The blogosphere right now is abuzz with discussions about the current economic downturn and what impact it will have on eCommerce sales, and the associated budgets that eMarketers will be given. 

Forrester research sees eCommerce bucking the downturn trend, with online spending actually going up by a predicted 17% in 2008.  That said there will still be a tightening of belts as far as spending is concerned, with most of the spending freezes taking place against in-site technologies.  Search will continue to grow, as it is both vital to online sales and the most easily provable from a tactical ROI perspective. 

According to our friends at Marketing Sherpa, while “38% of marketers are spending more on online tactics, such as paid search, natural search, email marketing and online events” this growth is happening at the expense of in-site technologies as “B-to-B and B-to-C marketers are conserving budget dollars by renegotiating contracts with vendors and agencies” 

So let me get this straight.  Online stores are spending more money on getting people to walk in the front door of the store, and less money on making sure they walk out of the store with a product in hand.  Doesn’t make a lot of sense to me, especially when you listen to an online brand that has a keen grasp of the big picture. 

I listened to a great speech at Shop.org by Patrick Byrne, COO of Overstock.com.  It would take a series of blog posts to detail all the interesting things that have been done/are being done by the Overstock.com team, but two major points stood out:

• While they came late to the party regarding natural search optimization for Google, they have made search a number one priority over the last few years.
• They are in the process of rebuilding their marketing programs, customer service programs and website experience around 5 pre-defined visitor segments.

They recognize that while increased eyeballs on website equals increased revenue, the only way to break the vicious cycle of search reliance is though optimization. 

I know that most of the people reading this don’t have Overstock.com budgets, but try a simple exercise. 

• Pull up an analytics report on the conversion rate for one of the product categories that has received budget for keyword buys and search optimization. 
• Look at the percentage of traffic and conversion rate for the traffic segment. 
• Compare the conversion rate of this type of traffic to your site average and if it is lower, calculate your potential revenue opportunity.

There is a lot of money that gets left on the table by making traffic generation of any type your primary marketing mechanism.  You should be budgeting time and money to optimize visits within your site as a logical component of your search marketing initiatives, especially if you want to take advantage of the 17% growth of the only growing retail market.

Cheers,

Jim

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