Which Media Did You Use Prior to Your Getaway?
Sure, the Wednesday before Thanksgiving is big. But, the Friday before Memorial Day is the threshold to summer, when we schlep en masse to the Hamptons, Tahoe, Las Vegas, the Jersey Shore, or wherever. I'll bet more than half of you are leaving around the crack of Noon, maybe even stuffing some of your Ad:Tech toys into your duffle.
The juxtaposition of where our industry is and the toys and parties of an event as large as Ad:Tech, or any of the once-again large trade shows, has me thinking about how we use the Web, how we make money on the Web, and how we communicate with one another within our industry. For all of you getting ready to jet today, I'll bet that more than half bought your tickets online, if not your whole vacation, maybe some clothes or a bathing suit. You probably even got your directions from the airport online.
InterActiveCorp (IAC), the owner of expedia.com and hotels.com, sold more than $10 billion of travel last year alone, a big lump of the $55 billion in online commerce transacted on the Web in the past year, according to the US Dept. of Commerce. It looks like all those predictions about broadband penetration and consumers moving to the Web, which fueled the bubble that burst in the spring of 2000, are coming true. I don't know too many people under the age of 50 who don't buy online.
Or so it seems.
What if I told you that this huge clump o' commerce amounted to a spec of the whole? The same data set provided by the US Dept. of Commerce calls that $55 billion figure 1.6% of the total retail spend in the US.
Now, this doesn't include the whopping $24 billion in goods transacted on eBay last year, only the fees collected by the online auction house. Nor does it include any Business to Business (B to B) figures, which are more difficult to quantify, but which are estimated to be significantly higher than Business to Consumer (B to C).
Anyway, the point is that the number of transactions is growing. But, the hard transactions aren't where the lion's share of the opportunities exist online. Most of the opportunity resides within the marketing that goes on behind those other 98.4% of sales. According to the Economist's recent report on eCommerce, 20% of all consumers making a bricks-and-mortar purchase will have researched this purchase online, and these consumers will know just how much they intend to spend when they walk into the store. The same study also indicates that 75% of Americans start shopping for new cars online, even though the vast majority eventually makes their transactions in the showroom.
The point is that whether or not we make our purchases online, the vast majority of American consumers makes their purchasing decisions online, or least begins to make these decisions. Obviously, this explains the rise in dollars spent in Search, which has pulled all of interactive up along with it.
I recommend taking a look at this 14-page study: "E-commerce Takes Off" which is available within the Economist's May 15th-May 21st issue. While our industry is still probably labeled with the parties and giveaways of the trade shows we frequent, and brand managers and decision makers have been slow to spend money in interactive, the thinking behind the shift we're enjoying now is outlined very clearly in this report.
Since you're reading this, you're probably in this industry, of course. So, naturally, we all used the Web to make our Memorial Day plans. With so many Americans joining us, even if they're not making their purchases yet, we may be sitting atop a different kind of bubble. Think about that as you lay on the beach this weekend. Our industry, finally sustainable, may be on the cusp of a significant growth spurt. Let's check on that again come Labor Day.