A new report from Hitwise is showing that as more time online is spent inside social networks, e-commerce sites are receiving less traffic from search (both natural and paid) and more from social networks. They found that for UK online retailers, the amount of traffic they received from paid search listings fell from 10.1% in March 2008 to 8.9% in March 2009; meanwhile the amount of traffic these sites are receiving from social networks has increased from 5.2% to 7.1% over the same time period.

A similar shift has happened from webmail providers to social networks; whereas a year ago the traffic they generated for e-commerce sites was roughly equal, Hitwise now reports that social networks are generating 58.3% more traffic that webmail providers.

With the UK (and the rest of the world) in a downturn, margins for online retailers are being squeezed, and reducing the cost per acquisition has never been more important. Companies are now showing that it’s possible to generate effective traffic from the social networks, which if done right is far cheaper than paid search; ASOS, the online fashion retailer, is receiving over 13% of its traffic from Facebook alone. Brands which get this right will be have a cheaper CPA and better margins than their competitors, giving an essential edge in this climate.

(Data sourced from Hitwise Intelligence).

Grant Bell general ASOS, ecommerce, facebook, hitwise, online retailers, PPC, search, social networks, traffic generation, upstream traffic