As Americans curb their spending in the brick and mortar world, on the Internet they’re opening up their wallets like it’s 1980 again.Â O.K., maybe not like the 80’s, but the online marketplace is where more and more greenbacks are finding their way. In an article in Internet Retailer, 22% more consumers say they plan to buy more on the Internet. Reasons for this are many: ease of locating items, better discounts, time savings and convenience just to name a few. That’s good news for retailers who plan to support their online presence in 2009. According to a survey conducted by The E-Tailing Group 70% of U.S. retailers plan to invest the same or somewhat more in e-commerce than they did last year because it is the fastest-growing part of their business.
But that doesn’t mean online retailers are willing to increase spending on big-ticket items like platform upgrades or new up-and-coming technologies. Those kinds of changes take big investments and often involve some kind of risk. According to Lauren Freedman, president of the E-tailing Group, 2009 will be remembered for refinement of navigation, site search and site tweaks. Tight economies beget a sharper focus on ROI and being accountable for how money is being spent. In better times, companies were willing to dedicate more dollars for untried strategies in hopes of one or two of those strategies hitting the mark to increase web traffic. But in an economic environment where companies are burning the furniture just to keep warm, there’s no room for risk. According to Ravi Belani, associate at Draper Fisher Jurvetson, a renown venture capital firm in Menlo Park, California, there is a movement among advertisers away from cross-site media buys towards adoption of targeting and performance-based advertising as key to the trend driving recent investments in the sector.
Evidence of this trend can be seen in recent investments in ad networks and ad tech firms including Collective Media, Glam Media, Rubicon, Pubmatic, and ScanScout (which have all received tens of millions of dollars in investment funding in recent weeks). There may be a recession going on in the real world, but online, you almost feel like it’s the 80’s all over again. Minus the feathered mullets, of course.
Enzo F. Cesario