The online revenue contribution

A key objective for Internet marketing is the online revenue contribution. This is a measure of the extent to which a company's online presence directly impacts the sales revenue of the organisation and can be used to influence resource allocation to the online channels. Online revenue contribution objectives can be specified for different types of products, customer segments and geographic markets. For example, in 1997, low-cost airline easyJet set an online contribution objective of 50% by the year 2000. This established a clear vision and resources could be put in place to achieve this. EasyJet now has an online revenue contribution of 95%. Forrester (2005) provides benchmark figures of direct online revenue contribution for different sectors in the US (forecasts for 2010 are in brackets):

The significant growth of these average figures over the next four years shows the importance of setting objectives for the online revenue contribution.

For some companies such as an FMCG manufacturer, a beverage company or a B2B manufacturer, it is unrealistic to expect a direct online revenue contribution. In this case, an indirect online contribution can be stated. This considers the Internet as part of the promotional mix and its role in reaching and influencing a proportion of customers to purchase the product, generating trials, or in the case of a B2B company, leads. In this case a company could set an online promotion contribution or indirect online revenue contribution of 5% of its target market visiting the web site and interacting with the brand. Bazett et al. (2005) give the example of a high-street chain that for every £1 of revenue it takes on the web, £3 are spent in the store after browsing online - so it has objectives for this and works equally hard to help these customers through such facilities as store locators and information on the nearest store with a particular product in stock. Complete Activity 4.3 to explore the factors that impact online revenue contribution in different markets.

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Responses

  • temshe
    What is indirect online contribution?
    3 years ago
  • adriano
    What is online revenue contribution?
    3 years ago

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