eCommerce Jingles All the Way to the Bank Report by SupremeLord

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									THE 2009
HOLIDAY
SPECIAL R EPORT:
E-Commerce Jingles All The Way to the Bank




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HOLIDAY
REFLECTIONS:
A New Perspective
The holidays mark a time for reflection in both business and personal                                                      LONG -TERM TRENDS: Online Holiday Spending
lives. We pause to take stock of where we have come and to ponder
                                                                                                                              30
where we are going. What happened last year, what can we expect in
2009 and where will we land in 2010?
Each of these questions are that much more important as retailers and marketers                                               25
enter a new marketplace, drastically altered by the effects of a recession. Last year in                                                                                                                25.5 BILLION
                                                                                                                                                                                                        IN 2008
2008, for the first time in 20 years, we saw an unprecedented decline in holiday sales
                                                                                                                              20                                              E
across the board.1 Economists report that consumer behaviors are forever changed;                                                                                           AS
                                                                                                                                                                         RE
                                                                                                                                                                      INC
new trends in spending habits (thrifty is in) and online shopping—price comparison,                                                                            11
                                                                                                                                                                 2%
product reviews and dedicated customer support—have become the norm. In this                                                  15
new (online) landscape, retailers have an unprecedented opportunity to chart a new                                                                                                26.3 BILLION
path this holiday season and beyond.2                                                                                                                                             IN 2007

Now is the time to move forward—it’s time to adapt to new consumer behaviors and                                              10
adjust strategies accordingly. We welcome you to the new marketplace this holiday
season. And do you know where that is? It’s online. And it’s social.
                                                                                                                              5
Last year e-commerce drew in 25.5 billion dollars. What this figure means depends on
                                                          3


the context. When compared to 2007, online sales were down three percent. A small
blip from a global economic slow-down when you take a look at the big picture: long-term                                      0
trends show online sales have increased over 112 percent since 2001 (Figure 1). And as                                                 2001 2002 2003                 2004 2005 2006 2007 2008
consumers spend more time online, online spending is expected to continue on this
                                                                                                                        Figure 1. LONG-TERM TRENDS: Long-term trends show a dramatic 112% increase in online holiday
path. Now that’s a trend to follow.                                                                                     spending, growing from just over 10 billion in 2001 and peaking at 26.3 billion in 2007. (Spending data
                                                                                                                        compiled from Nielsen-Online and ComScore reports).




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2009 STUDY:
THE SOCIAL LIFE OF RETAIL
For this study we looked beyond the numbers and yo-yo market fluctuations of
the past couple of years. Economists’ predictions for this holiday season are more
optimistic than last, but what does that mean in terms of what we can expect
of consumer behavior online? How has social media changed the way people
shop? What do retailers need to know to get the most from this year’s holiday
bump? And more importantly—beyond the holiday shopping season?
Many marketers are already riding the social media wave—we have seen
                                                                                                  TOP MOST TRAFFICKED RETAIL, SOCIAL
a growth in ad spending on social sites, up 119 percent from August                               NETWORKING, AND REVIEW SITES.
2008.4 And there’s good reason for this: the average American spends
                                                                                                       traffic                                  u.s. monthly traffic
about 12 hours a week online—that’s close to two hours a day.5 Heavy                                                                 site                                         category
                                                                                                        rank                                       (UNIqUE vISITOrS)
internet users rack up close to 42 hours a week—that’s roughly six hours
                                                                                                            1                    google.com           142 million                 search engine
a day. To put that in perspective consider this: for the half hour a day                                                                                                           (benchmark)

we’re in the bathroom, a third of Americans are tweeting, updating their                                     3                  Facebook.com           95 Million                     Social

Facebook status or reading e-mail on mobile devices.6                                                        4                   YouTube.com           82 Million                     Social

                                                                                                             9                     eBay.com            64 Million                     retail
For all the hours online, a growing percentage of our time is dedicated
to social networking. Time spent on Facebook has tripled since August                                       17                   Amazon.com            47 Million                     retail

2008.7 In one survey, active Facebook users were interacting with their                                     26                   Walmart.com           28 Million                     retail

profile, on average, more than 15 hours a week!8 And here’s the upshot                                      27                    Twitter.com          28 Million                     Social

for retailers: activities on social networking sites are influencing traffic                                44                     cnet.com            16 Million                     review
flow online—and behavior offline. Users are engaging with and sharing                                       55                   BestBuy.com           13 Million                     retail
the ads they see in search results and on social networking sites.                                          64                    bizrate.com          12 Million                     review

                                                                                                           100                     Sears.com          8.5 Million                     retail

                                                                                                 TABLE 1. Top most trafficked retail, social networking and review sites. Google is the number one
                                                                                                 most trafficked site. (quantCast rankings, October 2009).




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THE TASK: TRACKING THE PATH
TO PURCHASE
We analyzed the trends in traffic patterns during the last two holiday seasons. We had a hunch, given the fact that social
networking is revolutionizing search behavior, that online holiday shopping activities would also be affected. So
we compared holiday traffic at the top ranking e-tailers, social sites, and review sites (Table 1). We’ve found that a significant, positive shift is
occurring—consumers are more engaged with online ratings, reviews and initiating conversations about products and services.

Today, the integration of social media and online search fosters consumers’ reliance on the ability to quickly search for information, reviews and
price comparisons. And there’s evidence: a recent study confirmed that exposure to social media influences search behavior during the early stages
of the sales funnel.9

Search engines, like Google, have long dominated in driving traffic online. But that, too, is changing. Facebook
now contributes more than three percent of all traffic to the top retail sites online (Table 2)—social networking and                                        SURVEY OF ACTIVITIES PERFORMED
blogging is the largest growing segment online.10 And online social activities are changing the way we navigate                                              ON SOCIAL NETWORKS
the internet—we click the tiny UrLs our friends tweet and search for information about a product after reading a                                             (% OF rESPONDENTS)
blog. It’s easy and convenient, too. A reported 50 percent of social network users post links to other websites and                                         Posted photos
                                                                                                                                                                                                                  81%
25 percent link to a company, product or service (Figure 2). Imagine the millions of New Year’s Eve revelers in Time
                                                                                                                                                            Responded to posts of others
Square—times seven—all searching for a product on                                                                                                                                                              72%
Facebook.11 The Nielsen Company found that 18                                                                                                               Updated activities/posted thoughts
percent of searches begin on social sites.                  UPSTREAM TRAFFIC:                                                                                                                               68%
                                                                             TOP 5 REFERRAL SITES*                                                          Posted links to other websites
And who is minding the shop? The consumer. Social                                                                                                                                                     50%
                                                                                                          retail site
media enables millions of consumers to cyber-cast                                                                                                           Clicked on paid ad
                                                                                            AMAzON      WALMART            BEST BUY              SEARS                                       38%
opinions to another million attentive consumers in
                                                                                                                                                            Posted video
                                                                        referral site >>>




                                                                                             Google      Google              Google              Google
seconds. There are 25 million bloggers and 65 million                                                                                                                                      38%
                                                                                             Yahoo        Yahoo               Yahoo              Yahoo
active users on Facebook participating in online                                                                                                            Linked to a company, product or service
                                                                                            facebook     Target              Amazon              Kmart
discussions. In two years, the 5 million people on                                                                                                                                  25%
                                                                                              eBay      facebook           facebook             Amazon      Started a group
Twitter have contributed enough 140 character tweets                                                                                                                          19%
to fill over one million books.12 And a recent study                                        youtube      Amazon              Walmart            Walmart
                                                                                                                                                            Included a podcast
from Penn State found that one in five tweets mention                                       Wikipedia    BestBuy            youtube               eBay           5%

specific brands or services—that’s close to as many titles                                   twitter      eBay                 eBay             facebook    Other
                                                                                                                                                                5%
that are now available on the Amazon Kindle. Are you                       TABLE 2. UPSTREAM TRAFFIC: TOP 5 REFERRAL SITES. *Search
                                                                           engines were excluded from the top five count, but it is significant to         FIGURE 2. SURVEY OF ACTIVITIES PERFORMED ON SOCIAL
ready to change lanes to social this holiday season?                       note that Google and Yahoo combined account for up to a quarter                 NETWORKS (% OF RESPONDENTS) [Source: Beresford research,
                                                                           of all traffic. [Source: All clickstream data from Alexa.com. Insufficient      “Online Social Networks,” September 17, 2009) reported in
                                                                           data for eBay.com]                                                              eMarketer. note: n=421 ages 18+]



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AN AMERICAN TRADITION:
TURKEY & ONLINE SHOPPING
The picture is clear: e-commerce will continue to grow, despite the weakened
economy, and online interactions will continue to drive sales offline. Although
we saw a dip in retail sales across the board, holiday online traffic grew ten
percent last year.13
Economic woes and the convenience of e-commerce drive shoppers online—instead of to the
mall. And although it might be a bit tongue-in-cheek, it’s true: according to a recent poll by Harris
Interactive, consumers prefer to shop online because they save gas
money.14 Consumer behavior has changed in the last year due to
the recession. But that doesn’t mean that people aren’t shopping or         BLACK FRIDAY TRAFFIC: Online Growth vs. Mall Stagnation
have stopped gift giving altogether—they have just become more                                                                 Exponential Growth in
                                                                                  30                                           Online Retail Tra c (Black Friday)
creative. And thrifty shoppers go online to find the best deals.15 It’s not                                                    Mall Tra c (Black Friday)

surprising, then, that there is a significant increase, year-over-year, in        30                                           Online Tra c

online traffic on the most celebrated shopping day of the year (Figure 3).
Although holiday shopping is creeping up on Halloween festivities, the                                                     145
                                                                                  25
volume of consumer traffic on the Friday after Thanksgiving remains a
                                                                                                   Unique Visitors (Millions)
                                                                                                                           140




                                                                                                                                                                                               Mall Tra c (Millions)
tradition and heralds in the biggest shopping season of the year.16               20

                                                                                                                                                                                         135
                                                                                                                                15

                                                                                                                                                                                         130
                                                                                                                                10

                                                                                                                                                                                         125
                                                                                                                                5



                                                                                                                                0                                                        120
                                                                                                                                     2000     2004                         2008
                                                                                               FIGURE 3. Black Friday is one of the most trafficked shopping days of the year—both on and offline. Last year, online
                                                                                               holiday retail traffic jumped ten percent as more and more shoppers look online for deals and product reviews. Mall traffic
                                                                                               has stagnated, typically 25 to 35 percent of Americans head out to the malls the day after Thanksgiving each year. [Source:
                                                                                               estimated online traffic compiled from data released by Jupiter research and Nielsen-Online. Mall traffic reports
                                                                                               compiled from news and National retail Federation reports]




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RESULTS:
THE RULES HAVE CHANGED
Each year new reports “reveal” the secrets and tricks to cashing in on the holiday bump. In
the past several years the message has been consistent: the holiday shopping season is
getting longer and retailers need to be prepared for increased holiday traffic well before Black
Friday or Cyber Monday. The months leading up to December are crucial, even if the final
purchases don’t happen until the week before the holiday—the second highest week for
holiday sales. As a result, holiday campaigns crept into October. Building brand awareness
was the name of the game.
Today we’ve found the rules have changed—awareness alone isn’t everything. A recent study reported that
the post-recession consumer responds more to “action-focused” online marketing. In other words, brand
relationships—consumers’ expectations for engagement with a brand—increased the perceived value of a
product. And this is becoming a defining characteristic of the new consumer: the study reported that 72 percent
of shoppers sought value over brand.17




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Here’s the scoop: In 2001 brand recognition drove shoppers to online retail sites like BestBuy.com and Walmart.com.                                                             18
                                                                                                                                                                                     Today, we
are seeing ferocious growth in traffic to social sites—and social sites are contributing more and more traffic to retail sites, especially during and
after the holiday shopping season.

In our analysis of holiday traffic online, we found that traffic to social sites steadily gained on retail sites in 2007 and 2008. We saw that, despite the
holiday bump, traffic to online retail fell behind traffic to social sites in 2008 (Figure 4). Which means long-term growth on social sites may play a
more influential role in consumer behavior this holiday season than ever before:

    •   In 2008, holiday traffic directly to retail sites was down ten
        percent from 2007.                                                                          ONLINE TRAFFIC: Steady Social Growth
    •   On average, traffic to social sites outpaced retail sites during
                                                                                                                                                     Tra c (unique visitors)
        the 2008 holiday shopping season, growing 12 percent from
        December 2007 – December 2008.                                                                                   30
                                                                                                                                      Holiday Bump                              Social Networking
    •   Traffic to the review sites remained stagnant throughout the                                                                                                            sites continue to show
                                                                                                                         25                                                     steady growth.
        year, experiencing a mild bump during the holiday season.

                                                                                                                         20                                                                                        Retail




                                                                                                    Millions of People
                                                                                                                                                                                                                   Review
                                                                                                                                                                                                                   Social
                                                                                                                         15

                                                                                                                         10

                                                                                                                         5

                                                                                                                         0
                                                                                                                             Dec-06   Apr-07     Aug-07    Dec-07      Apr-08         Aug-08       Dec- 08




                                                                                                  FIGURE 4. An analysis of traffic to the top 5 most trafficked online retail sites (Table 1) shows the typical holiday “bump”
                                                                                                  in online traffic. However, social networking sites are not subject to the same market pressures that influence e-commerce
                                                                                                  sites like Amazon.com and eBay.com. [source: quantCast, October, 2009]




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THE NEW DEAL
What we learned: Shifting habits in online behavior means that there is also a
shift in online shopping habits. Historic trends show that retail sites, like Amazon and Best Buy,
experience the holiday bump. remember when eBay was big news? Today, it’s all atwitter: we are
seeing that the unencumbered growth on social sites is not as influenced by the holiday “bump”—or
by the post-holiday crash. In fact, beyond the steady growth in unique visits to social sites, people are
spending a lot more time on social networks year-over-year (Table 3). This is a significant opportunity
for paid search and online advertising—in our recent eye tracking study; we found that 65 percent of
participants engaged with paid search results on Facebook and YouTube.19 The “stickiness” of social
sites guarantees more ad exposure and also opportunities for personalized ads and engagement
throughout the year.

    TOP 10 SOCIAL NETWORKING AND BLOG SITES
                                          aPr-08 total                    aPr-09 total                        year-oVer-year
      rank              site
                                          minutes (000)                   minutes (000)                         % groWth

        1             facebook                1,735,698                       13,872,640                                  699

        2              Myspace                 7,254,645                        4,973,919                                 -31
        3              Blogger                  448,710                          582,683                                   30

        4              Tagged                    29,858                          327,871                                  998

        5              twitter                   7,865                          299,836                                  3712

        6            MyYearbook                 131,105                          268,565                                  105

        7             LiveJournal                54,671                          204,121                                  273

        8              LinkedIn                 119,636                          202,407                                   69

        9              SlashKey                      n/a                         187,687                                  n/a

       10             Gaia Online               173,115                          143,909                                  -17


TABLE 3. Top 10 Social Networking and Blog Sites Ranked by Total Minutes for April 2009 and Their Year-Over-Year
Percent Growth (U.S., Home and Work). [Source: The Nielsen Company]




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BEYOND BEST PRACTICES:
IT’S PERSONAL
TWELP!?             If a giant electronics retailer could
make a sound, that’s what we would have heard from
Best Buy last year after they cut back on their holiday
advertising. (Oops!) This year is different. It’s social. Back
in full force and ready to make gains on the 2008 slump,
Best Buy has launched the Twelpforce—a Twitter-based
customer service “hotline.” (remember, adding value to
the product through increased customer support and
opportunities for engagement!) And the crowds were
waiting in the wings: the debut of Twelpforce brought
on over a thousand followers. In three months time,
with the support of on and offline advertising and
new Facebook apps, Twelpforce now has over 13,000
followers and has answered over 20,000 questions.20

In preparing for the holiday season, Best Buy
discovered that going social was a cost effective
strategy for engaging customers. In addition to the
Twelpforce, Best Buy redesigned their Facebook
page to better address customer questions. Best Buy
celebrated Christmas in July this year with Twelpforce,
but the best thing about social media, including video
sharing sites like YouTube, is that it is quick and easy to
step into. It’s not too late to get started!




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Questions to ask yourself before you jump all in:
    •   Does your business have a social media policy? Do you need one?

    •   What kind of resources do you have to commit to social media? Do you need outside help?

    •   Have you identified measurable goals and methods for measuring your social media success?

    •   Are you ready to commit to growth over the long-term? Online marketing gives the greatest
        rOI when it is part of an on-going strategy.

    •   Do you have a plan to integrate PPC, SEO and offline marketing to back your social media
        efforts?


As with nurturing any relationship, online or otherwise, it is important to keep your eye
on the fundamentals. Search is still the bread and butter of e-commerce. Search engine
optimization (SEO) and paid search managment provide reliable and trackable management
tools for any business. Century Novelty, an online retailer specializing in party favors, increased
their paid search budget last year and saw their revenue jump 20 percent. The reason? Proper
management of keywords found fresh opportunities for drawing in new customers.
The holidays don’t have to be a drag because of the recession. Word-of-mouth marketing is critical as
consumers go on social sites to do research for products, consult about gift purchases and read reviews.
Consumer behavior has adapted to the new online environment—online spending has increased 112
percent since 2001—and online engagement with reviews and ads drives sales offline as well. Don’t let
the invitation to your online social networks become buried in the search engine results. It’s important to
maintain a solid online presence beyond the holiday season—because brand engagement is a year-long
commitment. And integrating SEO, paid search and social media into a robust digital marketing strategy
gives much more than holiday bumps and cheer; you’ll see the rOI jingle well into 2010 and the years
to come.




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 REFERENCES
 1                                                         11
     National retail Federation, 2009.                       Internet World Stats reported 251.7 million
 2                                                         internet users in North America as of June 2009.
   Online marketing is fast becoming a new
                                                           Organizers of New Year’s Eve events in Time Square
 standard as we climb out of a recession. The
                                                           said over a million people attended the festivities,
 cost-effectiveness is only exceeded by its reach
                                                           as reported in USA Today (January 2008).
 and trackability. retailers often rely on sales during
                                                           12
 the holiday season (the holiday “bump”)—and                  Milstein, S., Chowdhury, A., Hochmuth, G.,
 online marketing may prove to be an essential tool        Lorica, B., & Magoulas, r. Twitter and the
 this year. Stephen Hoch, a professor of marketing         micro-messaging revolution: Communication,
 at the University of Pennsylvania, told NPr that          connections, and immediacy—140 characters
 “retailers are not expecting a wildly successful          at a time. Sebastopol, CA: O’reilly Media. 2008.
 holiday season, but do think they can avoid huge          13
                                                                Nielsen-Online, 2009.
 losses.” (October 11, 2009).
                                                           14
 3                                                           A 2009 survey of more than 2,000
     ComScore, 2009.
                                                           consumers by Harris Interactive found that
 4
     Nielsen-Online, September 2009.                       37 percent will shop online to save gas
 5                                                         money or find better prices.
   Anderson, Jackie., reineke reitsma and Bailey
                                                           15
 Liackman. Consumer Behavior Online: A 2009                  The 2009 Harris Interactive poll reported that 32
 Deep Dive. Forrester research. July 2009.                 percent of online shoppers indicated intent to use
 6                                                         online comparison shopping to find the best deals.
  American Standard’s 2008 Bathroom Habits
                                                           16
 Survey.                                                      Oneupweb’s 2007 Holiday Online retail Buying
 7                                                         Trends reported that holiday sales picked up the
     Nielsen-Online, September 2009.
                                                           week of Halloween.
 8
  Beresford research, Use of Online Social                 17
                                                             Penn, Schoen & Berland Associates (sponsored
 Networks. September 2009.
                                                           by LinkShare and gsi interactiveSM), 2009.
 9
  GroupM and ComScore. The Influenced: Social              18
                                                             2001 Holiday eSpending report. Goldman
 Media, Search and the Interplay of Consideration
                                                           Sachs, Harris Interactive and Netratings, Inc..
 and Consumption. October 2009.
                                                           19
 10                                                          Seeing Search Go Social: An Eye Tracking Analysis
   Nielsen-Online, 2009. One in every 11 minutes
                                                           on Social Networking Sites. Oneupweb, 2009
 online globally is accounted for by social network
                                                           20
 and blogging sites.                                         Saul Hansell, “Best Buy Plans a very Twittery
                                                           Christmas.” New York Times, October 1st 2009.




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