Mobile Commerce, Twitter to Save E-Comm Sales?

While e-commerce growth was flat for the first quarter, the sector likely bottomed out, with online sales increases likely to hover around 5 percent for the second half of the year, comScore Chairman Gian Fulgoni said during a Webinar going over the research firm’s Q1 findings.

Though e-commerce had seen double-digit growth for the past several years, Fulgoni said the worst may be over, as he cited mobile commerce and social network and video site marketing at sites such as Twitter and Hulu as opportunities for bolstering sales in the near future.

“The good news here is that I think it’s bottomed out, in the second quarter we saw 13 percent growth, that dropped to six in the third quarter of 08, in Q4 it was minus three, now flat in the first quarter, so we’re not seeing a continued downward trend,” said the comScore (NASDAQ: SCOR) chief.

He was less optimistic, however, on future growth for this year, saying it’s not likely online sales will see the double-digit increases the sector enjoyed over the past few years, and reluctantly predicted about five percent spikes.

The recession, naturally, is having a negative impact on consumers’ purchasing power, and Fulgoni said this is reason for concern as it prompts older shoppers to save instead of spend.

There was no growth he said in the percentage change in online spending for the quarter compared to a year ago for the segment age 45 and older making more than $100,000. For those age 45 and over making between $50,000 and $99,000 it dropped by 11 percent.

Online sprendthrifts

“This is what is most troubling to me, perhaps in the entire (presentation). There is a distinct lack of spending in the segment of people 45 and over. These people have some extra money, but they’re not spending it,” he said.

Overall the e-commerce sector fared better than traditional retail sales — online sales for the quarter were flat but retail dropped by 8 percent.

In terms of how the Internet is affecting shopping behavior, comScore data shows three-quarters of people are likely to collect information online before buying offline. “That says it all right there. You need to move marketing dollars to build your brand online,” said Fulgoni.

He also reported that the 72 percent said search engines were “very important” in influencing buying behavior, 54 percent cited online coupon sites as very important, followed by comparison shopping sites at 46 percent, auction sites at 44 percent and online classifieds at 36 percent.

Unique visitors to online coupon sites is hovering around 35 million per month. That’s up 7 percent more than last year, for those saying they use coupons from brand sites. Overall online coupon use is up 2 percent to 31 percent.

In terms of what consumers want to see at online stores, 64 percent say product details are important, 60 percent said incentives were an important feature, followed by easy site navigation with 46 percent and product reviews with 42 percent.

Next page: Clicks versus branding

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Fulgoni also cautioned e-tailers and online marketers on putting too much emphasis on clicks versus branding.

“I’m going to get on my soap box here, we’ve done a lot of work on understanding the right metrics to use to evaluate campaigns, whether branding or direct, and you have to be careful about using the click. If you’re doing anything in a branding sense, the click is irrelevant.

“You need to look at view through, the number of impressions, how they’re driving site visitors, the latency impact, the degree to which its driving trademark search queries, incremental sales. If you’re not taking into account latency and incremental sales, you’re understating your ROI by a factor of four or five,” he said.

Twitter as hockey stick

On the social commerce front, the comScore chief advised using sites such as Twitter for branding purposes, as the demographic is appealing.

“It’s a classic hockey stick. Twitter grew from April of last year to this year by 3,000 percent in terms of unique visitors, and visitors to Twitter are 76 times more likely to also visit an online coupon site compared to the general Internet population. Dell has had some success using Twitter for branding, though maybe not as much as Ashton Kutcher,” he said.

He also pointed to viewers of online video as a coveted segment for e-commerce. “It’s exploding. If you advertise on sites that reach online video viewers, you’re reaching people with 20 times higher spending rates online than the average online population,” he said.

In regard to mobile advertising, Fulgoni said while people may not be buying on their smartphones now in huge numbers, mobile commerce is poised to take off, likening it to the broadband phenomenon.

“The smartphone is to mobile advertising what broadband was to the PC. Pre- and post-broadband, it’s night and day, and mobile commerce will go through the same type of transition. Mobile purchasing is small today, but we do believe the technology is aligning to make it much more prevalent. As smartphones become a bigger part of the market, and users become more confident, mobile e-commerce will gain traction,” he said.

He also said the burgeoning smartphone application market will drive mobile commerce. Apple (NASDAQ: AAPL) has a wildly successful app store for its iPhone, which just saw its billionth iPhone app download. That success is spurring others to follow suit — most notably Research In Motion (NASDAQ: RIMM) recently opened the BlackBerry App Store for its devices and Google has an app store for its open-source mobile platform Android.

Fulgoni added: “There’s a whole new economy of mobile applications that are making buying transactions easier. As consumers become more aware of them and they reach critical mass, the market will move.”

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