Today JPMorgan predicted that global e-commerce will grow 19% in 2011 and is forecasting
that rate to continue through 2013. What’s more interesting is that 52% of people make an online purchase at least once per month, and only 12% didn’t shop online in 2010 (down from 20% in 2007). This is according to JP Morgan senior analyst, Imran Khan. Wow. Those are big numbers. This is a swift and significant change in shopping behavior, even in a recession.
However, there is a bit of a disconnect pointed out as well. Online advertising spending has grown significantly in the US – it reached 13.7% of total advertising, which far exceeded the percentage of online retail sales to total retail sales (3.9% of US retail). This suggests some level of inefficiency.
So what to make of this ecommerce to online advertising gap? A couple of thoughts:
- We have not yet hit the tipping point of online advertising. There is a barrier that must still be overcome that will take more years of advertising to close the gap.
- Online advertising may have little correlation to online sales. This could be due to the fact that online advertising is a media, rather than retail, choice. I can advertise soup on the internet, but I wouldn’t expect you to buy it there. The same is true for restaurants, gasoline, etc.
- Or….advertising is not effectively convincing people that online shopping is a safe, quick, and viable alternative to putting your coat on and driving to the mall.
