Study: Consumer Confidence in Web Rebounds

Despite lingering business woes, consumers’ confidence in online media and
commerce is again growing, according to ACNielsen and Yahoo! .

A survey from the two firms, which for more than a year have used an
index to chart quarterly changes in consumer confidence in Internet products
and services, found that confidence grew two points from first quarter, to
113. That’s also a 13-point increase over the survey’s first findings, from
the second quarter of 2002.

The new findings from 1,000-person telephone survey also show rebound
from a precipitous drop from the
fourth quarter of 2001 to first quarter of 2002. During that period,
confidence fell across all categories of users, with the decline largest
among heavy Internet users; their confidence index tumbled from 151 to 142.

While the newest index charted an overall increase, confidence in the Web
continued to decrease in only one category: that of the least-frequent
Internet users, defined as those who do not use the Internet every day. The
index declined from 106 to 101 during second quarter, though the new level
still represents an increase of seven points from a year earlier.

Paradoxically, the latest survey found that non-Internet users’
confidence in the medium also is on the rise, with that index climbing 15
points from last year and 10 points from last quarter.

“Based on a year’s worth of findings, it is clear that e-commerce and the
Internet are becoming more and more a part of American society, both as a
mass medium and a standard shopping channel,” said Travyn Rhall, managing
director at New York-based ACNielsen International. “The best example of
this mainstream trend is the fact that even those who don’t use the Internet
are rapidly gaining confidence in the medium, likely attributable to media
exposure and word of mouth.”

One reason why consumer attitudes towards the Internet and online
shopping has grown during the past year is that e-commerce marketers may
have become more successful in promoting the channel’s chief selling points
— convenience, price comparison and choice. At the same time, the findings
suggest that consumers are less troubled by what has been seen as two of the
space’s major limiting factors — customer service and fulfillment.

As a result, ACNielsen and Yahoo! also reported that consumers also
appear more willing to make transactions online. The survey found that 53
percent of Internet users said they planned to shop online, with an average
spend of $199 — up from 42 percent last year, with a predicted average
spend of $184.

Based on the projections, consumer spending on the Internet will top $14
billion, up 41 from last year and slightly over last quarter.

The study also found that the Internet continues to appeal more to a
higher-educated consumer base, with college-educated users’ confidence index
coming in at 129. Users without a college education were less confident in
the Internet, with an index level of 97 (which nevertheless represented a
13-point increase from a year earlier).

While conventional wisdom has always suggested that the Internet skewed
toward higher-educated (and thus, many believe, higher-income) consumers,
the new Yahoo!/ACNielsen finding is likely to be agreeable to players in
the online media space, who are striving to look for ways to convince major
advertisers to move more of their budgets online. One of the major selling
points of industry organizations like the Online Publishers Association is
the greater affluence of the average Internet user, versus the average
traditional media audience member.

In good news for e-commerce marketers, college-educated consumers are
also likely to spend more online — $220 versus $140.

While women are believed to outnumber men online, males still tend to
show slightly more confidence than women (with an index ranking of 116, as
compared to 110), and also intend to spend more than their female
counterparts ($228 versus $167). While that finding could bode well for
online marketing and media plays to lure male-focused advertisers, it
suggests that pitching the medium to deep-pocketed consumer packaged goods
manufacturers might not be that easy. That’s because CPG companies are
eager to reach willing women buyers, since research has shown that women
tend to make most of the household’s purchasing decisions.

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