June 2001 - Vol. 3 No. 6
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| More than temperatures are on the rise this summer. Online profits are heating up, as well as e-commerce around the world. Surfers are warming to larger ad formats and are showing a preference for e-coupons. The automotive industry is dedicating more of its advertising budget to the Internet, and insurance companies are furthering online operations. The online world is becoming more demographically diverse, including a very connected Class of 2001. Visitors are sharing personal data, reassured by privacy policies and wooed by sites that remember their preferences. Finally, bank customers are trading standing in line for going online.
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ADVERTISING
Big Ads, Bigger Business
| Bigger looks better to Web surfers. When comparing the effectiveness of a traditional banner ad to an ad 30 percent larger, a Millward Brown IntelliQuest study for ESPN.com and Universal Pictures revealed that the bigger advertisement won out. Online ads for "The Mummy Returns" were tested on ESPN.com over two consecutive weeks with a pop-up window for viewer response. Almost half (47 percent) of those who saw the larger ad said the movie would be "worth paying to see," versus 40 percent of the traditional ad viewers. When asked if they felt the movie would have "superior digital effects," 75 percent of the bigger ad viewers agreed, compared to 66 percent of those who saw the smaller ad. Source: PricewaterhouseCoopers & Millward Brown |
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Auto Companies Driving Towards The Web
Auto companies are gradually pulling dollars out of broadcast television and shifting them to more cost-effective advertising vehicles. In addition to spot TV, the Internet and print are other areas that will see increased auto spending.
| Auto advertising has been the fastest growing category among Phase2Media advertisers - up 267 percent from fourth quarter 2000 to first quarter 2001. |
DaimlerChrysler, which spent about $1.6 billion in advertising last year, will begin to shift the $1.2 billion it spent on television into other media.
With 53 percent of new car buyers using the Internet in some way during the new car purchase decision process, the Web is quickly supplanting television in getting the message out.
Source: Media Life Magazine
What An E-consumer Wants
E-consumers have a thing for their virtual mailman. More than half (55 percent) of online shoppers prefer to receive coupons by e-mail rather than by newspaper (29 percent) or "snail mail" (16 percent), according to research conducted by Valentine Radford. Eight in ten respondents welcome e-zines and over 50 percent say that e-mail ads are "enjoyable." HTML e-mails are preferred over text by 60 percent of those surveyed, and 72 percent enjoy rich media e-mails.
Source: Valentine RadfordLower Costs for Customer Acquisitions
Online retailers are tightening operational costs and improving the conversion process, dropping the average cost of acquiring a new customer from $38 in 1999 to $29 in 2000. That cost has decreased because online retailers are focusing on targeted marketing now, and have moved almost completely away from offline mass media (fewer break-through creative, TV ads).
- Spending on print ads has dropped from 22 percent of e-retailers' marketing budget in 2000 to 13 percent.
- Spending on TV ads also dropped from seven percent in 2000 to two percent in Q1 2001.
- According to The Boston Consulting Group, more e-tailers than ever before are reporting a profit: 72 percent of catalogers, 43 percent of brick and mortars, and 27 percent of Web-based dealers were in the black last year.
Online retail sales in North America are predicted to grow by 45 percent this year, for total revenues of $65 billion. The fastest growing category is travel; with online sales of $13.8 billion in 2000, travel sites are expected to increase by 50 percent in 2001.
Source:
& The Boston Consulting Group
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| Online coupon clippers are an advertiser's dream-come-true. According to Cyber Dialogue, of the 84.9 million US adults currently online, 14.9 million have downloaded an e-coupon in the past three months. Online coupons include those received via opt-in e-mails, coupons offered to visitors directly on the Web site and coupons that appear first as banner ads and must be clicked to download. More than nine in ten (94 percent) of the adults who download coupons have shopped on the Web and 67 percent have purchased offline after researching products online. Coupon clickers are also more receptive to banner advertising 46 percent call banner ads "helpful," compared to 39 percent of the general online population. |
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IN GENERAL
Getting Personal
Do Web shoppers prefer personalized service or privacy? The Personalization Consortium has revealed that 82 percent of Web visitors are willing to give information such as gender, age and ethnicity to sites that will remember their preferences. Over half of the respondents prefer personalization: 56 percent would rather buy from a site that customizes content, and 63 percent are more likely to register at such a site.
Surfers who are willing to give personal information also spend more on the Web. More visitors who divulge personal data (21 percent) pay for online subscriptions than those who do not (11 percent), and more "personalizers" (28 percent) spent over $2,000 online in 2000 than those who refused to provide personal information (17 percent).
However, privacy is still very important. More than eight in ten (82 percent) Web users consider privacy statements a "critical factor" in an online purchase, and 84 percent have chosen not to give personal information to a site without a clear privacy policy. SRI Research reports that 26 percent of surfers are "much more likely" to personalize at sites with a prominent privacy statement.
Source: Statistical Research, Inc., Cyber Dialogue & Personalization Consortium
Where We Spend Our Time Online: Search America
One in three Americans visited a search engine, portal or online community in May 2001, according to Nielsen//NetRatings. The search engine category hosted the most visitors last month 95 million surfers for 92 percent reach of Web users.
The second most popular (and fastest growing) category was telecommunications/Internet services, which attracted 72 million visitors, for a 70 percent reach. Entertainment ranked as third, with a 67 percent reach of 69 million people.
Source: Nielsen//NetRatings FINANCIAL
Happy E-Bankers
Saving time and having 24/7 availability are the two most important benefits of banking online, according to Gomez, Inc. On a scale of one to seven, online banking users have an average satisfaction level of five. Customers who consider the Internet their "primary" source for banking and those over age 55 are the most content with their bank.
Source: Gomez, Inc.Enabling Online Insurance
With more than 150 insurance industry leaders planning to increase online budgets by 89 percent during the next three years, the insurance industry has been identified as a key online opportunities by PricewaterhouseCoopers. Only seven percent of agents and 17 percent of insurance companies now use the Internet to process policy applications, but by 2004, 93 percent of agents and 71 percent of companies are projected to do so. Executives predict that enabling e-business will save insurance companies 19 percent annually.
Source: PricewaterhouseCoopersMore Buying Than Selling On the WWW
More companies are buying than selling online, according to PricewaterhouseCooper's "Trendsetter Barometer," a survey of 425 of America's fastest growing businesses with annual revenues from one million dollars to $50 million. Over half (59 percent) of the companies reported making purchases on the 'Net, buying over eight percent of their goods online in the first quarter of 2001. However, only a quarter of these businesses are currently selling on the Web, with just over five percent of their sales coming from the Internet.
Source: PricewaterhouseCoopers
DEMOGRAPHICS
Bridging the Gap
Minorities, seniors and lower income households are demonstrating the mass-media appeal of the Internet. Online African-Americans have increased by 41 percent since 1998, with 54 percent currently connected and Hispanic access has grown by 45 percent, with 42 percent online, according to The Media Audit.
E-mail Levels Gender BiasWhen using e-mail, 65 percent of businesswomen felt their ideas were more likely to be considered, 66 percent believed their peers were more responsive and 67 percent thought they could better express themselves, according to a Compaq survey. Over half (52) of the women surveyed felt that e-mail neutralized gender issues present in face-to-face meetings. Source: PR Newswire |
Retirees online have increased by 84 percent during the past three years, with 25 percent connected. Individuals over age 50 are logging on 51 percent more than in 1998; currently 37 percent are online.
Comscore further supports the narrowing of the digital divide, noting that lower income households are logging on in record numbers. Those with incomes below $25,000 have experienced a 28 percent growth rate online, with 36 percent gaining Internet access.
Other Comscore findings:
- Over half (58 percent) of all Americans, and 60 percent of Caucasian-Americans are currently online.
- In the US, Western states have the greatest online penetration (62 percent), succeeded by the Northeast (60 percent), the South (58 percent) and the North Central (54 percent).
- Households in which the oldest resident is between 25 and 34 years old are most likely to have Web access (68 percent), closely followed by the 35 to 44 age group at 66 percent.
Welcome To the WorldWideWeb, Graduates
Only one demographic group can make this claim: almost 100 percent of the graduating class of 2001 have Internet access. During their four college years, this connected
class' time online has climbed from six to 11 hours per week. This
year's graduates like and trust the Web: 78 percent state that the Internet has "brought them closer to the world," and only 23 percent are concerned about privacy online (compared to 46 percent of total online Americans). More graduates (80 percent) get their news from the Internet than the radio (57 percent), TV (55 percent), newspapers (37 percent) or magazines (39 percent). Over 90 percent e-mail every day, and over half (54 percent) use the Web to job-hunt.
INTERNATIONAL
As the World-Wide-Web Turns
Forrester Research predicts that worldwide Internet commerce will reach $6.8 trillion by 2004, with sharp increases in many Asian and European countries.
IDC forecasts online spending of $5 trillion by 2005, supplied by 1 billion Internet users, or 15 percent of the global population. This assumes a 70 percent growth rate from 2000's revenues of $354 billion. Last year, 34 percent of Web surfers were American, followed by 29 percent from Europe, 16 percent from Asia/Pacific (except Japan), ten percent from Japan and 11 percent from elsewhere. Growth in underdeveloped countries will change the balance over the next few years, and by 2005, Asia/Pacific and Europe will compete for the greatest online population, with USA taking third place.
Source: Forrester Research & IDC