Retailers Focus on Multiple Holiday Sales Driving Tactics, in Addition to Search

According to the 2008 JupiterResearch Executive Survey results, online retailers continue to put search engine marketing spending at the top of their holiday sales driving tactics. Nonetheless, this trend is more subdued when compared to previous years. The JupiterResearch US Paid Search Forecast, 2008 to 2013 notes that paid search will grow 26 percent in 2008 (to $11.4 billion) and continue at a compound annual growth rate of 13 percent, however attention is starting to shift from paid search to more aggressive search engine optimization (SEO) campaigns.

15 percent less online retailers cite increasing their search engine marketing spending for the holiday season among the top three sales-driving tactics. According to the 2008 JupiterResearch Retail Executive Survey, 40 percent of online retailers will increase search marketing spending as a holiday sales-driving tactic this year. Though a high overall total percentage, this is still 15 points less retailers than the previous year. Online retailers already spend 40 percent of their budgets on search, thus the slowing of this spending increase signals a wider focus on other tactics.

A growing number of retailers increase spending on holiday sales-driving tactics like promotions and online advertising. 27 percent of online retailers will increase spending on affiliate marketing (a 14 percent increase over the previous year) whereas 18 percent will increase spending on banner advertising. Amplified concentration on other sales driving tactics, in addition to search, reflects a slight shift of online retailers' attention towards higher website exposure and more competitive pricing. This strategy should pay off as, according to the 2008 JupiterResearch Group Consumer Survey, 31 percent of online users will do more research online before purchasing products this holiday season, in order to make sure they get the best price.

By Patti Freeman Evans & Cristina Bugnaru

Amazon Rocks

I know, we are in the depths of an economic quagmire, but could we just take a sec to recognize that the biggest online retailer just posted a 31% increase in revenue. That is huge given the situation and that they have been around for more than 10 years. Hard to count how many companies were still growing at that pace that far into it. I think Amazon's performance goes to show you that focus on merchandise selection and value, exceeding customer expectations on delivery and good customer service after the fact go a long way with customers.

Yes, they and eBay have tempered guidance for Q4 and the year, but realistically who hasn't.

American Airlines Unbundling?

According to the Associated Press, American Airlines is planning to follow the Air Canada a la carte pricing structure as early as next year.

Air Canada�s so-called unbundled approach is tiered to allow travelers to select different airfare structures. Tango is the no-frills, with only a portion of frequent flyer miles offered, higher change fees and a fee for advance seat selection. Tango Plus gives 100% status miles, complimentary seat selection, and lower change fees. Latitude and Executive Class follow this pattern with more flexibility and higher prices.

Once an Air Canada traveler selects the fare, they have the option to pay for additional features or, as Air Canada's cleverly markets, to "customize your flight". This includes baggage check in, prepaid food vouchers, and seat selection.

When Air Canada launched this pricing structure five years ago, they were rebuilding their brand after entering bankruptcy and having some serious service issues that opened the door for their competitor WestJet to gain share.

And, while Air Canada passengers certainly recognized that previously free items were now charged essentially the unbundled structure was transparent and gave travelers choices. Air Canada met the challenge with what I believe is a best practice website in terms of conveying information to help travelers choose.

If, in fact, American Airlines is planning to un-bundle fares, I expect it won't be long before we see this across US carriers (assuming Air Canada's GDS issues with their pricing structure won't be duplicated).

Unbundling in the US would happen in more challenging marketing environment; driven by cynicism and frustration after months of fare and fee increases, it will be a tougher — though imperative — marketing message to communicate this is about traveler choice.

Online travel gets greener

There are undoubtedly varying shades of green. We discussed this in a recent report called "Green Online Travelers
Assessing the Brand Impact of Travelers' Environmental Concerns" in which we determined that, while 42 percent of online travelers agree with the statement that they are concerned about the environment, those "dark green travelers" who have actively consider sustainability in their travel decisions is more of a niche at 7%.

Two new websites have launched aimed squarely at that 7 percent.

Vroom Vroom Vroom offers car rentals offers car rental through major companies and will purchase carbon offset programs for each rental. (Ok, I admit it: I was tempted to telephone directly just to hear someone answer the phone making cartoon car noises.) Green without costing more will certainly appeal.

We also saw the launch of Whole Travel this week, which lets travelers undertake open-ended destination and accommodation searches of sustainable hotels. Hotels have a �whole ranking� based on their (1) Environmental practices, (2) Economic management, (3) Social and cultural support, and (4) Customer interaction.

Both sites will have to establish credibility. Vroom Vroom Vroom will need to establish credible carbon offset information (see our upcoming report on "Identifying Best Practices Promoting Carbon Offset Programs". Whole Travel's rankings are self-reported with plans to use local organizations for verification.

At the same time, both sites offer potential benefits that can extend beyond their green offerings. Vroom Vroom Vroom's lowest rates. Whole Travel has an inventory of unique properties that will appeal to people looking for a different accommodation experience.