Study: Customer Acquisition Costs Fall

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Customer acquisition costs continue to drop sharply just as retailers selling online are trimming their overall marketing budgets in favor of direct marketing, according to a second-quarter online retail update from Boston Consulting Group and the National Retail Federation's Shop.org.


The study of 74 Internet-only and multichannel retailers found that online customer acquisition costs fell to $14 in the second quarter, down 65 percent from the year-ago period. These same costs in the first quarter of this year fell to $18, from $23 in the holiday 2000 season. BCG and Shop.org attribute the decrease to more effective marketing.


Retailers selling online are spending more on direct mail, e-mail and catalogs rather than print and broadcast media. In the second quarter, 35 percent of marketing budgets on average were spent on e-mail, catalog and direct mail, up from 21 percent in 2000.


Spending on print advertising has fallen from 22 percent of retailers' marketing budgets during 2000 to 7 percent in the second quarter, and television has dipped to less than 1 percent.


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