Businesses cautiously optimistic about prospects for 2024
Online commerce set to grow, but SIDN Panel members looking critically at costs
As each year draws to a close, we ask businesspeople on the SIDN Panel how they view the year ahead. How do they expect online business to go? What market developments do they envisage, and what will those developments mean for demand on the domain name market? While the generally positive outlook expressed by respondents a year ago persists, it's now more qualified, with cost inflation a particular cause of concern. Although respondents are still expecting online business to grow, and are planning to invest in design and SEO, more of them are thinking of switching service providers or cancelling domain names.
Big cost rises in 2023
Price rises are the main factor dampening optimism. Businesses are positive about the prospects for their online operations, but many have seen their main suppliers' prices go up by more than 5 per cent for 2 successive years. Last year, 42 per cent reported supplier price rises of 5 per cent or more, and this year the figure rose to 47 per cent. Hosting and domain names are the cost items mentioned most often by respondents.
Question: Which website-related costs have gone up in the last year? (n=94)
2023 | 2022 | |
|---|---|---|
Hosting | 80.60% | 78.02% |
Domain names | 68.70% | 47.90% |
Software licences | 25.40% | 35.60% |
Online marketing | 20.90% | 17.80% |
Web design | 14.90% | 17.80% |
Other, namely | 6.00% | 8.20% |
Rising prices are one of the reasons why a growing number of businesses expect to cancel domain names in 2024. Unused names are most likely to be disposed of.
“Big year-on-year price rises seem to be the norm now, after a long period of stability. Rising costs make it less attractive to retain preventively registered typo domains and the like.”
Respondents are nevertheless modestly positive about their domain name portfolios: half as many again expect growth as expect contraction. However, 33 per cent say they're likely to make cuts if the economic climate is unfavourable, compared with 20 per cent a year ago. Much therefore depends on how the economy performs in 2024.
Cost-cutting: more focus, less paid promotion
So, to what extent is the concern about costs likely to be translated into investment policy in the year ahead? Nearly all respondents expect the percentage of their turnover accounted for by online trading to increase or remain unchanged next year, but envisage changes in their spending patterns. Most businesses will be focusing on a smaller number of sites and investing mainly in SEO (47 per cent) and redesign (55 per cent) – in other words, investing more in fewer sites. Meanwhile, online marketing appears to be losing its appeal. All forms of online marketing are less popular with our respondents than a year ago, with the exception of influencer marketing, which 19 per cent of respondents expect to spend more on in 2024.
Macroeconomic factors less threatening
Notably, respondents are generally less worried about external business threats in 2024. Concern about energy prices, inflation and the economic climate has declined over the last 12 months. However, from the open responses, it's clear that many see the rise of AI as a threat. Various respondents said that their clients were starting to use AI for tasks they would previously have entrusted to external service providers, particularly in the online marketing sector.
Question: How much will each of the following factors impact your investment in online activities next year? (n=80) (The table shows the percentage '(Very) high impact'.)
2023 | 2022 | ||
|---|---|---|---|
General inflation | 33.9% | 42.7% | |
Staff/resource shortages | 27.3% | 32.6% | |
Energy prices | 26.8% | 35.6% | |
Economic climate/recession | 26.6% | 38.9% | |
Higher taxes, social security, etc | 19.2% | N/a |
Any questions?
If you've got any questions about the survey results, please contact our .nl Domain Marketing Manager, Michiel Henneke. Historical data on developments in the .nl domain is available on stats.sidnlabs.nl. Interested in joining the SIDN Panel? We'd love to hear from you! Apply now!
