The Ripple Effects of High Gasoline Prices

Shopping at home is rising along with gasoline prices.We’ve all heard the news reports about the effects that high gasoline prices are having on families who rely on automotive transportation for their livelihoods. It’s all well and good to promote the use of public transportation, but when your job is 25 miles away along suburban or rural roads, it’s often impractical to adjust commuting behaviors.

We’re also reading how high gas prices are affecting other aspects of the economy, such as the rising price of food items in the grocery stores due to higher transportation costs.

To this, we can now add another consequence of the high cost of petrol. Paralleling the gas price spike has been an increase in Internet activity.

Marin Software, a leading paid search manager platform for advertisers and agencies, has performed an analysis across more than $2 billion worth of paid search marketing activity. The firm established a benchmark based on the share of activity across the Google and Bing search engines, and then studied cost-per-click activity, clickthrough rates and conversion rates.

Marin evaluated the rise and fall in the volume of clicks along with the rise of gas prices over the time period January – March 2011. Voila! It found a positive correlation between rising gas prices and increased click activity.

In a similar vein, digital market intelligence firm comScore is reporting that U.S. e-commerce sales were ~$38 billion during the first quarter of the year. That’s up ~12% compared to the first quarter of 2010. And while e-commerce volume has been up over the past six quarters, this is only the second time the growth as been in double digits.

So the premise that the higher gas prices climb, the more the propensity is to shop from home and avoid the cost of driving appears to be on target. And it’s probably being helped along by the plethora of “free shipping” offers that are also out there — along with avoiding paying sales taxes.

Looking forward to the day when gasoline prices may plateau or fall back, it’ll be interesting to see if Internet activity drops back as well. Or will more people have become used to the comfort of shopping from home in their boxer shorts – so that online activity remains at an elevated level?

I have a suspicion it’ll be the latter.

One thought on “The Ripple Effects of High Gasoline Prices

  1. Here’s my question about this study:

    Does higher click activity also mean higher sales volumes, or just more people, say, comparing prices in a tough economy? (Clickthrough increases mean nothing if conversion rates decline, i.e., if sales remain static or decline.) The research you quoted said that conversion rates were factored in to the study, but the published correlation rate was between gas prices and clickthrough rates, not conversions. Is that information available?

    The point is, increased clicks only matter if they are followed by corresponding increased sales. Otherwise, they’re nothing more than increased overhead.

    Also. at some point, higher transportation costs are going to have to be passed along to customers. Online retailers will have no option if they want to stay in business.

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