Online shoppers in Germany spent roughly €15.5 billion ($21.5 billion, at average 2009 exchange rates) last year, according to recent data from GfK’s WebScope Panel. That marks an annual rise of 14%—well below the 19% growth rate in 2008, but distinctly positive given the difficult economic conditions.

The average expenditure per online buyer in Germany rose by 10% in 2009, to €506 ($703), though the number of purchases, on average, remained constant at 9.4 per year.

Of the non-food product categories monitored by GfK, clothing and fashion showed the greatest gain (24.5%) since 2008. Sales of electronics were up 12.3%, and sales of durables (such as furniture, toys, books and household goods) grew 11.5%.

So far, expectations for growth in 2010 are modest—though e-commerce should continue to perform more robustly than offline sales. Consumer confidence in Germany fell marginally (0.1%) in February 2010, according to GfK’s monthly assessment, and a similar slippage is expected in March. The German economy is beginning to pick up steam again, but prospects of further job losses and wage constraints due to lingering effects of the financial crisis are weighing on consumers.

GfK’s WebScope Panel research is based on a nationally representative sampling of 10,000 Internet users ages 14 and older. GfK has surveyed online buying habits in Germany continuously since 2001.

The UK’s Institute of Practitioners in Advertising (IPA) published a statement today supporting the Grocery Supply Code of Practice. The code aims to deter retailers in the UK from forcing brands to slash prices to damaging levels.

As the financial squeeze continues to shape consumers’ expectations and buying habits, the IPA is concerned that brands may be suffering unfairly. While retailers lean on advertisers to keep prices down, shoppers too are anxious not to pay over the odds.

Price promotions have been an obvious weapon for advertisers during the 2008-2009 recession. A spokesman for the Institute of Sales Promotion (ISP) noted that the proportion of goods sold at discounted prices in the UK rose by 25% in 2009, and reached a value of £14 billion ($22.3 billion) in the month of November.

The ISP also noted that 70% of sales directors polled recently said they expected significant discounting to continue in the near future.

But the IPA’s October 2009 report, “Pricing for the upturn: How can brands fight back?” argued that advertisers and their brands could suffer long-term damage if they depended too much on discounts to attract shoppers.

The IPA had already explored the potential impact of discounting in an earlier report, “Price promotion during the downturn: shrewd or crude?” Data collected for that study indicated that price promotions eroded consumer loyalty toward brands.

The WARC’s coverage of the later IPA report also discusses further implications for advertisers. Worth a look.

January 26, 2010 should have been a red letter day for the UK. At last: The official announcement that the longest, deepest recession since the second world war was at an end. But the growth registered by the economy in the last quarter of 2009 was decidedly underwhelming, at 0.1%. Moreover, fears persist that the country may succumb to a “double dip” recession—and slide into negative growth again this year.

The continuing financial squeeze prolongs pressure on advertisers and marketers to watch every penny. In practice, that should reinforce the importance and momentum of online spending in the UK, while traditional media struggle. GroupM, for example, has forecast that only Internet and mobile ad spending will increase in 2010.

There are hopes that consumer confidence will rise as spring arrives, and help to ensure the recovery stays on track. Confidence levels climbed substantially between a record low in January 2009 and the end of the year, according to the Nationwide Building Society.  But expectations are still fragile, said Nationwide, and most consumers will need encouragement to spend.

Score another one for paid content. Just after The New York Times confirmed what we’d all suspected (is “feared” too strong a word?) — that it’s going to charge for online access again — YouTube became the second media giant in a week to announce a shift from free access to paid content. The user-generated video specialist is launching an experimental digital movie-rental service, and its first venture into transactionable content. But will it work?

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Google’s earnings in Q4 and in all of 2009 were strong, but that might be more a case of Google’s strengths than the online space as a whole. Here’s why.

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According to the latest IPA Bellwether report,  budgets for Internet advertising and direct marketing in the UK both rose in Q4 2009, for the second quarter in a row. Overall marketing spend fell for the ninth quarter running, but the fall was the smallest since Q1 2008. Among the more than 300 firms surveyed for the report, 35% said they anticipated better prospects in 2010, as the economic recovery gathers pace.

These results will be welcome news for UK advertisers, and digital marketers in particular. But it is still too soon to tell whether the industry as a whole has really turned a corner and can look forward to positive growth in 2010. Just three months ago, ZenithOptimedia forecast a 13.1% drop in UK ad spending for 2009.

The travel industry is showing slight signs of a rebound, at least, if Web traffic is any indicator. Compete recently released data which shows that while differing travel categories (hotel, cruise, air, car rental) are recovering at different rates, all categories are seeing an increase in aggregate unique visitors this year compared to 2008. From Compete’s blog:

In summary, all four categories are showing signs of recovery, and in general consumer research levels are leading indicators. But results here are based on domain level visits: a deeper assessment would include consumer engagement (deeper funnel steps like conducting a search or choosing an itinerary) and actual bookings. A true recovery will be supported by more overall research by travelers, more engagement, and more bookings – coupled with a return of pricing power.

Many consumers are still opting to stay at home, while others say they are reducing the amount of money spent on leisure travel by researching deals online before purchasing. As we recently wrote in our Daily Newsletter, “52% [of US Internet users] told About.com that, like in 2008, they would not travel this holiday season, another 24% said they were even less likely to travel this year than last. Money-saving attitudes, unsurprisingly, have an effect on what kinds of ads are most likely to reach consumers. Asked which online travel advertisements they were most interested in, large majorities of respondents wanted coupons on big-ticket travel items: airfare and hotels.”

(Read more…)

The virtual world IMVU announced in October 2009 that it was profitable and on track to generate $25 million in revenue in 2009. Much of that revenue comes from the credits that members purchase from IMVU to buy clothing, accessories and other goods for their avatars. We recently spoke with Cary Rosenzweig, IMVU’s CEO, about how IMVU is different from other virtual worlds and from social networks, and how its virtual goods economy functions. Here’s an excerpt from the full interview:

eMarketer: In what ways is IMVU different from other virtual worlds and from social networks?

Cary Rosenzweig: Unlike Facebook, which is about managing your real-world contacts, IMVU is a place where you meet new people from around the world, in addition to bringing some of your current friends. We have 40 million registered users so far. And we have the world’s largest catalog of digital goods. That’s unique because it’s created by our own users, which has profound implications both for the consumer and for us as a business.

eMarketer: How does IMVU generate revenue?

Mr. Rosenzweig: Over 80% of our revenue comes directly from the consumer. This has allowed us to not only ride out the economic downturn in the past year but, in fact, do quite well in it. The balance is advertising. The advertising is a combination of managed offers—where consumers will agree to trial offers from advertisers, and those advertisers will pay us money for that and we will pay the user in credits—and more traditional forms of online advertising.

eMarketer: What sorts of engagement metrics do you track?

Mr. Rosenzweig: People typically get on twice a day for over 30 minutes each. We get well over 80,000 people using the service simultaneously. I think our record this summer was 92,000. We get over three-quarters of a million chat sessions per day, and about 175,000 virtual items are sold every single day. In fact, we’re more like an e-commerce company than a media company in the sense that we get our money from the purchase of these virtual credits that people use to buy virtual items.

eMarketer: Why are virtual goods so important to your users?

Mr. Rosenzweig: In the past 30 days over 35,000 different people have sold at least one of their items that they created to at least one other person in IMVU. They’re extremely prolific, very creative. They create more than 4,000 new items every day.

So why is having such a large catalog of virtual items important? Well, from a user standpoint, we have discovered that using virtual goods, especially with your avatar, is a long-tail phenomenon. A key proof point of that is our top 10 selling items never sell more than 0.2% of the items sold in a relevant time period. People want their avatar to be unique, just like they themselves want to be unique in the real world. So they don’t want to buy the most popular item, and they’ll go very, very deep into the catalog to select the right hair and eyes and eyebrows and makeup and body types and dresses and jewelry, etc., to make themselves very, very unique.

eMarketer: How does the virtual goods economy work in IMVU?

Mr. Rosenzweig: There are three elements: IMVU, the customers, and then the developers, which we sometimes call creators. The developers often are users of IMVU, and some of them are successful enough that they’ve quit their day jobs and are making a living creating and selling items within IMVU alone.

The customer gives us money and in exchange we give them credits. We don’t do revenue share with anybody at this point, so from here on out we keep the money and the credits are now in the IMVU system. So the customer goes to the catalog and buys something, and they get a digital good, and the credits move to the developer. So what does the developer or the creator do with their credits? Well, there are many, many, many creators, many of whom don’t sell a lot of items, and so they use the creation of digital goods as a way to earn credits for themselves so that they can buy something from someone else.

But many of them want to sell their credits and get real-world money. So we allow the developers to sell their credits directly to the customer in exchange for money. So the customer is giving us money, and they’re giving the creators money. The process of selling credits to the customer from the developer takes place partially outside of IMVU, meaning the developers create Websites outside of IMVU where they accept credit cards or PayPal or whatever. Once they’ve taken acceptance of the money, then we allow them to send credits to the customer inside IMVU.

The full version of this interview is available here, to eMarketer Total Access subscribers only. Every day they have access to new interviews with digital marketing leaders and trendsetting entrepreneurs.

We recently chatted with author/blogger Lee Eisenberg about his new book, “Shoptimism: Why the American Consumer Will Keep On Buying No Matter What,” which explores shopping behavior from both the consumer and retailer sides, social media, academic and marketing research, and Mr. Eisenberg’s own experiences. Interesting stuff. A clip from the full interview on eMarketer Total Access:

eMarketer: How has the recession changed the way we shop?

Lee Eisenberg: My book’s subtitle is “Why the American Consumer Will Keep On Buying No Matter What.” Now that’s not to say that the American consumer will keep on buying the same way, or the same things in the same stores. But where there’s a will to shop, we will find a way to shop. We’ll never stop shopping and the sales side will never stop selling.

I think the recession has rebalanced our mindset. Most of us are now more mindful about what we buy than we were a couple of years ago. It’s not to say we won’t be spending money on big-ticket things or designer labels and so on. But I do think we’re placing a much bigger premium on value, and by that, I don’t mean absolute price. You read a lot these days about cost per wear, which is to say you take the price and you divide it by the number of times you wear it, or the amount of use you’ll get out of it, and that equals value. Value proposition is far, far more important today than it was a couple of years ago.

…

The other thing is social media. Every survey says 85% of us would trust what the rest of us say about a product or a retailer more than what an advertising agency says about its client. That’s a big change that’s not going to go away as the economy improves. These retailers have to learn that they don’t have the power to regulate or project their brands the way they used to.

eMarketer: How should multichannel retailers approach online versus offline shoppers? Are they one and the same? Is one more valuable?

Mr. Eisenberg: The brand values, voice and principles must be the same whether you’re delivering those in a store or online. That said, I think you’d be hard pressed to find any retailer that won’t tell you that the best customers are the cross-channel ones. It isn’t an “either/or.” It’s an “and/both.” A customer who shops two or three ways is going to spend more than a customer who only shops one, even if that customer is a heavy shopper in that one platform.

The full version of this interview is available here, to eMarketer Total Access subscribers only. Every day they have access to new interviews with digital marketing leaders and trendsetting entrepreneurs. Some other interesting interviews/case studies on retail:

• How Facebook can be a Revenue Source for Retailers
• Best Buy talks Social Commerce on Facebook
• Case Study: Marketing in a Tough Economy
• Retailers Will Focus on Basics This Holiday Season
• How the Davids of the E-Commerce World Can Beat the Goliaths

One of the themes in an upcoming eMarketer report previewing the online holiday shopping season is that the tough economy has mainstream and luxury retailers alike returning to tried and true merchandising and marketing tactics. Recent eMarketer interviews with e-commerce professionals bear this out.

Kevin Ertell, VP of retail strategy at ForeSee Results, said that during the holiday season retailers will focus on proven marketing techniques like paid search and e-mail marketing and shed all the peripheral stuff. By peripheral stuff he means experimental activities on social media sites. A lot of retailers talk about Facebook and Twitter, Ertell says, but those forays still seem to be marginal tactics for now.

Scot Wingo, CEO of Channel Advisor, concurs. Many of the retailers he works with want to make sure they have good selection, good pricing and that their products are in the channels where consumers shop. Wingo doesn’t know many retailers who are saying they have to get their social strategy together. Sure, social is on their minds but as part of their long-term thinking.

Suzanne Hader, founder of 400twin, said luxury retailers are trying to connect with affluent holiday shoppers by emphasizing the quality and value of their products over their opulence. They have done away with the razzle-dazzle approach that was in vogue a couple years ago. Saks Fifth Avenue, for example, offers the Forever Handbag, with the implication being that by buying this bag a woman won’t have to buy one every single quarter.