Ekaterina O. Walsh

1
(No Transcript)
2
Winning over the online consumer
Ekaterina O. Walsh Senior Analyst Forrester
Research
3
Theme
Local content Well positioned to succeed across
channels.
4
Agenda

• Who are the online consumers and how do they
  differ from newspaper readers?
• Do online media cannibalize traditional media?
• Is local content important to online consumers?
• How do you serve ethnic groups online?

5
How we know what we know

• Four years dedicated to understanding online
  consumer issues
• Annual surveys of almost 200,000 consumers, on-
  and offline
• Continuous contact with media companies,
  retailers, and technology vendors

6
Agenda

• Who are the online consumers and how do they
  differ from newspaper readers?

7

The Digital Decade
By 2004, two-thirds
of households will
have adopted digital
technologies
8
Online Penetration Differs Across The US
Above-average penetration
(more than 47 of households)
verage penetration
A
(43 to 47 of households)
Below-average penetration
(less than 43 of households)
9
The Forrester Technographics Segmentation
Fast Forwards
Sidelined Citizens
10
Who is online and who isnt?
Offline 26,000 53 44 32 52 29 38 17 22 19
39
Online 56,000 41 53 67 59 41 69 33 28 30
9
Median income
Median age
Male
Attended college
Married
Have children under 18
Technology optimists
Career-motivated
Family-motivated
Entertainment-motivated
Sidelined citizens
Average hours spent per week 10
11
Internet Penetration Drops Off With Age
80
70
60
50
40
30
20
10
0
65 and
60-
55-
50-
45-
40-
35-
30-
25-
Under
over
64
59
54
49
44
39
34
29
25
Age of head of household
Percent of respondents in this age group who are
online
12
Low-Income Households Still Havent Signed On
80
70
60
50
40
30
20
10
³
70K
40K-
20K-
Household income
Percent of households in this income group that
are online
13
Who reads newspapers and who doesnt?
Dont 32,000 39 54 34 62 47 44 22 22 19 3
5 40
Read periodicals 40,000 46 48 49 55 33 53 25
25 24 25 46
Median income
Median age
Male
Attended college
Married
Have children under 18
Technology optimists
Career-motivated
Family-motivated
Entertainment-motivated
Sidelined citizens
Online
All6
All94, 4 hours per week on average
14
Online consumers are still an elite segment
compared with general newspaper readers
Online 56,000 41 53 67 59 41 69 33 28 30
9
Read periodicals 40,000 46 48 49 55 33 53 25
25 24 25
Median income
Median age
Male
Attended college
Married
Have children under 18
Technology optimists
Career-motivated
Family-motivated
Entertainment-motivated
Sidelined citizens
15
Consumer technology adoption curve
Early adopters
Mainstream
Laggards
16
Online consumers are an elite segment even
compared with heavy newspaper readers
Online 56,000 41 53 67 59 41 69 33 28 30
9 100
Light readers 41,000 44 47 48 56 38 54 26 2
5 24 24 49
Heavy readers 37,000 60 53 52 51 19 51 23 2
5 24 27 36
Median income
Median age
Male
Attended college
Married
Have children under 18
Technology optimists
Career-motivated
Family-motivated
Entertainment-motivated
Sidelined citizens
Online
Light readers spend less than 6 hours reading
periodicals per week (77 of readers), heavy
readers spend 6 or more hours (23)
17
Almost all online consumers read periodicals in
print...
18
but not all seek news and local content online
regularly
Send email
91
Use search engines
72
Research product purchases
44
Look for medical or health information
33
Visit reference sites
32
Download software
29
Read daily newspaper
29
Use Internet yellow pages
27
View stock quotes
26
Visit local/city guides
26
Play online games
25
Use Web-based email
24
Purchase
23
Look for job or career information
23
Use instant messaging
21
Visit TV network sites
18
17
Visit financial sites
16
Participate in online chat
Request service help
14
Bid/sell in online auctions
13
Download music files
12
Publish personal Web page
7
Percent of online households that perform these
activities at least once a week
19
Agenda

• Do online media cannibalize traditional media?

20
Online consumers spend the same amount of time
reading magazines...
How many hours each week do you spend reading
magazines?
58
60
49
Online adults
50
Adults who are not line
40
32
30
24
20
13
13
10
4
3
1
1
.9
.5
.3
.3
.1
.4
0
31 or More
26 to 30
21 to 25
16 to 20
11 to 15
6 to 10
1to 5
Less than 1
Average for online adults 3.5 hours
Average for adults who are not online 3.6 hours
21
and subscribe to more magazines

22
Online consumers spend about the same time
reading newspapers
How many hours each week do you spend reading
newspapers?
60
Online adults
53
Adults who are not online
50
46
40
30
25
23
19
19
20
10
6
4
2
.9
1
1
.1
.3
.3
.4
0
31 or More
26 to 30
21 to 25
16 to 20
11 to 15
6 to 10
1-5
Less than 1
Average for online adults 4.15 hours
Average for adults who are not online 4.71 hours
23
Most online consumers continue to read in print

Since Going Online, Do You Read
Newspapers/Magazines?
100
82
80
60
40
20
15
3
0
Stayed the Same
Less
More
Percent of online adults
24
Online availability of media leaves unaffected
most print readers who are online


How did your time reading the print edition
change due to online availability?
100
80
71
60
40
20
13
11
5
0
Decreased
Decreased
Increased
Stayed the Same
A Little
Sharply
Percent of online adults
25
The Net is stealing some time from reading
Since going online, how has the time you spend
doing the following activities changed?
Personal Reading
82
90
Work-related reading
80
80
Reading newspapers/magazines
72
70
60
50
40
30
23
20
15
15
10
6
5
3
0
Less
Same
More
Percent of online adults
26
but consumers still spend more time reading
newspapers in print than online
How does the time you spend on each compare...?
Same amount of time
reading the PRINT
More time reading
and ONLINE editions
the PRINT edition
than the ONLINE edition
17.8
More time reading
the ONLINE edition
71.3
10.9
than the PRINT edition
Percent of online adults
27
Consumer technology diffusion curve
Early adopters
Mainstream
Laggards
28
The young consumer technology diffusion curve
Adults
29
Young consumers leave adults In their digital dust
A
Y
Low
High
Average hours spent online per week
A
Y
10
13
Average hours spent online for fun
A
Y
5
8
A
Y
Online tenure in years
2.5
2.7
Number of locations from which they
A
Y
1
2
access the Internet
Average number of email accounts
A
Y
2
3
Number of activities for which they
A
Y
2
4
regularly use the Internet
A
Y
55
69
Interest in high-speed Internet access
Percent of disposable income spent
A
Y
6
16
online in 2000
Online adults
A
Online young consumers
Y
30
Online young consumers seek information for
diverse reasons

• Why do you seek out information?
• Because Im interested in whats going on 86
• To be able to make better decisions 81
• To have fun/relax 79
• To do well at school/work 70
• To have something to talk about with others 60
• People who are important to me expect me
• to stay on top of information 39

31
Young consumers trust newspapers the most


Please indicate how much you trust the following
sources for content and ads.
Print
newspapers
Online versions of
TV
traditional media
Email/chat
Radio
with friends
Print
Online only
magazines
news providers
Internet
Email from
in general
companies
Content/news
Content/news
Chat groups
Direct mail
Ads/promotions
Ads/promotions
0
20
40
60
80
0
20
40
60
80
Percent of young consumers who trust content or
ads

somewhat

or

a lot

32
Traditional media have won the trust battle
consistently -- results from 1999 study
Newspapers
Newspapers
35
42
Magazines
Magazines
30
34
Radio
Radio
25
32
TV
TV
24
33
Direct mail
Direct mail
18
18
Internet
Internet
14
13
Percent of online adults
Percent of online young consumers
who trust ads in this medium
who trust ads in this medium
33
No evidence of media cannibalization among online
young consumers yet

• Statement Agree
• I read newspapers less since I started
• going online 27 (mean2.72)
• I read magazines less since I started
• going online 27 (mean2.66)
• Being online makes me more interested
• in reading newspapers/magazines 27 (mean2.78)

34
Most young consumers get their news both online
and in print
Do you read news online or in print...?
35
Print has advantages for online young consumers

• Why do you read in print?
• Read both online and in print Read in print
  only
• I like being able to take a newspaper or
• magazine wherever I go 64 55
• I dont have to log on to a PC 48 48
• I like the feel of a print newspaper or
• magazine 32 23
• Its harder to read online 17 32
• I like the ads 22 15
• I trust the print content more 9 13
• I cant find what Im interested in online
  7 8
• Percentages are of online 16- to 22-year-old
  consumers.

36
Online has advantages for online young consumers

• Why do you read in print?
• Read both online and in print Read online
  only
• I can access most online news for free 69 75
• I like the up-to-date information 64 63
• Its faster to read online 52 74
• Its easier to read online 40 64
• I like the ability to access archived
  stories 35 31
• I can view video clips or listen to
• audio files 29 29
• I can access information about my
• hometown online 28 28
• I like the personalized content 26 33
• I can get more in-depth information 26 30
• Percentages are of online 16- to 22-year-old
  consumers.

37
Young consumers are avid multitaskers
38
Heavy online young users are most capable of
multitasking
39
Most online young consumers keep their magazine
and newspaper subscriptions
Have you ever canceled a print subscription
because it was available online?
Percent of online 16- to 22-year-olds who
subscribe to print media
40
But the Net causes print media sales for three
times as many young consumers
Has seeing the web site of a newspaper or
magazine ever caused you to buy the print
edition?
Percent of online 16- to 22-year-olds who
subscribe to print media
41
Almost two in 10 online young consumers have
subscribed to a print publication online
Have you ever subscribed to a print newspaper or
magazine online...?
42
Agenda

• Is local content important to online consumers?

43
Young consumers media favorites - local
newspapers make it to the top
Information/news Web
TV shows watched in
Magazines read in print in
Newspapers read in print
sites ever visited
the past month
the past three months
at least once a week
local
People
MSNBC

Who Wants to
24
67
17
24
Be a Millionaire

campus
Newsweek
CNN
22
15
16

The Simpsons

63
USA TODAY
Time
ABC news
20
15
11

Friends


56
The New York Times
Entertainment
AOL news
18
13
10
Weekly

The Drew Carey
50
alternative
CNET
16
10
Show

Rolling Stone
13
The Wall Street Journal
CBS news
15
8

20/20

40
Sports Illustrated
11
Los Angeles Times
CNBC.com
15
6

Dateline NBC

37
National Geographic
10
The Washington Post
Monster.com
15
6

Frasier

37
Playboy
10
Chicago Tribune
USA TODAY
15
5

ER

36
YM
10
San Francisco
WebMD
15
5

South Park

36
Chronicle
Teen People
9

The X-Files

34
Percent of US online young consumers
44
Local news is most valuable to online young
consumers
45
Local newspapers have a future in print for
online young consumers...
What types of newspapers do you read in print?
65
Local
59
Campus
40
National
20
Topical
17
Alternative
0
10
20
30
40
50
60
70
80
Percent of online young consumers
(multiple responses accepted)
Young Consumers
46
But they also have a future online
"What types of newspapers do you read online?"
28
Local
20
National
13
Campus
8
Topical
Alternative
5
0
5
10
15
20
25
30
Percent of online young consumers
(multiple responses accepted)
47
Local newspapers are well positioned for both
print and online

What types of newspapers do you read in print
and online?
75
Local
42
National
21
Business/Finance
0
10
20
30
40
50
60
70
80
Percent of online adults
(multiple responses accepted)
48
The pain of serving young consumers

• Choice is a basic right
• There is such a thing as a free lunch
• Information is everywhere
• Brands must pass muster

49
Young consumers have the most confidence in the
technology industry

• How much confidence do you have in each of the
  following industries/institutions?
• Average score (on a scale of 1 -- no confidence
  at all to 5 -- complete confidence)
• All Age 16 to 22 Age 23 to 30
• The technology industry 3.77 3.77 3.70
• The Internet 3.54 3.54 3.51
• The hospitality industry 3.50 3.50 3.40
• Retail stores 3.32 3.32 3.22
• The healthcare industry 3.26 3.26 3.20
• The entertainment industry 3.18 3.18 3.01
• The financial services industry 3.17 3.17 3.15
• The news media 2.85 2.85 2.79
• The legal system 2.84 2.84 2.80
• The advertising industry 2.83 2.83 2.77
• The government 2.73 2.73 2.64

50
Agenda

• How do you serve ethnic groups online?

51
Internet penetration increases among all ethnic
groups
US online penetration by ethnic background
Percent online
1999 growth
Percent online
in January 2000
rate
in January 1999
Caucasian-
(C. Am.)
43
34
27
American
African-
(Af. Am.)
33
23
44
American
Hispanic-
(H. Am.)
47
36
33
American
Asian-
(As. Am.)
69
64
8
American
All households
43
35
23
Ethnic groups are ordered by number of US
households (most to least)
52
Home access increases among all ethnic groups
Locations where households connect to the Internet
C. Am. 1999
Af. Am. 1999
H. Am. 1999
As. Am. 1999
All 1999
C. Am. 2000
Af. Am. 2000
H. Am. 2000
As. Am. 2000
All 2000
60
60
Home
Work
45
45
30
30
15
15
0
0

60
60

School
Library
45
45
30
30
15
15
0
0
(Multiple responses accepted.

Other

category omitted.)
53
Home PCs have reached at least a third of all
ethnic groups
US home PC penetration by ethnic background
69

80

Percent who have a PC at home
49
50
49
60
37
40
All
house-
20
C. Am.
Af. Am.
H. Am.
As. Am.
holds
0
The average number of PCs owned
by those who have a PC at home
1.45
1.31
1.47
1.71
1.45
Percent who have bought a PC in
59
61
62
58
60
the past one or two years
54
Ethnic background does not materially influence
Internet adoption
55
Ethnic background does not materially influence
internet adoption
C. Am.
58
39
57
75
Af. Am.
H. Am.
28
22
33
51
As. Am.
56
Ethnic groups types of online activities are all
the same
Across ethnic groups, consumers use the Net for
the same reasons
C. Am.
Af. Am.
H. Am.
As. Am.
Communication
Send email
92
86
89
92
Use instant messaging
21
19
23
21
Participate in chats
16
17
21
22
Seek access to information
Use search engines
73
63
71
77
Seek medical or health information
32
40
36
30
Read daily newspapers and magazines
27
36
32
43
Seek job information
21
38
30
30
Entertainment
Play games
25
33
26
18
Visit sports sites
20
21
20
22
Download music
12
17
16
20
Note Percentages are based on number of online
households.
57
Summary

• Online and print consumers do not overlap While
  most of online consumers read in print, not all
  print readers are online
• Online media do not cannibalize but complement
  traditional media
• Print remains a main consumer channel
• Consumers trust content and ads in newspapers
  most -- in print and online
• Media are a mix -- each channel serves a
  different purpose
• Consumers multi-task

58
Summary (continued)

• The Net may spur print media sales growth
• Local content has bright prospects with both
  adult and young consumers -- in print and online
• Asian Americans online are more likely to read
  news online (and in print) but all online
  consumers seek information online

59
Action

• Integrate channels to
• offer bundles to advertisers
• cross-sell products and services
• partner with local services
• leverage resources and staff
• plan content that extends beyond each channel (a
  la Dawsons desktop)

60
Steal a page from Dawsons desktop
61
Action

• Integrate channels to
• offer bundles to advertisers
• cross-sell products and services
• partner with local services
• leverage resources and staff
• plan content that extends beyond each channel (a
  la Dawsons desktop)
• use the credibility of the traditional channel
• have a unified presence across channels and
  multiple points to touch consumers
• leverage user databases
• get ready for a future of many devices, one
  consumer

62
Action continued

• Learn from other industries Implement incentives
  for the entire organization to have a stake in
  the online channel
• Establish a brand that
• leverages the established traditional legacy
• signifies a best-of-breed expertise
• grows a technology halo
• Partner with complementary information and
  technology organizations
• Hire and learn from young consumers

63
Thank you
Ekaterina O. Walsh 617-613-6120 ewalsh_at_forrester.c
om www.forrester.com