• by Paul Gough , August 29, 2002

Shoppers may not spend as much money as retailers would hope this holiday season, but when they do they’ll be buying at established Web sites and especially ones that have strong links to the offline world.

That’s the message from a Nielsen//Net Ratings report on prospects for the upcoming holiday season and lessons from the last one. Nielsen//Net Ratings says advertisers will do well to use marketing devices from the full online palette to draw in customers in the tough economy. Advertisers who are able to leverage their established brands in integrated online and offline campaigns may have better success, the analysts say.

Online spending has been growing about 24% year over year to slightly over $10 billion in Q2, compared to an overall retail growth of 2.5%. Holiday shopping peaked between the first and second week of December 2001 although advertisers were able to snag last-minute shoppers with attractive offers and savvy placement, Nielsen//Net Ratings says. Holiday-themed ads accounted for only 11% of the total, with retailers spending most of their impressions on brand awareness and positioning ads.

Direct marketing comprised 40% of retail ads during the 2001 holiday season, up from 24% in 2000. Principal analyst Lisa Ann Strand says direct-marketing strategies will only become more important this shopping season.

Smart email campaigns flourished last holiday season, the report says. Barnes & Noble and Spiegel were among the big winners, with between 20%-40% audience retention. Spiegel saw a spike in traffic with emails that told of special timed sales.

“That dovetails nicely with the at-work shopping audience,” she says. About half of holiday shoppers buy online at work, taking advantage of the high-speed connections to speed the process, even though the at-home shopping audience is more than twice as large.

Cross-channel email campaigns are surging, says Nielsen analyst Dawn Brozek, allowing retailers to bridge the gap between online and offline sales. That’s gold to retailers who find that online shoppers who are driven to their stores spend more money at the cash register and return more often, she says. And the emails are often forwarded to non-list members, which helps build online databases.

“If they can get customers to buy through as many channels as possible, these customers become more valuable over time,” Brozek says.

The report also said the Web’s audience isn’t growing as fast as it once did but is becoming more important as a research tool. Consumers are digging deep for information and comparing prices on the Web before going to traditional stores to buy, particularly with big-ticket items like automobiles, home and garden and appliances.

“Online shopping is becoming an integral part of consumers’ purchasing decisions,” says Strand.

Strand says the retailers with a strong Web presence, leveraged even further by making the most of their established brands, will rise above the fray to score best. Advertisers should make sure ads link to more information, store locations and other things that will help close the sale either online or at the cash register.

“It’s critical now and it’s going to become critical in the future as those retailers with a strong online presence lose out to those that do,” Strand says.