Electronic retailers cut back on their ecommunications spend

Technology e-retailer dabs.com (featured in Case Study 7) has traditionally used these as their main communications tools:

• Search engine marketing (the main investment)

• Referrals from affiliates (this has been reduced)

• Online display advertising on third-party sites (limited)

Jonathan Wall, Dabs marketing director, explains how dabs.com reappraised their use of e-commu-nications tools. He said:

We stopped all our affiliate and price-comparison marketing in February because we wanted to see what effect it had on our business and if we were getting value for money. It was proving a very expensive channel for us and we've found [stopping] it has had virtually no effect, because we're seeing that people will still go to Kelkoo to check prices and then come to our site anyway. It's like they're having a look around first and then coming to a brand they know they can trust. We're continuing with paid-for search on Google, but that's all we're doing with online marketing at the moment.

New Media Age (2005b) also reported that Empire Direct had adopted a similar approach to its communication mix, reporting that its co-founder and sales and marketing director, Manohar Showan, had revealed that the company has significantly moved from online to offline advertising. He said:

We've moved a lot more into national papers and specialist magazines, two years ago, if you'd asked me where we marketed and advertised ourselves, I would have said the majority was online. But now it's turned right round and online's the minority.

New Media Age (2005b) believes that the reason for this is not a mistrust of the very medium it's using to take sales but, instead, the result of a growing realisation that its acquisition costs were swelling online. Showan says:

We were very keen advocates of affiliate marketing and pay-per-click search. The trouble was we had to pay for every click and we were finding that the cost of acquiring each new customer was getting more and more. One big issue was that we were finding people would come to us through affiliates just to check information on a product they'd already bought, so we were basically paying for customers to find out how to hook up their new VCR. We still have affiliates - our main one is Kelkoo -and we still bid for clicks on Google, but not as much as we used to. One of the things we were finding with the search engines is that, with our own search optimisation and because so many people were coming to our site, we were normally very high up the list just through normal searching. In our experience, particularly with Google, if people can see what they want in the main list, they don't look to the right-hand side of the page.

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