Direct Marketers Earn Profits On The Web.

A new report by the Direct Marketing Association (The DMA) found that more than half (55 percent) of all direct marketers who engaged in e-commerce transactions earned a profit on the Web in 2001. Of those not currently earning a profit, 55 percent anticipate being profitable in 2002.

According to The DMA’s State of the E-Commerce Industry Report 2001-2002, approximately 71 percent of consumer direct marketers have the ability to conduct financial transactions online. Compared to last year, average online revenue per company increased by more than $1 million (from $3,983,500 in 2000 vs. 5,284,640 in 2001).

“Increasingly, direct marketers are leveraging the cost savings, visibility, and customer acquisition benefits of interactive marketing to boost sales and expand their customer base,” said H. Robert Wientzen, president & CEO, The DMA. “Successful marketers now realize they need to stick with proven business models using new technology to expand their operations not completely redefine them.”

In addition, the report found significant efforts underway to integrate dot.coms into the overall brick-and-mortar retail and catalog marketing and operations infrastructures. Fifty-eight percent of companies now consider themselves dot.corp, and 21 percent either, or a combination of both. The companies who reported the strongest dot.corp presence are those who market their site to the B-to-B segment (69 percent), medium-sized (61 percent), and small (58 percent) businesses.

The report also revealed that:

The average online order size in the business-to-consumer segment in 2001 was $90. In the b-to-b segment, this figure substantially increased to $350.

Twice as many respondents are targeting their Web sites to the business segment (52 percent) than the consumer segment (26 percent). The number of B-to-B marketers increased in 2000 over 2001 – 42 percent in 2000 versus 52 percent in 2001.
The majority of respondents continue to use their Web sites primarily for product/service information, (85 percent in 2001, up from 78 percent in 2000) and lead generation (57 percent in 2001 up from 55 percent in 2000).

Sixty-four percent of consumer marketers report sales/e-commerce as the primary purpose of their Web sites, while 68 percent of B-to-B marketers report lead generation as their top function.

The Web allows marketers to prospect internationally, and provides a cost-efficient opportunity to expand into international markets. Forty-four percent of companies conduct Web business overseas. However, among B-to-B direct marketers that number reaches 62 percent.

Sixty-one percent of respondents indicated the ability to reach new members/segments is the most compelling benefit of using interactive media. Greater visibility (47 percent), new business opportunities (46 percent), and cost savings (43 percent) were also cited as primary benefits of using interactive media.

In comparison to B-to-B marketers, consumer Web marketers have had a Web site longer, receive more traffic and page views, use more banner ads at other sites, are more likely to conduct electronic financial transactions, upsell more often on their primary Web sites, and are more likely to measure interactive media through improved customer service. They also drive more traffic through direct mail, e-mail marketing, and online advertising than B-to-B marketers.

Medium-sized and large-sized companies have had a Web site longer than smaller businesses. They are also more likely to use their Web sites for sales/e-commerce and customer service, and tend to receive more traffic and page views daily.
B-to-B marketers found incentive programs and e-mail marketing equally effective for customer acquisition and retention. For consumer marketers, online PR and affiliate programs/sponsorships were more successful as a customer acquisition tool, while e-mail marketing was considered to be most effective for customer retention.

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