• by December 4, 2000

Sixty-four percent of Internet retailers plan to spend the bulk of their ad dollars online vs. offline this holiday shopping season, according to an executive survey by Jupiter Research. Conversely, only 21% of online retailers plan to advertise in print media and a mere 12% will advertise on radio, television and cable TV this holiday season.

According to Jupiter, online retailers who over-spent on holiday advertising last year are taking a far more conservative approach this year, with only 11% planning to spend more than half of their ad budget on this year's holiday season -- compared to nearly one-third (29%) last year. To further reduce expenditures, Jupiter advises online retailers not to focus on price promotion and discounting to lure customers, but to base marketing on what is most important to consumers who are buying gifts online this holiday season: service, convenience and selection.

"Marketers have learned from last year's experience and this year have redistributed their online holiday budget and developed much more targeted and efficient marketing campaigns using more measurable media channels," according to Marissa Gluck, senior analyst, Jupiter Research. "However merchants must savor the opportunity that the holiday season is one of the few occasions where they can compete on service, and not on price. Although Internet shoppers have been spoiled by discounts in the past, during the holiday season they are more concerned with receiving their orders before the holiday, saving time, and avoiding crowds than they are with saving on price."

Based on the findings of a Jupiter Consumer Survey -- showing that saving time (53%) and avoiding crowds (47%) are top online consumer motivators -- Jupiter advises retailers to focus marketing campaigns on service, convenience, and selection versus price promotions. Online retailers should also offer shoppers gift suggestions via retention-based e-mail and banner campaigns that can help speed and simplify customers' purchasing decisions.

Merchants that insist on offering discounts should focus on free or discounted shipping emphasizing service and value without compromising list price. According to Jupiter's Consumer Survey, 83% of online shoppers say they would use a particular Web site if it offered free or discounted shipping, versus 53% who said merchandise discounts are important.

E-mail marketing, a low-cost, high-return solution, remains the most widely used online channel, with 79% of retailers utilizing both retention-based and sponsored e-mail this year, up from 72% last year. Portal advertising among online retailers, in contrast, has declined from 72 to 58% since the 1999 holiday shopping season. Further evidence of this year's increase in online retailer advertising is provided by AdRelevance, which revealed an increase of 250% since last year. In a separate announcement today, AdRelevance reported that the number of retailers advertising online increased from