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Giveaways pay off on the Web

Want to convince customers to buy on the Web? Give them something for free, a new survey suggests
Written by Richard Shim, Contributor

Giveaway sites are attracting a new kind of audience to the Web, users who might be willing to pay for goods and services even as they collect a free gift.

That is the message from market researcher PC Data Online, which hosted its Trends Conference Friday. Echoing a familiar theme that users don't want to pay for information on the Internet, PC Data CEO Ann Stephens said that 89 percent of Web surfing time is spent in search of free information, entertainment or prizes.

Only 11 percent of Web visitation time is spent buying something.

But Stephens said a new type of Web customer is also emerging: those who are more likely to make a purchase than previous users -- and they're more loyal to boot. These customers tend to be the ones trying to win free prizes from online lotteries and other giveaway sites.

'Giveaway customers' on average are 42 years old (older than the typical Web audience), 40 percent more likely than the average person to make Web purchases and 40 percent more loyal to individual sites, Stephens said.

Web sites with an established brick-and-mortar presence are generally favored by this group. As a result, these sites are growing much faster than the rest of the industry.

Stephens cited JCPenney.com as an example. Eighty five percent of purchases on JCPenney.com come from customers lured by giveaways. JCPenney.com's traffic, measured by number of unique visitors jumped to just over 2.5 million from just under one million since September 1999.

"Not bad for a company whom I can't recall seeing any ads from," Stephens said.

Still, as far as online buying goes, Stephens said that most sites are still trying to figure out what works and what doesn't.

Results from PC Data Online suggest that something as simple as when a site asks you for a credit card number -- such as before or after making an order -- can sway the likelihood of sale by as much as 8 percent. That's a major influence when you consider that people make a purchase only 11 percent of the time.

However, Stephens said many of the traditional ideas for ensuring success offline, such as building a brand and talking to customers to monitor their needs, still apply online. Especially when it comes to getting a valuation from the stock market.

In other developing trends, according to the research firm, we can expect to see newspapers making bigger moves on the Web. With users spending 71 percent of their time getting local information from sources other than newspapers, newspapers are spending huge sums on the Web to catch up.

One example: The New York Times is expected to file an IPO for its New York Times Digital Division to raise money to grow its site. Details about the filing are not yet available. Stockholders approved the filing on 23 May.

Stephens said that within 12 months, newspapers will introduce new ways of making money on the Web.

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