn Russo, December 2005 OMMA issue
For the first time since the Internet's birth, local online advertising is showing significant growth. The market is projected to finish the year 51.5 percent ahead of 2004 -- its largest boost in five years, according to Borrell Associates' 2006 Outlook report. Healthy growth will continue in 2006, if not quite as strongly, at 39.3 percent.
"We've reached the tipping point," explains Kip Cassino, Borrell's director of research. "What typically causes this is people talking to each other and saying, 'I've been doing this and it's working,' and word spreads." Advertisers will have spent $4.1 billion online by the end of 2005 -- just 3.1 percent of the entire nearly $130 billion local advertising market. That figure is projected to grow to $5.7 billion in 2006 and $8.6 billion by 2010.
Local paid search -- the largest local online category -- should grow 161 percent by 2006, to $906 million, and will account for nearly half of all local online advertising by 2010. Online promotion is the fastest-growing online segment, projected to reach more than $3 billion by the end of this year.
Print and TV Most Vulnerable
Newspapers garner nearly half (41 percent) of all local online advertising, while all remaining media sites combined -- television, radio, yellow pages, and local magazines -- capture just 27 percent.
Newspapers and TV stations are vulnerable because they're selling online as a print add-on, without a dedicated online sales staff, and relying on established classified categories.
"Local media sites with high market share tend to have dedicated online-only staffs, multiple revenue streams, and less dependence on classified categories," says Cassino.
And a recent study by Sarah Farebrother, a University of Missouri-Columbia graduate student, found that online newspapers' classified ads don't exploit the Web's creative capabilities: photography, audio, video, and animation. Larger newspapers are more inclined to use instant messaging and e-mail.
Not All Local Is Local
Out-of-town pure-play Internet firms own 31.9 percent of the local online ad market. IAC Financial & Real Estate, for instance, leads with 180.2 percent growth in 2005, followed by Google with 95.6 percent.
"Almost exclusively, our clients are national advertisers taking advantage of local search marketing opportunities," says Chris Copeland, partner and managing director of Outrider North America. Outrider's local search portfolio comprises retail, direct marketers, and e-commerce companies, but in the future, Copeland says he expects to see such local or regional groups as auto dealer associations or travel groups get on board.
Copeland finds Borrell's local search numbers too optimistic: "In the traditional local market, someone purchases a yellow pages ad, the creative is done for you, the listing is put in the book, and you're done." The active auction model of search, on the other hand, demands "a level of engagement that most local businesses won't be willing to commit to." Copeland estimates that 70 percent or more local search advertising is done by national advertisers: "Unless those numbers change, we simply can't reach what the projections show."
Survey Reveals That 71% of Internet Shoppers Find Better Value and More Special Offers Online Than Offline
According to a recent BizRate survey conducted in early 2005 of 923 online buyers, consumers are flexing their wallets by aggressively searching online when looking for merchandise and deals, instead of shopping at tried and tested retail channels.
Most consumers (59%) are starting their shopping at aggregator sites (search engines, comparison shopping sites, shopping portals and auction sites) versus going directly to a merchant's site and taking the first price offered. This represents a 13-percentage point consumer shift towards aggregator sites in less than three years*, when only 46% started shopping at aggregator sites and the majority (54%) of shoppers went straight to a merchant's site. This shift is probably because 87% of online shoppers are now comparing offerings of online retailers against catalog merchants and retail stores to find the best deals and items that are in-stock, with 71% of online shoppers reporting that they were able to find better sales and discount offers online than offline via a retail or catalog merchant.
Comparison Shopping is Prevalent
It is the American way to shop around, with 70% of respondents reporting they compare prices every time or most of the time they shop online, but some folks are still doing it the hard way. While 37% of online shoppers are very savvy and let a comparison shopping site do their deal-hunting for them, the majority (64%) still comparison shop the old-fashioned, time-consuming way by roaming from site to site looking for the best value. In fact, Internet shoppers will visit an average of four online retailers prior to choosing which site to buy from - while actively comparing prices (94%) - and then they visit the site of their choice an average of 2.61 more times before proceeding to checkout.
Deal-Sensitive Categories and Other Methods Shoppers Use to Save Money
Books and clothing tend to be the two most popular categories online shoppers deal- hunt the most. Other common ways to search for deals include signing-up for sale newsletters (36%) and just waiting for sales (22%). For 74% of consumers, the biggest deal leading to a purchase is receiving a free shipping deal, or a special offer.
Good Value vs. Brand Loyalty
Online shoppers are very rational when it comes to saving money. Forty-three percent will not pay extra from a retailer they like, if they can get it elsewhere for less. However, consumers exhibited a moderately high level of loyalty to their favorite brands with 34% of online shoppers reporting that they buy the same brand "most of the time" when shopping online, 62% reported buying the same brand "some of the time", and 1% reported buying their favorite brands "always."
About the Study Methodology:
The Online Shopper Deal Shopping and Value Panel Study, conducted by BizRate Research, a division of Shopzilla Inc., is based on a survey with a sample of 923 online shoppers from February 22-28, 2005. Survey respondents were selected from among a panel of 790,000 online shoppers. Respondents were 44% male, 56% female adults.
* denotes same study conducted December 4-9, 2002.
Note: All site data accurate at the time of issuing this press release.