Marketing and Electronic Commerce

Who is Online?

  1. How Many Have Access to WWW?
    1. Difficulties
    2. Estimates
    3. It Is Also Global
    4. Your target Audience
  2. Demographic Profile
  3. WWW Usage Patterns
  4. How Do They Access WWW?
  5. Issues Regarding Growth Potential

How many have access to WWW?

There have been a number of surveys developed to estimate the number of people who have access to WWW and the Internet. It is very important, from a marketing perspective, to understand the numbers of consumers that have access to WWW, who they are and their motivation for being online.


The following reasons make it very difficult to estimate the number of consumers who access WWW and the Internet.

  1. It is in a significant growth phase. Hence survey data will differ when comparing two surveys that were conducted at different times.
  2. It is a distributed medium. Unlike estimating those that have access to TV, its a little more complex than estimating the number of TVs (computers) sold, or the number of viewers per program (a finite number of programs centrally controlled by a few). WWW information is hosted on over 460,000 webservers (Netcraft Web Server Survey, October 1996).
  3. It is also futile to use the number of hosts (computers with Internet access) to estimate the number of users with access. Current estimates are that there are betwen 3 and 7 people accessing the Internet per host (16,146,000 hosts, January 1997).
Thus to get gross estimates of WWW/Internet access we have to use sample population surveys. Two issues that have helped create more conflict in the survey results are:

  1. Interpretation of questions, i.e. what is meant by access to WWW to one person on one survey could have an entirely different meaning to another on another survey (using slightly different wording in the questions posed)
  2. The representation of the sample to the entire population. For example, the CommerceNet/Nielson Internet Demographics studies have been severely criticized on this point.


The estimates that I am going to report are provided by CyberAtlas. These are consensus estimates, not estimates from original research by CyberAtlas. To give you an illustration of the diversity in the estimates reported by various surveys, looking at US Internet/WWW use consider the following examples. Louis Harris & Assoc. (Nov 16, 1996) reported 35 million users (defined as U.S. adult Internet users). O'Reilly & Assoc. (July 1995) reported 5.8 million users (defined as U.S. users with direct Internet access).

CyberAtlas estimates are that:

  • 14.9 million Internet users, September 1995
  • 26.4 million Internet users, January 1996 (78% growth)
  • 34.6 million Internet users, July 1996 (31% growth)

    According to International Data Corp., by the year 2000, 152 million will have access to WWW/Internet.

    It is Also Global

    While most research has focused on the estimates for U.S. use, WWW is a global medium and one should consider its penetration in other countries outside the U.S. in order to understand its true value as a global medium.

    About 73% of Web users come from the U.S., 11% come from Europe and 8% from Canada and Mexico (GVU User surveys). According to SIMBA Information Inc., overseas subscribers to online and Internet access services will more than double to 21 million by the year 2000, including 13 million in Europe and 5 million in Japan.

    Issues that have compromized growth outside the U.S. include:

    1. Telephone access is very expensive. Telecom deregulation in 1998 in Europe will help resolve this issue.
    2. The Minitel system in France has been very successful, slowing the move to the Internet.
    3. Technological infrastructure in third world countries.

    Using the number of hosts to determine the level of use worldwide we can get a good overview of WWW's penetration globally. This information comes from Network Wizards. This information is from a 1996 survey, and thus can't be compared with host numbers from session 1.

    Country Hosts # Growth % Growth
    U.S. 8,224,279 3,955,631 93
    U.K. 579,492 288,234 99
    Germany 548,168 197,461 56
    Japan 496,427 336,651 211
    Canada 424,356 161,712 62
    Australia 397,460 190,034 92
    Finland 277,207 165,346 148
    Netherlands 214,704 79,242 58
    France 189,786 75,812 67
    Sweden 186,312 79,587 75

    The following table illustrates the percentage of PCs that have access to the Internet in different countries. We can see that in the U.S. 16% of home PCs access the Internet, but in Japan that number increases to 18.4%.

    Total % of PCs that Access WWW
    Japan 18.4%
    U.S. 16%
    Germany 11.7%
    Hong Kong 11.7%
    Taiwan 10.3%
    U.K. 9.5%
    Australia 8.9%
    Singapore 7%
    France 6.5%
    S. Korea 6.3%
    Italy 5.8%
    Source: IDC/Link, January, 1997

    Your target Audience

    It would be foolish to consider the size of the WWW audience as the size of the potential audience for one company's WWW presence. Much like it would be foolish for a TV programmer to estimate the size of the target audience for a typical program to be the entire TV viewing population. Considering there are approximately half a million web servers (different computers hosting WWW information) and many web servers will host information for more than one company, then the potential viewing population for a particular entity is small.

    The average number of sites (according to NNI) that a browser will visit on a regular basis is between 7 and 15. The most popular web-sites will get a disproportionate amount of traffic, while the remaining sites will have to develop a significant niche in order to encourage audiences to find and return to their site. The most popular sites, and thus the ones that garner the greatest amount of browser time are (according to PC Meter):

    1. American Online, 40.1%
    2. Yahoo!, 38.5%
    3. Netscape, 38.5%
    4. WebCrawler, 30.8%
    5. Microsoft, 20.8%
    6. Infoseek, 18.1%
    7. Excite, 17.9%
    8. Lycos, 16.7%
    9. Microsoft Network, 15.2%
    10. GeoCites, 14.6%

    Demographic Profile

    It is very important to investigate the demographic profile of the Internet users, and how that profile may be changing as the Internet becomes more ubiquitous.

    According to CyberAtlas consensus data, the average age of Internet users is 32 (39 for computer users in general), 64% have at least a college degree (Nielson Media Research), 32% of Internet users are female (CyberAtlas consensus), medium household income is $60,000 (Nielson) and 41% of Internet users are married (GVU). Thus the WWW audience is very attractive to marketers as they have a greater than average household income, are well educated.

    The average household income is beginning to decline over time and the percentage of female users is increasing. This is a function of the Internet population tending toward the norm, and not because early more affluent users are no longer using the Internet.

    WWW Usage

    The usage patterns of those that access WWW will give marketers better information on the value of WWW to consumers.

    Average weekly WWW usage rates are about 4 hours per browser. According to IntelliQuest 20% of the WWW population spend 10 + hours per week on WWW, 21% between 5 and 9 hours, 39% between 2 and 4 hours and 19% 1 hour or less.

    According to Nielson Netviews the top five reasons for accessing WWW are:

  • Entertainment, 51%
  • News, 49%
  • Computer products, 41%
  • Travel, 30%
  • Financial Information 26%

    According to GVU the top four reasons for being on WWW are:

  • Browsing, 77%
  • Entertainment, 64%
  • Work, 51%
  • Shopping, 19% and increasing. The most commonly purchased categories are:
    1. Computers
    2. travel
    3. books
    4. music

    How do they access the web?

    By understanding how consumers access WWW should help identify better marketing programs. For instance, if the majority of WWW browsers accessed WWW via American Online (AOL) then it might be prudent to develop a joint marketing program with AOL such that AOL drives WWW browsers to your site.

    Home is the most common place where browsers to access WWW, and AOL boasts about 8 million subscribers (as the leading commercial access provider). In fact, 46% of all home Internet users use a commercial online service to access the Internet. 48% access WWW using an Internet Service Provider (ISP), according to FIND/SVP, and there is a shift in this direction. The consequence of this shift may be that users are simply using AOL and other commercial providers as gateways to the Internet (not for their proprietary information) thus barebones ISPs are better value.

    Work is the next (behind home) most popular access point, with school third.

    Issues Regarding the Growth Potential

    Access to WWW is still very limited. This limited access translates into limited marketing opportunities for companies who want to use WWW as part of their marketing program. In order to understand the real value of WWW, we should spend some time considering that which is limiting WWW access and the prospects for growth in the future.

    1. WWW is an eletist medium, due to cost and complexity.
      Cost of access limits the size of WWW audience. Because one has to buy a computer, modem and access in order to use WWW then those that do not own a computer have to incur a significant cost to access WWW. WebTV and other similar TV appliances that allow browsers to access WWW through the TV set will help broaden the WWW audience. Now one information appliance allows for both TV viewing and WWW access, a significant cost reduction.

      Complexity is another issue. Technophobia plagues all those who are not comfortable in front of a computer. The perception that WWW is complex to those that don't access WWW hinders the growth of WWW. TV viewing is much less complex than WWW browsing, thus WWW access to the mass population will lag TV access significantly. As computers (or information appliances like WebTV) become less complex, then more people will access WWW.

    2. Speed of information.
      The infrastructure that supports the Internet and WWW is finding it difficult to deal with the current volume of traffic. As the size of WWW grows (the number of webservers and information on webservers) as well as the size of the audience of WWW grows, the system becomes over burdened and in many cases slows to a grinding holt. The instant gratification that browsers require makes it necessary to develop an infrastructure that supports the size of the system at speed. As can be expected in situation of high growth, demand for the system is lagging the development of the infrastructure behind the system.

      Developments like ADSL (a modem working over existing phone lines that allows multiple use of the phone line), DirecPC (using a satellite system) and cablemodems (internet through the TV cable) may improve the situation soon.

      The situation has become so critical that some research institutions are moving from the Internet to Internet 2, in order to move information at speed. They are leaving the Internet for the very same reasons they helped pioneer the development of the Internet.

    3. Security.
      Security issues are also slowing the adoption of WWW as a marketing medium. Although it may have little impact on the number of browsers who access WWW, it certainly effects what someone wants to do once they are on WWW. Electronic commerce, while evolving slowly, should become a significant form of retailing in the future. This will only happen when security issues are resolved and the perception (from a consumer's stand point) is that WWW is secure.
    4. Global issues, as previously addressed.
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