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Recession prompts rise in e-commerce and online marketing

While high street stores have been struggling of late, reporting a downward trend in trading and launching huge sales to increase turnover, online businesses have been feeling confident about the future.

Research by eBay released in June found that 69 per cent of internet firms were positive about the outlook for the coming months, while 57 per cent expected their sales to go up, a rise of four per cent compared to the first quarter of the year.

In addition, the PayPal UK Online Retail Report, produced by Experian last month, forecasted that British shoppers will up their internet spending by as much as £12.3 billion, to £21.3 billion by the end of 2011.

The research found that almost nine million adults already shop online at least once a week and they are expected to spend at least £1 in every £14 on internet purchases by 2012.

Carl Scheible, managing director of PayPal UK, said: “The value of online retail can no longer be dismissed as a sideshow.”

“Of course, many of the major high street brands have actually enjoyed the online boom, despite facing challenges in their own stores. The improvements in online shopping will continue to drive consumers,” he added.

Just under a quarter of UK adults believe that online shopping will become the norm and the high street will die out, which could have big implications for marketers, suggesting once more that the internet is the future.

“The downturn pushes more people to look for accountability and measurability. Marketers need to prove to their chief executive officer why money has been spent in the downturn and of course budgets have been slashed so online is quite helpful in this way,” said Eva Berg-Winters, senior manager and new media specialist at PricewaterhouseCoopers.

“With search spend you can see how many clicks you have received and how many people are coming through your website or even buying your products - so you can prove the success of this type of advertising,” she added.

Ms Berg-Winters suggested that the downturn has contributed to the enhanced shift towards online advertising.

It seems that internet marketing and trading go hand in hand, with the trend towards buying online being reflected in increased online ad spend.

“What is very interesting in this recession is that e-marketing and e-commerce has really come on since the last recession,” said Paul Elliott, Business Link adviser for the east Midlands.

“People may well have cut back their marketing spend but they are still able to maintain a strong presence online by using the cheaper alternative of e-marketing,” he commented.

It is not just retailers that are combining online selling and marketing however. Andrew Nicholson, e-commerce manager at events catering Sodexo Prestige, revealed that the company’s sales have improved in line with its enhanced internet presence and advertising strategies.

“We’re moving away from more traditional media, more traditional marketing channels, purely because its getting harder and harder to justify the spends when there’s so much more out there online that is either free or cheap,” he said.

“Everything we do online is fully accountable as well because we can see who’s read what, who’s clicked what, we can see what campaigns are working, what returns on investment, what sales, so that’s very important,” he concluded.