Pew Report Questions Internet’s Influence

In May, 2007 report, the Pew Internet & American Life Project issued a report entitled “A Typology of Information and Communication Technology Users.” It organized Americans into various categories and subcategories by engagement with technology. One of the striking findings was the following: “49% of Americans only occasionally use modern gadgetry and many others bristle at electronic connectivity.”

A similar finding was just issued by Parks & Associates in a report on US technology usage:

Roughly one-fifth of all U.S. heads-of-household have never used e-mail, according to National Technology Scan, a forthcoming study from Parks Associates. This annual phone survey of U.S. households found 20 million households are without Internet access, approximately 18% of all U.S. households.

These findings suggest that there is a chasm between the technology reliant and those who are disengaged from technology. For those of us whose jobs are tied to the Internet (probably everyone reading this) it’s hard to imagine 20% of US adults (assuming the accuracy of the extrapolation) have never used email.

But in a new report (on shopping) out yesterday, Pew questions the primacy of the Internet’s impact on purchase decisions: “Even though many buyers use the Internet in product research, relatively few say online information had a major impact on the product choice they eventually made.” The survey focused on music, cell phones and real estate purchases. The conclusions of the report are nuanced but generally fly in the face of a good many earlier studies that cite the growing influence of the Internet on consumer purchase behavior. Here are the top-line data from the Pew survey (n=2,271):

For those who have bought music in the prior year:

• 83% say they find out about music from the radio, the television, or in a movie.
• 64% say they find out about music from friends, family members, or co-workers.
• 56% say they find out about music through various online tools, such as going to a band’s or artist’s website or streaming samples of songs to their computers.

Among those who have purchased a cell phone in the prior year:

• 59% asked an expert or salesperson for advice.
• 46% go to one or more cell phone stores.
• 39% use the Internet.

For those who have rented or bought new housing in the prior year:

• 49% use the Internet.
• 49% look through ads in the newspaper.
• 47% ask a real estate agent for advice.

The “bottom line” conclusion is the following: “Even though many buyers use the Internet in product research, relatively few say online information had a major impact on the product choice they eventually made. Only 7% of music buyers, 10% of cell phone buyers, and 11% of those who bought or rented a home in the prior year say that online information had a major impact on their decision.”

How do we explain the discrepancy between these survey data and those that have have come before (from BIGResearch, Yahoo, comScore, etc.)? Here are a few thoughts:

• The Pew methodology uses telephone surveys (landline and cell), which are going to capture a broader range of respondents than online surveys to some degree. Online surveys tend to magnify the influence of the Internet by their very nature. You may also get a higher representation of technology resisters and non-adopters among the landline respondents in a telephone survey. But this is conjecture on my part.
• The focus on “major impact” may necessarily diminish the perceived influence of the Internet.

My takeaway from these data and the data I cite at the top of this post is that we’re living in a very fragmented media world, where no individual medium holds sway over consumers. In addition, to reach target audiences marketers have to really understand those audiences and their media consumption patterns much more today than ever. Some audiences will rely on the Internet more heavily and some on traditional media sources. To some degree that reliance will depend on economic, educational, geographic and ethnic variables.

Local Stores Caused Me to Buy a Mac

This past week I bought a Mac. Way back in the old days (a decade ago) I was a Mac user. My wife has been loyal to Apple all along and now has a 24 inch iMac. But in my world, first as a lawyer and later in other professional incarnations, a Mac was incompatible with colleagues’ machines and inconvenient. When I left Kelsey in April of 2006 I decided to buy a Toshiba laptop after a fair amount of online research. The model I got was well reviewed and reasonably priced. In the end it turned out to be a mediocre gray box.

The trackpad failed after about a year. And three months ago I got a virus (despite anti-virus software that compromised the machine’s performance). That was a horrible episode, which mortally wounded the computer. I managed finally to extricate the machine from the grip of the virus but then other things started happening. Finally, the machine started spontaneously quitting on me last week.

I literally use my computer 24/7 so there was no time to go out and find someone to diagnose and potentially fix it. It was pointless also to try and contact the manufacturer. (I know from experience.) I was assuming the need for a new hard drive, etc. and a couple hundred dollars at least in repair costs. I also expected that I would also have to replace the machine soon anyway even if it could be repaired. So I cut to the chase, so to speak, and decided simply to replace the machine.

Several friends were somewhat relentlessly lobbying for me to get a Mac. I was open to that but also assuming I would buy a new PC. My thoughts were divided between buying a higher end machine that was presumably more reliable or a cheap PC that I wouldn’t really care about and would last a couple of years: sort of a “beater” to invoke a used car analogy. I decided on the latter category. I fixed my gaze on well-reviewed, but inexpensive boxes from Lenovo and Dell. My conclusion was that it makes no sense to spend more than $2K on a PC because they need to be replaced every two years.

But here’s the rub: neither machine was available immediately. There was no store I could go to to buy either computer. I had to buy them online; and the earliest I could expect to get them was “3 to 5 business days.” That means about a week in reality. I couldn’t wait that long.

Enter the Apple store.

Here’s where the personal story dovetails with my analyst coverage. The Mac’s reputation for quality, the availability of local techs (in store) to service the machine, but especially the fact that I could walk in and buy it today, all trumped the PC’s lower price. Also the fact that there are several ways now to run Windows on a Mac (Parallels, Boot Camp, Fusion) removed the final barrier for me. In addition, I had familiarized myself with the various models up close, by visiting the Apple store many times in the past couple years. The “feel” of the keyboard on the Macbook was especially appealing to me. That’s not something I could have readily experienced but for the Apple stores.

Honestly, had there been local stores where I could have purchased the Lenovo or Dell models I identified I probably would have bought one of them. But there weren’t so once again I’m a Mac user.

Stepping back, my process exemplified consumer purchase behavior at large:

• I did lots of online research, reading reviews at “trusted” vertical sites like PC World and CNET.
• I used search engines to search on “generic” phrases like “Best PCs for under $1000″ and “top rated laptops.”
• I searched on brands and branded models to compare prices.
• I went to shopping engines to look at prices.
• I also visited manufacturer websites.

This is what consumers do now as a matter of routine:

Source: Etailing Group/Krillion, 2008

In the end, I bought the machine at a local store because I could get it today and didn’t have to wait. I also had recourse locally to the Apple store, if the machine had a problem or needed service in the future.

Other than in the Travel category, product-related e-commerce in its original form (buying online from a no-name etailer) is an endangered species. Exceptions include trusted sites such as eBay and Amazon and the emerging trend “buy/reserve online and pick up in store.” But the coming, mass syndication of local inventory data will put immense pressure on pure-play, non-branded etailers and e-commerce only shopping engines.

Indeed, e-commerce is dying. Long live Internet-enabled offline commerce.

Product Search: It’s 90%+ Local

Bill Tancer of Hitwise responds to the debate, prompted by comScore and then a UBS report, speculating that Google and search are being directly affected by the recession:

If a recession is in fact affecting search, we should see a drop in the amount of traffic going from Google to retail sites (our Shopping & Classifieds category). The following chart shows the percentage of traffic over the last three years actually increasing.

This where I leave the “is Google going down debate” and go off on my own tangent.

Ecommerce is less than 4% of US retail but the Internet is growing dramatically as an influence over offline purchases in local stores, dealerships, etc. (almost $500 billion today). When considered in the context of real-world consumer behavior — there are lots of studies that validate this proposition — it must be inferred that the majority of that shopping/classifieds search referral traffic that Bill is talking about is ultimately local.

Even though it’s hypothetically possible to fulfill these queries online via e-commerce that’s not really happening. (E-commerce growth has slowed to roughly 19%.)

Source: US Census Bureau

The local intent here is totally hidden because the queries are about products or brands and have no geo-modifiers. But the transaction ultimately takes place in a physical place in the real world in the overwhelming majority of the cases. And if the linkage between the brands/products and where to buy them locally were more pervasive and obvious we would see much more clearly that product search is part of the story of local.

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Related: Patagonia selects Where2GetIt to power a real-time inventory/product locator function:

Where 2 Get It manages multiple daily inventory management updates from Patagonia’s online retailers, providing automated inventory level reporting to ensure that search results are in line with actual product availability.

This kind of thing is going to be increasingly common. Between Shopatron, Where2GetIt and NearbyNow, much of the popular retail product database is probably already online.

TheFind Introduces Local Shopping

Innovative “Web 2.0″ shopping site TheFind has introduced local shopping today on its site. According to the press release, the site’s new capabilities include:

• Search for products available through local retail outlets. For example, a search for UGG boots in and around Miami would show store locations that are within 25 miles of the shopper’s location. Consumers can easily adjust the search area to comprise a 40- or 50-mile radius, if desired.
• Immediately identify local retail outlets near you that carry desired items. After searching for a product on TheFind, search results will display items from both online retailers and local retail outlets – with local stores clearly identified via a “Local” icon.
• Check in-store availability. For select outlets supporting this capability, TheFind enables shoppers to see which nearby stores have a particular item in-stock. Additionally, all listings for local retailers have phone numbers listed so busy shoppers can call to check in-stock status.
• Quickly and easily determine which retail outlets offering the desired items are closest in proximity. For every search, TheFind graphically maps all the local brick and mortar stores carrying the items of interest. Consumers can use the map to determine which location is the closest to them, saving time and resources. The site also provides street addresses and phone numbers for each store location.
• Compare each store’s offerings and obtain the very best deal. TheFind puts a wealth of information at users’ fingertips to enable shoppers to assess the total overall cost of goods. TheFind alerts shoppers to various considerations such as sale items and promotions and driving distance of retail outlets, so they can make purchasing decisions based on their individual preferences and criteria. Integration of online prices and local offers helps consumers determine the best possible options.

Here’s an example of the new functionality in action based on a search for “All Clad Pots” (click to enlarge images):

And when you mouse over one of the product images:

TheFind is doing this by crawling and matching products on retailer websites with store location and contact information. Accordingly the site recommends “call for availability.” It’s a impressive implementation.

As local inventory data starts to become syndicated in 2008 and these capabilities become more widespread, they threaten e-tailers and those who sell without local stores (with the exception of eBay and Amazon). As I’ve argued all shopping sites will need to have local store information/inventory to compete. Notwithstanding the growth of e-commerce, the Internet is fundamentally a marketing platform to consumers who fulfill offlline rather than a transactions platform.

Remember than e-commerce is roughly 4% of total US retail.

Functionality like “buy online, pick up in store,” which is becoming increasingly common (though the province of major retailers), is a kind of hybrid between local shopping and e-commerce.

In addition to TheFind, the local shopping club includes:

• ShopLocal
• NearbyNow (soon to become a consumer destination)
• Krillion
• Where2GetIt
• StepUp (via Google)
• Yokel
• CNET
• BrandHabit
• GPShopper (mobile)

Shopping.com is on deck presumably with a recently announced deal with Channel Intelligence.

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In an interview with InternetRetailer, JCPenney noted that 80% of its shoppers had visited the company’s site before showing up in the store.

More on the (Local) Shopping Front

Two pieces that were released recently are worth noting…

The New York Times writes about Wal-Mart the growing trend of buy online and pick up in store. (Nearby Now does “reserve online” and pick up in store.) From the article:

Take Wal-Mart, for instance. In recent weeks, the company, the largest retailer, completed a national introduction of its Site to Store service — in which consumers buy items from the Web site, then have the items delivered, at no charge, to their local Wal-Mart stores where they can pick them up. Items arrive within days, though the system is not yet set up to tell customers when something they want is already in stock at a local store.

According to Raul Vazquez, Walmart.com’s chief executive, the initiative has surpassed the company’s expectations, with about a third of all online sales occurring through this program. “It’s gone incredibly well,” Mr. Vazquez said. “None of us expected to see it reach this percentage of sales at this point.”

This type of program, which is increasingly common, is an interesting hybrid of e-commerce and local shopping. It still qualifies as local because it involves physical stores, local overhead and so on. The key here is the back end systems that allow real-time inventory data to be presented online. As that becomes more prevalent (and it is), you’ll see more online “shopping” offline conversion/purchase behavior — not more e-commerce.

Simultaneously iCrossing has released its “How America Searches — Online Retail” report. The report has lots of interesting data and information I’ve been meaning to dig into. From my superficial review of the data so far, the report is really about the Internet’s influence on consumer purchase behavior in myriad ways rather than e-commerce per se.

I don’t have time to further explore right now, but one interesting piece of data that caught my eye was the use of search to find local/offline stores to buy products. See the far right column in the chart (click to enlarge):

Source: iCrossing (9/07)

ShopLocal Building Out Ad Platform Business

ShopLocal, which just introduced the ShopLocal Index last week, measuring online-influenced, local shopping activity is continuing to build its ad platform (SmartAds/SmartDelivery). Here’s an announcement from today:

With SmartDelivery, advertisers can now choose the advertising delivery vehicle that best reaches their customers with local in-store promotions, including online display ads, embedded content, Real Simple Syndication (RSS), search engine marketing (SEM), widgets and mobile. Traditionally, consumers received their weekly promotions and deals through printed newspaper inserts and mailings but ShopLocal revolutionized the industry with SmartCircular and SmartMedia that placed these same print promotions online. Now SmartDelivery takes multi-channel advertising to a new level by providing the technology that allows advertisers to customize localized content and send it out over multiple channels. The SmartDelivery engine also improves measurability, with performance tracking metrics.

This business runs in parallel but is generally independent of its consumer-facing shopping site.

ShopLocal and ‘The Trillion Dollar’ Marketplace

I spoke last week at a private event hosted by ShopLocal. It was intended to showcase their various products/services and their roadmap to clients and partners. There were some very interesting discussions and sessions (one snippet blogged here.) They also had some fun trivia questions surrounding the concept of a “trillion,” because the theme of the event was “The Trillion Dollar Markeplace.”

This phrase comes from recent Jupiter and Forrester e-commerce/retail reports that predict the Internet will be influencing a trillion dollars of offline (local) spending by either 2010 or 2011. These are self-consciously headline/PR grabbing predictions but directionally they are absolutely correct. And last week there were two thematically related reports, one from Yahoo!/comScore about products and the other from TMP directional media/comScore about services.

Essentially, both of these reports say that the majority of commercial activity being driven by the Internet is happening locally (which has to be the case with most service businesses). And the core point of my talk was that local is not a niche — especially when retail is included — it’s much bigger than anything else happening online. The Internet is much less a transactions platform than it is a marketing vehicle for local/in-store transactions. E-commerce will continue to grow, and mobile will eventually be a bridge between online and offline, but consumers have largely spoken.

When I make these arguments I find some people curiously get upset. It’s happened to me at a couple of events. It’s typically people in their 20s who assume that e-commerce is going to take over. It happened at this event when I argued that many local searches were masked because of missing geo-modifiers or a lack of visibility into the searcher’s ultimate intent and behavior (tracking).

Regarding the first category, I typically use the example of “attorney” or “divorce attorney.” Very few of those searches are going to have an object other than finding a lawyer to consult in the real world. One woman during the Q&A part of my talk disputed this proposition arguing that people might be doing research or looking for forms in such a context. I allowed that that was true for a small percentage of people but not the vast majority. She seemed genuinely upset by this contention.

Chad Schott of RH Donnelley came to my defense and made even more aggressive claims about the percentage of searches that have a local intent.

When I was at The Kelsey Group, I helped formulate a definition of local search that was largely tied to their historical coverage, yellow pages. Yellow pages and its various flavors online forms a core part of local search but it’s a much broader phenomenon. Accordingly, since leaving I’ve been evangelizing a broader definition that I believe encompasses and reflects consumer behavior more accurately: Shop Online, Buy Offline (Yahoo! says “Research Online, Buy Offline” [ROBO]).

In other words . . .

“Local search is a process where users conduct research online but with the ultimate intention or result being an offline transaction. It’s about the Internet influencing real-world buying decisions . . .”

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Related: comScore’s new data on e-commerce and prediction that non-Travel e-commerce would reach $200 billion by YE 2007.

Study Affirms Online-Offline Shopping Connection

Earlier this week Yahoo released the results of a major study of online advertising and consumer retail purchase behavior. Conducted in conjunction with comScore between April, 2006 and January, 2007, the study sought to quantify “the impact of search marketing and display advertising on consumer shopping behavior and the in-store sales of major retailers.”

It measured the influence of paid search and display advertising in isolation, as well as the impact of integrated search and display campaigns. Subsequent consumer purchase behavior was tracked at five major US retailers.

At a high level the findings affirm the value and importance of search marketing generally and of integrated search and display campaigns in particular — on in-store sales. There’s an increasing body of empirical data, much of it from Yahoo studies, that show how significant the Internet has become as a driver of local/offline consumer purchase behavior.

The rest of this post is at SEL.

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Here are related, previous posts related to Internet-influenced offline purchase behavior.

AT&T-Yahoo! Startpage a Model for Newspapers

I was just speaking with someone about online newspaper strategies and we were discussing the opportunity for newspapers in the Yahoo! consortium – now more than 500 local papers – to create a co-branded local portal in each market modeled on the AT&T-Yahoo! startpage (for ISP subscribers).

The difference is that it wouldn’t be the default homepage that users saw when they fired up their browsers, so it wouldn’t get the “automatic traffic” the AT&T-Yahoo! startpage enjoyed. But the concept is still interesting and valid.

Newspapers and Yahoo! would jointly provide content and services to offer local users a broad range of content and functionality – kind of like a local Yahoo! portal but with prominent newspaper content and branding. In other words: news, entertainment and events, restaurants, local service businesses, classifieds, etc.

In essence this would be a realization of the “local portal” strategy for newspapers that they can’t seem to formulate or execute on their own. The precise relationship of these local newspaper portal sites and the owned and operated newspaper sites would have to be worked out but a model exists in the old KnightRidder Digital “City.com” sites.

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Related: YP.com and LiveDeal are starting to roll out their combined assets.

Why Are E-Commerce Conversion Rates So Low?

In eMarketer’s newsletter today are data aggregated from Lauren Freedman’s E-Tailing Group and Shop.org:

Online merchants convert an average of 2%-3% of their site visitors into buyers, according to the e-tailing group’s “Sixth Annual Merchant Survey.”

That’s about the same as last year. And the year before that.

The group says that driving the right customers to sites and increasing sales and retention all require more targeted tactics every year. It points to analytics and data mining as the way to make this happen.

Shop.org conducts a similar annual survey with Forrester Research called “The State of Retailing Online.” Conversion rates in that study also average about 2%-3%.

The piece goes on to discuss sites that have 15% to 20%+ conversion rates.

eMarketer presents these data as something of a “best practices” problem. Undoubtedly sites can improve conversion rates by adopting best practices. But there’s another thing going on here: consumers shop online and buy offline.

It’s really taking people a long time to get this point. Consumers, though they will buy online for various reasons (convenience, price), fundamentally want to buy locally.

As a result of this desire and behavior, you’re not going to see big increases in conversion rates — best practices or no — across the board any time soon.

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Related: My earlier post, “the future of online shopping is offline.”

Judy’s Book Makeover Almost Complete

Thanks to Gary Price (again) for alerting me to some UI and content changes at Judy’s Book. Here’s their post on the changes and here’s the new site:

It’s a local shopping/coupons site now — the metamorphosis is all but complete — and a distribution partner for ShopLocal (and ValPak) among others. One way to look at this new Judy’s Book is as the “Oodle of coupons and deals.”

Notwithstanding ValPak’s brand recognition in direct mail coupons offline, there’s no single destination of choice for local coupons and deals. It’s a huge potential growth area online and Judy’s Book, if they’re smart, could be one of the winners in the space.

Krillion: A New Local Shopping Engine

Joining the ranks of a small but growing list of companies trying to connect online product research and offline buying, Krillion launched this morning. Other companies offering local product information, to varying degrees, in this segment are ShopLocal, StepUp, NearbyNow, Yokel, CNET, Froogle, Become.com and data provider Channel Intelligence.

The rest of this post is at Search Engine Land.

Here’s some additional information from Matt Marshall at VentureBeat.

The Future of Online Shopping Is Offline

This is something of a mantra for me: online shopping is ultimately about offline/local transactions. Those in the retail segment prefer to call this “multi-channel marketing.” Regardless, the future is about telling people where they can buy things in the local market. E-commerce has a recurring bit part in my movie about shopping’s future but it remains small despite some good reviews.

comScore glessfully reported ecommerce revenues of $102 billion (not counting travel) for 2006. According to the company that represented 26% growth over 2005.

Don’t get me wrong (as they say), $100 billion is a very impressive large number. But, to put it in perspective, ecommerce is no more than about 3% (or so — Forrester argues more) of US retail. And get this, Jupiter says in its forecast that ecommerce is “maturing” and will slow.

Now let’s look at data from Compete representing the “top ten online retailer search terms and traffic ranking”:

These are direct navigation queries for “online retailers.” Or are they? While all these companies sell online, eBay and Amazon are the only two true “online retailers.” All these other names are well-known retail brands where the overwhelming majority of purchases happen in local stores.

And what’s the most popular area of most brand retailer websites? You guessed it: the store locator.

There are a growing number of sites seeking to provide local inventory information (or its equivalent):

• ShopLocal
• Yokel
• NearbyNow
• StepUp
• CNet (via Channel Intelligence)
• Become.com (in a limited way)
• Google (via Froogle and partnerships)
• Yahoo! (soon?)
• Others (yet to launch)

More and more offline purchasing is influenced by online research and advertising. This is the dominant paradigm. True, consumer purchase behavior is become more complex but it’s clear to me where things are going . . .

The only question is how do publishers and site operators respond?

Source: MORI Research for the NAA (2006) n=4,020 US adults

ShopLocal Tries Novel Video Marketing

As I was getting caught up on news, I saw Peter Krasilovsky’s post on a new video blog from ShopLocal: Digital Punch. It’s a little like CNET editorial reviews meets Diggnation.

What’s interesting is that this is a very indirect and potentially clever way to broaden the audience for ShopLocal (you can view the episodes on MySpace or YouTube, as well as the vLog itself). ShopLocal is ocassionally and casually referenced as the place you can buy many of the featured products. There also appears to be a potential revenue stream here in addition to the increased visibility the company is trying to build.

From the “sponsors” page:

Digital Punch specializes in product-placement, where our show host(s) discuss the sponsors in an integrated way that is similar to television of the 1950’s. Our sponsors have found this method, combined with the highly targeted nature of the show, to be an extremely effective way to get their brands in front of many viewers each month.

If you are interested in sponsoring an episode, please email us with your full name, company name, email address, phone number and one of our advertising specialists will follow up with you shortly. We look forward to punching you out!

Kudos to ShopLocal for being innovative. The challenge here will be to reference ShopLocal enough to achieve the desired objective but not so much that the show appears to be pimping the site. That’s a tough line to walk.

It might be “cleaner” and ultimately more effective to simply reference ShopLocal at the beginning or end of each episode as the place you can find the featured products or “powered by ShopLocal” (or similar) and remove the casual in-show references. Any objections to that sort of more obvious promotion can be overcome by making Digital Punch strong enough to stand on its own.

Here are some of the comments taken from a selection of the nine episodes on YouTube:

Was that a ShopLocal plug? Hmm…
This reporter is fan-tastic, so articulate!

Love it! Great PS3 vs. Wii story!

lmao this reminds me of the colbert report

weak

Good show. I thought it was funny

ShopLocal is effectively now producing TV. The key to making this a success, as I said, will be to make each episode both entertaining and informative enough to make them viral and grow the audience. But this is a provocative example of how content and advertising now merge in this new media world.

What Happened to Commoca?

I came across this post on GigaOm about putting the Internet (to some degree) on your home phone. It made me think of Commoca.

Commoca was going to be a touch-screen phone that was local ad supported (pay-per-lead). Effectively it would be the “laptop in the kitchen” for those that don’t have wireless networks at home (most of us). And it would allow a range of additional functions (radio, news feed, calendar, TV, shopping) in addition to some version of Internet connectivity.

I was supposed to be a beta tester for the product, but it never arrived. Last I’d heard the company’s funding had fallen through.

There is an opportunity for such a phone but the model and economics need to be just right. Like Free DA, advertisers could come from third party networks or agencies. The potential ultility for consumers is definitely there however.

Amid the Celebrating a Reality Check

Amid all the jubilant reports about online retail spending breaking records, the larger reality, reflected in this BusinessWeek story, is that retail spending is down and retailers are facing tough times. The holiday shopping season failed to meet expectations for most retailers and it signals a difficult 2007 for the economy as a whole.

Google Checkout: Doing Well Apparently

When Google introduced its payments system (and more) Checkout earlier this year my belief was that it had to break with its long-standing approach of not doing any marketing and push the product because it was potentially important to the company’s future. After a slow start, Google has been doing that — though in a very Google way.

It has run some online ads but also elminated any fees and offered consumers discounts to help speed adoption. Here’s a NY Times (reg req’d) article today that offers a very upbeat assessment on where Checkout stands:

Yet, to lure merchants to its advertising system, Google offered them $10 worth of free transaction processing for every $1 in advertising they spent on Google.

But Google recently got more aggressive. On Nov. 8, it waived transaction fees for all merchants, regardless of whether or not they were Google advertisers, through the end of the year. Then, on Nov. 27, it began offering Checkout users $10 off $30 purchases at many e-commerce sites and, in some cases, $20 off $50 orders. And on Dec. 5, it announced that transaction processing would remain free to merchants through the end of 2007.

In other words, Google plans to lose money on every Checkout transaction for more than a year. Yet the company believes it will be worth it.

Part of the speculation in the article is about Checkout being integral to an eventual CPA-based ad option (probably for online merchants) like Jellyfish or Snap. Google has reportedly been testing CPA (cost per action).

Here’s what showed up this morning when I searched on the word “checkout.” Note the PayPal ad on the right and mutiple Google links (click to enlarge picture):

Here are some earlier posts on Checkout.

Google Print and Wireless Shopping

No, there isn’t any relationship . . . I’m just running out of time this a.m.

First, Barry Schwartz at Search Engine Land points to a PPC Discussions post about some details on Google’s print newspaper ad program:

I received confirmation a bit earlier today that the ad we sent in for the Google newspaper test was accepted and has been / will be running in 78 newspaper in the US. Some of the better known papers include the Chicago Tribune, Boston Herald, Houston Chronicle, Miami Herald and a bunch of others. My ad started running on 11/29/06 and is scheduled to run in various papers through 12/21/06. The Google print team sent a pdf showing my ad in one of the papers as well.

I’ve already started to see some activity on my tracking url. Should be very interesting to see how this develops. Among other things I’m looking forward to seeing how these visitors interact with our site when compared to visitors we acquire via online methods.

At Search Engine Watch, Gary Price rounds up wireless shopping services. Recently, local shopping services Yokel and and NearbyNow launched mobile services (not mentioned in the piece). Mobile shopping is a fringe phenomenon now but will be more mainstream eventually. There are several basic use cases:

• Price comparisons while in the store with e-commerce sites
• It’s not here, I’ll buy it online
• It’s not here, where can I find it at another store

Another is NearbyNow’s SMS alerts/deals feature, which can either be push (opt-in) or pull: What’s on sale in the mall or local stores in my area?

Monday Morning Roundup

The NY Times (reg req’d) has a profile of/interview with Steve Berkowitz, who went from CEO of Ask to running Microsoft’s Internet arm. This is exactly the same article — in one way of looking at it — that was written about Yahoo!, which initiated a string of bad PR. Virtual Earth 3-D gets slammed a bit in the piece as being something of a distraction from core search. I like it and thing it has long-term value for the company. It just needs to operate faster online.

Helio adds mobile social networking features (per MediaPost, reg req’d), which will “dovetail” with local.

A couple of things I neglected to cover last week:

• Local.com added a holiday shopping guide. It’s not particularly local but valuable for shoppers and Local.com users and raises the question of what I like to call “the product definition.”
• In a conceptually related way, Yell.com added enhanced mapping capabilities to its site and launched an entertainment vertical called Yell Food and Drink. Canda’s YPG directory has a number of verticals and in the US, RH Donnelley has made some tentative moves in that direction.

Gary Price points out Windows Live’s new local HotSpot locator.

The WSJ over the weekend had a piece (sub req’d) on four media companies contemplating creating a YouTube competitor:

Four major media companies, including News Corp.’s Fox, Viacom Inc., CBS Corp. and General Electric Co.’s NBC Universal, are in talks about creating a video Web site to compete with Google Inc.’s YouTube, according to people close to the situation.

The companies, owners of most of the major TV networks, envision a jointly owned site that would be the primary Web source for video content from their networks, allowing them to cash in on fast-growing Web video advertising. They also have discussed building a Web video player that could play video clips from across the Web. A deal to create a competitor remains far off, however.

Walt Disney Co., owner of ABC, isn’t participating in the talks, because it wants to rely on the strength of its own brands, according to a person close to the discussions. ABC and the networks participating in the talks already offer some of their programming on their own Web sites.

LostRemote reports on local news weather forecasts showing up on Google video for the largest US metro markets.

Here’s an interesting NY Times article (reg req’d) on how publishers manipulate traffic numbers with pop-ups.

ClearChannel beefs up ClearChannel online, including with local ads and content.

Spot Runner has formed an alliance with the Diamond Promotion Service “to provide diamond jewelry retailers and manufacturers with cost-effective and targeted local TV advertising.  The ads complement DPS’ national ‘A Diamond Is Forever’ marketing initiatives and are designed to help jewelry retailers and manufacturers promote their businesses.”

Properazzi.com (something of a pun) launches a pan-European real-estate search site with over a million listings.

Attack of the Holiday Shopping Surveys

It seems like every couple of days now someone is putting out a holiday shopping-related survey. This is a logical PR move in anticipation of what will undoubtedly be a heavy season for e-commerce. After receiving the fourth or fifth one, I finally decided I needed to round them up (forgive me if I missed one).

Yahoo:

Three out of four (76 percent) holiday shoppers said they plan to shop for holiday gifts online, and a similar number, 75 percent, said they are likely to purchase gifts online from small businesses, according to a new survey commissioned by Yahoo! Small Business and conducted by Harris Interactive. Survey respondents expressed strong support for e-commerce with small businesses that offer a secure payment system, easy customer checkout and free shipping.

Nearly a third of holiday shoppers (30 percent) said that they would do half or more of their holiday shopping online, and nearly two thirds (63 percent) said online specialty, ‘niche,’ or boutique retailers are one of the “best places” to shop for unusual or hard-to-find gifts.

Google:

According to a new survey conducted by Harris Interactive and commissioned by Google Checkout, 40% of employed U.S. adults say they’ll be doing at least some of their online holiday shopping from work this year, with 1 in 4 of those shoppers logging on to track down that perfect gift on Monday, November 27. (57% plan to shop during coffee and lunch breaks, while 34% will wait until the end of the workday.)

Google is promoting Checkout to both consumers and merchants. Here’s the new consumer entry point (going live Monday after American turkey day)

Advertising.com:

Hosted by online market research company InsightExpress, the survey assessed consumer holiday shopping behaviors and expectations for 2006 from 500 survey respondents.

Survey data indicate that 2006 will be another strong season for online retailers. Well over half of the survey respondents plan to spend as much or more than they spent online during the 2005 holiday season. They also plan to go online early, with nearly a third of all respondents planning to begin their online shopping before Thanksgiving.

Consumers were also asked to indicate why they go online during the holiday season. They identified generating gift ideas, comparing product features and prices, and the convenience of shopping from home as the three most compelling reasons for shopping online.

The data also indicate, however, that holiday shoppers don’t always purchase online immediately – researching products for up to a month before buying a product. In addition, after researching products online, 60 percent of respondents still prefer to buy offline.

Become.com (based largely on Jupiter data):

• 68% of consumers say free shipping is the most important cost savings incentive to shop online (per third-party research commissioned by Become.com).
• 40% of consumers are reluctant to shop online due to shipping costs.
• 37% of online holiday purchases will be made after the ground-shipping deadline (according to Jupiter Research).
• In all, online holiday retail sales will grow to $32 billion in 2006 - up 18% over last year.

So what conclusions can we draw from all this? Basically:

• People will do as much or more online shopping as they did last year
• Some significant percentage of that will happen at work (posing challenges re capturing conversions when people are at work and then transact later at home)
• People love free shipping
• People research products online but still largely convert offline (the Advertising.com numbers were based on an online survey and underestimate the audience doing online research but converting offline)

By contrast, according to MORI Research (2006 for the NAA, n=4020), 90% of US adults buy offline and 7% buy online, but 66% use the Internet for shopping-related research. And once again, e-commerce is about 2.7% of overall US retail. But the Internet continues to influence more and more of those offline transactions.

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Related: In today’s MediaPost (reg req’d), Shanka Gupta discusses two more holiday shopping surveys: one by AOL and another released earlier in the week (the one I missed above) by DoubleClick.