How Are Internet Retailers Acquiring New Customers?

by Dec 15, 2000, 12:50 PM

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Internet retailers are spending almost one-half of their marketing budgets on average to acquire new customers and another 18% to retain existing customers, according to data reported by The Internet Commerce Briefing. The remaining one-third of the typical marketing budget is allocated to building brand awareness.

Online advertising has consumed an increasing share of budgets during 2000 and now accounts for more than 50% of the average Internet retailer's marketing expenditures. These advertisers, however, are no longer indiscriminately shoveling ever increasing amounts into the medium...40% of them have renegotiated or cancelled outright one or more of their portal deals in favor of more targeted approaches. The share of individual marketing budgets going towards offline advertising appears to be declining, but aggregate expenditures through the first-half of 2000 increased by 88% over the comparable period last year. The fastest growth has occurred in syndicated television, Sunday magazine supplements, and network radio advertising, each of which expanded by more than 300%. Print periodicals, direct mail, and event sponsorships are the most popular offline media. Portal deals, which were once the almost exclusive territory of pure-play Internet retailers, are now ranked by multi-channel retailers among the most effective media for customer acquisition, along with cross-catalog promotion and targeted e-mail. Among pure-play Internet retailers, a large plurality (44%) reported that targeted e-mail was the most effective means of acquiring new customers followed in distant second by television advertising and links on partner sites. Among the publicly-held Internet retailers, Intermarket estimates that the companies most efficient in converting shoppers into buyers during the first-half of 2000, along with the approximate amount invested to acquire each new customer, are: FTD.com ($20.00), BarnesandNoble.com ($22.00), iPrint.com ($23.00), Amazon.com ($25.00), CDnow ($27.00), autobytel.com ($31.00), Travelocity.com ($33.00), Buy.com ($36.00).

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