Web-based retailers tripled their marketing spending as percentage of revenue, to 18% in 2005, from 6% in 2004 according to a report by market research firm Forrester Research and Shop.org, the “Wall Street Journal” reported on 6/19/2006. The increase was driven in part by competition from traditional “multi-channel” merchants according to the report.
Of course, spending competition for Google AdWords is an added factor! Entrepreneurs planning the start-up of any new business typically have a hard time deciding how much to budget for marketing spending. For those who are considering new web-based retail businesses, getting the budget right is becoming even more critical. It is nice to be Amazon, with the #15 ranked website, and spending only $199 million in marketing on $8.5 billion of sales in 2005, a spending rate of less than 2.5%. -dr
