For the yearend holiday season, retailers are shifting away from price-based promotions to engage loyal customers and toward relationship-marketing initiatives, such as email marketing and search engine marketing, which allow retailers to understand visitor intent and leverage behavior-based insights to target customers with relevant messages that strengthen relationships, according to WebTrends.

This year, twice as many respondents (23 percent) said they would not be using price-based promotions to generate online revenue from loyal customers during the holidays, compared with 11 percent in 2005, according to WebTrends's "2006 Online Retail Holiday Readiness Report," which surveyed 300 internet and multi-channel retailers about key trends and online strategies they are focusing on for the upcoming holiday season.

Even the most popular holiday marketing promotion - free shipping - has dropped in popularity, from 62 percent of retailers using it in 2005 to only 45 percent saying they would use it in 2006, WebTrends said.

Also, though suggested items, gift idea centers and featured sales item pages remain the most popular site features to generate revenue from loyal customers, the percentage of businesses using them has fallen from last year. Only personalized promotions and live chat received a boost year over year. Moreover, three times as many retailers (18 percent) are opting to use no site features this year compared with last year's 6 percent.

The biggest increases in marketing spending for the holidays will be in email marketing (52 percent), SEM (46 percent) and SEO (38 percent). The biggest decreases in spending will be in online banner ads (17 percent), print advertising (16 percent) and broadcast advertising (14 percent).