Online to defy retail spending slowdown

US consumers will increase how much they spend on products online this year despite a dramatic slowdown in conventional retail spending, according to new research reported by Marketing Charts.

The study, by Forrester Research, predicts online spending in the US will rise by 17% in 2008 to $US204 billion, in a year in which the US economy is likely to either go backwards or only grow slightly.

Spending on clothing, computers and cars will be the largest three sales categories, according to the report.

The report also asked online retailers how they spend their marketing dough:

• Online retailers allocate an average 53% of their marketing budgets to online customer acquisition, compared to just 21% for customer retention.

• Retailers reported that search engine marketing is the best way to get new customers, with 35% of sales coming from SEM.

• Some 90% of online retailers use pay per click or pay per sale search placement, with 79% saying they will put even more money into that marketing tool this year.