MIAMI – E-commerce firms that have become tenants on large Internet portals are likely to turn increasingly to more lucrative online marketing tactics as revenue from tenant deals falls short of expectations, according to a study from Jupiter Communications LLC, New York.
Speaking at the research firm's Shopping Forum conference Tuesday, Jupiter Director of Digital Commerce Strategies Marc Johnson advised a packed room of about 750 marketers that less than 5 percent of e-commerce executives surveyed by Jupiter categorize themselves as “highly likely to renew” their current portal agreements. His speech was the first public disclosure of the study results.
“What we're finding is, though they're important, these portal deals are probably a little bit overrated,” Johnson said.
The portals' chief shortcoming, according to the marketers surveyed, is their failure to help virtual retailers retain their consumers. Only 22 percent of respondents felt their portal partners assist them in holding onto customers.
Still, the study indicates that most Web marketers feel being a tenant on a major portal site like www.yahoo.com or www.excite.com successfully drives sales and develops their brands. But more than 60 percent of the executives believe the portals contribute less than a third of their online sales.
Jupiter forecasts that 20 percent of online commerce will be driven directly by primary portals by the year 2002, up slightly from a projected 18 percent this year.
The firm recommends that commerce players view the portals as only one part of their acquisition and retention tactics. Specifically, e-marketers should branch out to affiliate programs, links on similar “affinity” portals, and offline marketing.
Some marketers attending the conference insist the portals are still indispensable because of their vast consumer relationships. Tracy Randall, vice president of commerce at Cooking.com, an online seller kitchenware, said her firm gets what it wants from the portals – traffic.
“We've never been disappointed just because we never bet the whole marketing farm on the portals,” Randall said.
Cooking.com, Santa Monica, works with numerous online incentives firms and packages outbound goods with special offers and gift certificates that can be redeemed online. The company plans direct mail and print ad campaigns for the fourth quarter.
In addition to owning the www.cooking.com site, the company rents the URL “www.recipes.com,” a move that reaps the firm an extra 50,000 visitors each month, Randall said.
Johnson advised portals to develop their own loyalty programs for e-commerce partners, or else risk “losing the ability to garner huge anchor tenancy deals.”