Online behaviour and the economic downturn

Posted October 1, 2008 in research, strategy  |  No Comments so far

Online intelligence service Hitwise released a report last week claiming that UK internet usage patterns were changing in response to the current economic situation. The full press release is here.

Hitwise gathers its data by looking at the traffic logs of its clients’ websites, which number around 1,500. These websites are divided up into a range of categories and sub-categories. Hitwise is therefore aware of traffic volumes to sites in different categories, and has attempted to draw conclusions from changing patterns in these.

This methodology may be imperfect—1,500 websites may sound like a lot but is just a drop in the ocean—but the findings seem to be intuitively correct. For around a year now the subject of how a slowdown would affect online behaviour has been coming up more and more frequently, and the general consensus has been that online retail and price comparison sites are not going to be as exposed to the effects of a drop in consumer spending. Smaller household budgets lead to an increase in price-sensitivity, and price-sensitive consumers spend more time researching and planning purchases as opposed to buying on impulse.

An example of this in the Hitwise research is that traffic to what it identifies as price comparison, voucher or cashback sites increased by 20% between July 2007 and July 2008, after a slight drop in traffic to such sites between 2005 and 2007. Voucher sites seem to be the biggest beneficiaries (to the uninitiated, voucher sites collate promotional codes & vouchers from various retailers, which can be redeemed at checkout for discounts – here’s an example).

However, another contributor to this trend could also be quite simply that British people have become, on average, more sophisticated online shoppers. It’ll be interesting to look at how traffic to voucher and price comparison sites bears up when the growth phase of the next business cycle begins. Will those sites become the online equivalents of Poundstretcher, shunned by all but the most price-sensitive? Or will they remain the first port of call for the clued-up online shopper?

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