June 5, 2001, 12:00 AM

Customer acquisition costs down, click-throughs up, says Shop.org

Customer acquisition costs drop and conversion rates rise in Q1, say Shop.org and Boston Consulting Group.

Kurt Peters

Executive Editor

Online retailer performance continued to improve in the first quarter of 2001 over 2000, new figures released today by Shop.org and the Boston Consulting Group show. Customer acquisition costs are continuing to drop on average, while an increasingly larger percentage of surfing shoppers are stopping to click the "buy" button. Customer acquisition costs for the quarter dropped to an average $18 among the 79 online retailers surveyed, a 60% drop from a year ago. Online retailers have been focusing marketing efforts on targeted campaigns and have moved almost entirely away from offline mass media. As a result, spending on print advertising has decreased from 22% of online retailers` marketing budgets during 2000 to just 13% in Q1 2001. TV advertising has dipped from 7% to 2%. Online portal advertising is the only significant form of mass marketing used by web merchants, the survey found, accounting for 23% of marketing budgets. The balance of the online retailers` marketing budgets in Q1 2001 supported e-mail campaigns, which acounted for 19%; banner ads, 13%; affiliate deals, 6%, catalogs and direct mail campaigns, 15%; and other programs, 9%.

Conversion rates rose from an average 1.5% in the first quarter of 2000 to 2.3% in the first quarter of this year. Supporting the increase are e-retailers` improvements in onsite merchandising, navigation and customer service, the survey found.



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