Digital News

Online in the era of the credit crunch

You don’t need to be an industry expert to know that retail consumers have very high demands and expectations from high street stores. You may not realise that online customers particularly the UK are even worse according to a new survey.

To date the online sector seems to be holding up well, with the most buoyancy being felt in search, affiliates and other transparent direct response driving channels. Paid search (PPC) and search engine optimisation (SEO) provide clear and transparent ROI. Despite current trading conditions Ad spend on search is still growing with the lions share as ever being spent on Google. Predictions that search would top the £2 Billion mark during 2008 may still be on the mark as during the first 6 months of the year ad spend on search reached £980M in the UK. (*Brand republic – check figures)

With marketers still spending online and the online sector holding up well, who is feeling the pinch? The first sectors to have been hit as everyone is aware were the property and financial sectors. This is no news, but as the credit crunch hits ‘the real economy’ what can we expect? In the retail sector there is a worry that Christmas 2008 will be the worst for 30 years, insolvency specialists warned this week that 323 UK retailers are on a “critical watch list” with a 70% chance of failing in the new year. This list includes some well known high street names such as JJB Sports and there have already been high profile casualties such as the Miss Sixty retail chain.

It is not all doom and gloom however ASOS (As Seen On Screen) the online fashion store has doubled sales in the last six months (source The Independent 9th Oct 2008). ASOS has achieved this impressive growth in no small part due to their robust online marketing strategies which include search engine optimisation SEO, Pay per click (PPC), affiliate activity and strong interaction with customers through newsletters and email marketing. Predictions that retailers who have failed to establish a strong online presence will suffer most are borne out by the obvious success of companies such as ASOS.

So what can we learn from this? In retail along with other online friendly sectors such as travel, companies are clearly continuing to spend online. There are going to be big winners despite the unfavourable conditions and those are likely to be the companies who have the most innovative, performance driven and comprehensive online strategies in place. Marketers need to establish relationships with agencies who can deliver performance led solutions especially in channels such as search engine optimisation and paid search but across all online disciplines. The road ahead may be rocky but in online at least the opportunities are there for all.