Online America

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Three years ago, when Forrester Research launched a service to classify North Americans by their affinity for technology, most dot-coms greeted the news with a yawn. The vast majority of Internet users fell predictably into just one of 10 consumer segments, rendering the analysis worthless. “All the Internet fans came from the same group of high-income, career-minded consumers,� says James McQuivey, Forrester's research director in Cambridge, Massachusetts. “Our own research ended up saying, ‘Guess what, folks? The same people are buying, trading, and doing everything else online.’�

How times have changed. Today, Internet users are found in all of Forrester's “technographic� types, even those with downscale, late-adopting, technology-challenged families. And clients with online customers are lining up. The same researchers who initially found so few Web users among low-income consumers that they combined three segments into one — nicknamed Sidelined Citizens — are now working to reclassify them into three Internet-savvy groups. “The change has been unbelievable,� says McQuivey. “Thanks to increasing market penetration, we're seeing varying activity among all kinds of people.�

Across the country, scenes like this are becoming increasingly common as research analysts try to keep up with the changing audience of the World Wide Web. The recent dot-com meltdown, resulting in massive layoffs and closings, is placing intense pressure on companies to find ways to better serve their online audience with content and advertising. However, as the number of Web fans continues to grow, marketers are struggling to monitor a moving target, adapting demographic and lifestyle segmentation systems for the first time to online consumers.

To hear the researchers tell it, the Internet is no melting pot but rather a moveable feast of different kinds of people seeking different types of online experiences. According to Nielsen//NetRatings, 56 percent of the U.S. population, nearly 154 million people, accessed the Internet in November 2000 — a 30 percent increase over the previous year. Their average age, reports ZDNet, is 39 years, and rising. Their average education — 38 percent hold a college degree — is falling. Likewise, their socioeconomic status is sinking thanks to the fastest-growing segment of Web newbies: Americans over 55 years old with working-class incomes and middlebrow tastes. The newest generation of connected Americans looks increasingly like the folks who cruise your local Wal-Mart.

“Americans online are not a monolithic group anymore,� says Lee Rainie, director of the Pew Internet & American Life Project in Washington, D.C. “There are so many people using the Internet in so many different ways that it's hard to define the center of gravity.�

What Divide?

ONLINE BEHAVIOR BY ETHNIC GROUP

ACTIVITY WHITES BLACKS HISPANICS
E-MAIL 93% 88% 87%
HOBBY 76% 68% 70%
PRODUCT INFORMATION 73% 71% 73%
TRAVEL INFORMATION 65% 64% 63%
ARTS INFORMATION 63% 66% 70%
WEATHER 63% 53% 55%
JUST FOR FUN 61% 73% 69%
GET NEWS 59% 62% 58%
HEALTH INFORMATION 55% 52% 48%
SCHOOL RESEARCH 54% 65% 59%
WORK RESEARCH 49% 48% 51%
BUY PRODUCT 48% 35% 42%
USE VIDEO/AUDIO CLIP 47% 60% 50%
FINANCIAL INFORMATION 45% 40% 36%
INSTANT MESSAGING 44% 51% 51%
VISIT GOV'T WEB SITE 41% 38% 36%
LOOK FOR A JOB 37% 51% 41%
SPORTS 35% 44% 37%
POLITICAL INFORMATION 33% 34% 33%
PLAY A GAME 33% 48% 36%
LISTEN TO MUSIC 32% 54% 44%
BUY TRAVEL PRODUCT 29% 28% 29%
PLACE TO LIVE INFORMATION 27% 35% 29%
CHAT 23% 38% 30%
DOWNLOAD MUSIC 21% 29% 37%
RELIGIOUS INFORMATION 20% 33% 21%
BANKING 17% 19% 20%
AUCTION 14% 6% 8%
BUY/SELL STOCKS 9% 8% 7%
GAMBLE/PLAY GAME 5% 5% 4%
Source: Pew Internet & American Life Project March-August 2000 Poll
As the earliest adopters of the Internet, white Americans still pursue most online activities at higher rates than other racial and ethnic groups. However, African Americans are more likely than other groups to log on for school research, job information, sports news, and “just for fun.� Hispanics, meanwhile, are tops when it comes to conducting work research, finding arts information, downloading music, and banking.

This heterogeneous portrait is a far cry from the old image of Net users as geeky white guys (GWGs) who enjoyed hacking and flame-throwing their way through chat rooms and bulletin boards. The first generation of online Americans were technophiles who had enough money to acquire clunky desktops and snail-paced 14.4 modems. “They were overwhelmingly male, overwhelmingly young, and overwhelmingly college educated,� says Humphrey Taylor, chairman of the Harris Poll, which has been tracking the Internet audience since 1995.

Since then, the Web community has exploded. Cheaper and more widely accessible Internet access has allowed more downscale Americans to move online. In a final blow to the old gender stereotype, the number of women online surpassed that of men for the first time last May. Estimates vary, but Harris Interactive reports that the online community has grown by more than 900 percent over the past six years. And as the Net-using population has gone mainstream, so has its tastes. While technology news used to be the most popular subject for Americans who wanted online information, now it's the weather. As Harris' Taylor observes, “The online population inevitably looks more and more like the country as a whole.�

In fact, a detailed analysis of wired America, using consumer segmentation systems, reveals an audience of Netizens nearly as diverse — and quirky — as consumers offline. Men and women, rich and poor, old and young — all go their separate ways on the Web. After Nielsen//NetRatings classified its 65,000 Web panelists into the 62 neighborhood types of PRIZM (the geodemographic cluster system developed by Claritas that segments consumers into lifestyle niches), it discovered a surprisingly eclectic society. Web users live in 32 clusters in above-average concentrations, ranging from the wealthiest suburbanites of Blue Blood Estates to the downscale country folk of Rustic Elders.

True, the clusters with the greatest access to the Internet are still home to early-adopting, upscale Americans. But the cluster whose surfers spend the most time online at home left some analysts agog: Mid-City Mix, a working-class, African American lifestyle whose residents like to chat, exchange e-mail, and hang out at entertainment and sweepstakes sites. The other top clusters for online longevity include Norma Rae-ville and Back Country Folks, characterized by people with lower incomes, modest educations, and blue-collar jobs. Norma Rae-ville residents, who are predominantly black, single, and concentrated in the South, spend 12.6 hours online each month, 26 percent more than average Americans. As a simple rule of thumb: The lower the user's income, the longer he or she is likely to spend online.

Part of the reason for this topsy-turvy connection is that many upscale Americans are now veteran Web surfers. Because they've already bookmarked a handful of favorite sites, their Web sessions are more efficient. Nielsen//NetRatings reports that Internet users now frequent an average of only 10 sites per month, down from 15 a year ago. Perhaps to compensate, they're visiting more pages at those 10 sites, digging deeper rather than wider for Web information. Granted, “deep� is a relative term: Research shows that Internet users spend an average of only 50 seconds at each page.

Peggy O'Neill, a senior analyst at Milpitas, California-based NetRatings, believes that access to the Web at work also affects the amount of time Americans spend online at home. Those who lack the ability to surf the Web at the office — typically blue-collar workers — are more inclined to log on at home. “The good news is that lower socioeconomic clusters are finding content and services that are relevant to them,� says O'Neill. “And that's helping to shrink the digital divide.�

But a kind of ehavioral divide is emerging in how different kinds of Americans use the Internet. The time-pressed consumers from upscale clusters like Money & Brains (sophisticated urban-fringe couples) and Country Squires (elite exurban families), tend to view the Web as a transactional arena — a place to gather information or buy big-ticket items. They patronize news, travel, and financial 3sites, such as schwab.com, smartmoney.com, and americanexpress.com. “Well-off Americans look to the Internet as a convenience,� says Chris Berry, Claritas' vice president for Internet initiatives in San Diego. “To them, it's just one more tool to help them get information or purchase things.�

Those Americans at the lower end of the socioeconomic ladder are more likely to regard the Internet as a kind of home digi-plex: an entertainment center for fun and games. In clusters like Red, White & Blues (small-town, middle-class families) and Blue Highways (working-class farm families), residents are more likely to surf a variety of entertainment and sweepstakes sites, including icq.com, youwinit.com, and gamesville.com. “Lower-income Americans look to the Internet as a replacement for television,� says Berry. “If it's not to play games, it's to enter sweepstakes or to get entertained.�

Along with the socioeconomic differences, many researchers report a growing gender gap on the Internet. When the Pew Internet & American Life Project analyzed Web habits last May, it first noted a number of activities that men and women do at roughly equal rates, like banking, sending instant messages, and downloading music. Then the sexes part company. Men are more likely to go online to buy stocks, get news, compare products, buy products, bid at auctions, and visit government Web sites. Women are more likely to send e-mail, play games, score coupons, and get information on health, jobs, and religion. “Just as men and women watch different TV shows and read different magazines,� says project director Lee Rainie, “they also gravitate to online activities that resemble the media products they like.�

This online gender gap forms early. A study of teenagers by Media Metrix found that boys are much more likely to download software and play games online. Girls, by contrast, are more interested in reading online magazines, doing homework, and staying in touch with their e-buddies. Their parents would probably be shocked to find that American teenagers actually spend about 30 percent less time on the Web than adults. Less surprising, perhaps, is that boys visit more pages than girls. While girls view an average 271 pages per month, boys speed-click through 301 pages — no doubt thanks to male weaning on TV remotes.

As adults, both sexes frequent age-appropriate Web sites. Media Metrix reports that women in their 20s and 30s patronize sites offering relationship and parenting information relevant to that life stage. In their 40s, they shift to hobby and leisure sites featuring gardening and cooking content. Women in their 50s, meanwhile, turn to Web sites offering advice on financial investments and health care.

“It's like holding a mirror to a woman's life,� says Anne Rickert, a measurement analyst at Media Metrix in Manhattan's Silicon Alley. “At every stage, her online preferences provide a readable map of her offline interests.� When Rickert first described that correlation at a meeting of analysts last summer, she remembers leaving them wide-eyed. “What surprised us was the degree of synergy between online and offline activities,� she recalls. “It was amazing.�

REAL VERSUS VIRTUAL WORLDS

In other ways, too, people behave online much like they do in real life — a pattern that's contrary to early predictions that Web use would be categorically different from day-to-day life. Futurists once maintained that Internet users would form virtual communities to the exclusion of real-world relationships. They'd buy products throughout the year rather than just at Christmas. They'd meet and date and have cyber-sex to their hearts' content.

Well, it hasn't quite turned out that way. Although early research claimed that the Internet contributed to the social isolation of enthusiasts, more recent studies have countered that argument. The Pew Internet & American Life Project reports that Americans who use the Internet visit friends or family members just as often as those who don't. A survey for America Online and American Demographics indicates that social relationships are actually strengthened by online use (see Forecast, December 2000). Harris Interactive has found that 48 percent of people say they communicate with their friends and family more often because of the Internet, compared with only 3 percent who said that their contact decreased.

Many of the nation's shoppers also behave online a lot like they would at the local mall: buying the same kinds of products from the same merchants. Almost half of all U.S. adults with Internet access now purchase goods and services online, according to Scarborough Research, and the highest concentration are the earliest adopters. In a list of 64 major metros, the top-ranked ones also happen to be the nation's yuppiest markets (Washington, D.C., Seattle, San Francisco) where about 60 percent of Internet users are also considered “cyber-shoppers.� In other words, they resemble an aging version of GWGs — except with more money and kids. Half of these shoppers possess a gold or platinum credit card. Eight of 10 of the top online shopping clusters are predominantly populated by married couples with children.

The fact that Americans behave online as they do offline has a grandmotherly logic — that is, if your grandmother likes to surf online. (Americans over 55 years old tend to visit travel, auction, and greeting card sites at high rates.)

Still, the parallels between the real and virtual world are not always clear-cut. Claritas' PRIZM clusters reveal a number of nuances showing that Americans don't always follow real-life patterns in the virtual marketplace. For instance, the consumers who patronize Sears stores aren't the same as those who visit sears.com. The highest concentration of offline shoppers hail from middle- and upper-middle-class clusters like Blue-Chip Blues, God's Country, and Second City Elite. The top clusters for the store's Web site include the tony town and country residents of Country Squires and the Urban Gold Coast.

Do wealthy Americans simply feel it's more acceptable to go slumming out of sight at sears.com rather than inside a Sears store? Probably not. “All dot-com profiles are more upscale than offline stores,� says Claritas' Berry, “because Web surfers are still more upscale than the general population.�

This online/offline gap also separates the fans of other similar activities. The biggest devotees of offline sweepstakes, for instance, live in downscale rural and urban clusters such as Shotguns & Pickups and Southside City — two segments that rarely register at online sweepstakes sites such as iwon.com. By contrast, the professional wrestling fanatics who visit wwf.com include upscale suburbanites from Greenbelt Families and Suburban Sprawl — two clusters that seldom buy tickets to live body-slam extravaganzas. When comparing MTV with mtv.com, the cable version lures twice the number of urban minorities from the Latino America and Hispanic Mix clusters as the Web site.

Despite studies showing the Internet gap shrinking between ethnic groups and the general population, differences remain. Hispanics and African Americans have yet to reach parity with Caucasians online, while Asian Americans have been more prevalent online for years — and are more likely to invest their money, make purchases, and research products over the Internet than the general population. Blacks already top whites in conducting school research, getting sports news, and looking for a job. “African Americans tend to do serious things on the Internet,� says Rainie. “Adults see it as an investment for themselves and their children.�

Online and offline consumption patterns are different in other ways as well. A full 58 percent of Americans visit retail sites at work, for example, compared with 52 percent who shop from their homes. The AOL/American Demographics study found that 58 percent of online Americans also like to shop in pajamas or nightclothes. Favorite shopping times also change between the real and digital marketplace. When Transactional Data Solutions (TDS), a marketing research company in Purchase, New York, began charting the daily transactions of MasterCard customers, it discovered an unusual pattern in bricks-and-clicks behavior. Offline, Americans tend to shop lightly during the week and then invade stores en masse on weekends. Online, the opposite occurred: shoppers bought throughout the week, peaking on Wednesday, before fading on the weekend. “You just don't see the Saturday spike in shopping online as you do in offline consumers,� says Bruce Mac Nair, vice president for business applications development at TDS.

Seasonal shopping patterns also reflect this unparallel universe between online and offline consumers. While brick-and-mortar stores record the lion's share of their sales during the Christmas season, most e-tailers operate at a steadier pace throughout the year. Less of a high in December. Less of a low in January. Indeed, computer e-tailers ring up more sales in August than December, and they name November as their worst month of the year. “There's less seasonality on the clicks side,� says Mac Nair. “You just don't see the Christmas craziness in most retail categories online.�

What analysts have noticed is that wired Americans are more likely to engage in two subjects online that remain verboten to discuss in polite company offline: sex and religion. While some may think that E * Trade is a bigger draw than Jesus, religion actually has a larger online audience than many secular topics. A recent study by the Pew Internet project found that 21 percent of Web surfers, or about 20 million Americans, seek religious or spiritual information online. In comparison, only 18 percent of Internet users bank online, and just 15 percent visit auction sites. These spiritual seekers include a disproportionate number of women, Baby Boomers, and African Americans.

Greater numbers of Americans have more earthly interests in mind when they log on: the enjoyment of erotica. Media Metrix says that 30 percent of the Internet population visit adult entertainment sites each month, while Nielsen//NetRatings puts the figure at 23 percent — about 21 million Americans. Some 16 percent of those online even sneak peeks at adult sites at work, according to Nielsen//NetRatings. Sports and humor sites remain more popular at the office, however, though that may be a function of workplace rules rather than a lack of prurient desires.

Even with the increasing presence of women on the Net, online sex is mostly a guy thing. Men make up 84 percent of the audience in the most popular adult site, cybererotica.com, and many are not the stereotypical lonely guys. The highest concentration hail from family PRIZM clusters like Kids & Cul-de-Sacs, God's Country, and Middle America. Contrary to the assumption that the number of online porn fans will decline as the number of women online grow and the novelty of seeing naked people on a desktop wears off, the total audience has remained relatively stable. Men continue to visit naughty-this-dot-com and hard-core-that-dot-com in ever increasing numbers.

TARGETING ONLINE LIFESTYLES FOR PROFIT

There are many ways to slice and dice a population, and some researchers have developed Web-only consumer segments to help corporate clients improve their techniques for customer relationship management. Last year, Harris Interactive produced a cluster system of “dot-shopper types� for ebates.com, highlighting six distinct consumer personalities. Among the types: Hunter Gatherers (married, middle-aged couples who compare products online but buy offline) and Hooked, Online and Single (upscale, single males who buy books, clothing, and computer software online). To make a Web site “stickier� for, say, Hunter Gatherers, Harris suggested featuring ads with endorsements such as “Rated #1 by …� E-tailers were advised to develop new forms of entertainment to capture the jaded surfers from Hooked, Online and Single.

Earlier this year, TDS released its own Shopper Clusters system, based on 650,000 MasterCard customers, that identifies three of 34 clusters as active online shoppers. [Note: The author of this article worked as a consultant on the project.] Among TDS' findings: The segment that spends the most money online buys the most offline as well. These affluent, young, urban couples, dubbed Cyber Chic, tend to live on the East and West coasts and are omnivorous shoppers, shifting between Crate & Barrel and amazon.com without missing a beat. Shoppers are still more willing to do their price comparisons online and buy their goods offline, according to the AOL/American Demographics study, but that tendency is declining. “The Internet is absolutely dominating traditional media in providing information before a purchase,� says Brad Fay, a senior vice president at Roper Starch, which conducted the study. “It's become an essential part of the purchase process online and offline.�

Internet research companies have also segmented consumers by industry and interest to better help clients target their customers. Harris Interactive calls the roughly 100 million Americans who go online for health care information Cyberchondriacs. Slightly older than the general population, they typically have a medical condition, or someone else in their family does. They look to the Internet as a kind of mobile medical library, logging on to investigate the latest research and treatments for a particular disease.

To pharmaceutical companies, these Cyberchondriacs are potential customers. Firms like Pfizer and Johnson & Johnson have launched Web sites to market their prescription drugs directly to these patients, hoping that the information will spur them to ask their doctors for the medication by brand name. “The Internet is the mother of all customizers,� observes Harris' Taylor from Rochester, New York. “You can customize a product to a 36-year-old, one-legged diabetic with red hair. And you can do it in a way that you could never do with traditional media.�

But few dot-coms have realized that marketing potential, which would require them to personalize a site's content and advertising to each visitor's lifestyle in real time. Although geodemographic segmentation systems have been around since the early 1970s, only a handful of companies have developed versions designed for online marketing. Claritas and its sister VNU-owned company Nielsen//NetRatings began offering a Web-compliant version of its PRIZM and Microvision cluster systems just this past September. (See related story in Databasics, p. 65.)

Most Web sites are still content to use offline customer profiles to aid online marketing efforts. MCI Worldcom has PRIZM-coded a number of Web sites as part of its strategy to establish partnerships with other sites to attract potential long-distance customers. The company has even identified clusters that have historically delivered few real-world customers, hoping to determine which Web sites might lure those forgotten clusters online. In another project, a major airline company classified its 16-million customer database using Forrester's technographic types, the better to pitch its online reservations; marketers dispatched bill stuffers to pro-technology clusters like Fast Forwards and Mouse Potatoes. Forrester also showed a greeting card company that its online customers included more technology pessimists than its competitors, prompting the firm to add cards geared toward Traditionalist tastes.

With online advertising still the key way to generate revenue, dot-coms are now tapping segmentation systems to deliver targeted audiences to clients. Looksmart, a search engine that outlaws porn sites from its results, has used demographic data from Media Metrix to show advertisers that its visitors skew toward women aged 18 and older. ZDNet, the technology Web site, has demonstrated how its little-known message boards have higher loyalty from other demographic groups — and has parlayed that finding into niche ad sales. “The primary use of online measurement data is still to support ad sales,� says Stephen Kim, vice president for account development and client information at Media Metrix. “But it also shows sites what types of people they're attracting so they can adjust their content and develop partnerships based on cross-visitation behavior.�

Ultimately, such marketing techniques should attract new Internet users in the future. Analysts estimate that the Internet population will reach between 75 percent and 85 percent of all Americans over the next decade. According to the Pew Internet Project, the next wave of Net users will disproportionately include women, African Americans, and senior citizens. As the message spreads that all children need online access to succeed in school, the Web is expected to reach the previously unreachable people in lower socioeconomic groups.

How soon these diverse Americans become wired is anyone's guess. Internet researchers offer widely varying predictions on how long before the Internet audience reaches its saturation point in the U.S. But on the future impact of geeky white guys, they're in remarkable agreement: The GWGs have finally gone the way of the 14.4 modem.


Contributing Editor Michael J. Weiss is a journalist, marketing consultant, and author, most recently of The Clustered World (Little, Brown, 2000), about lifestyle segmentation systems in the U.S. and abroad.

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