SURVEY SHOWS INCREASE IN ONLINE USAGE, SHOPPING: WEB ADVERTISING TOLERANCE DROPS AS NET AUDIENCE SEEKS INFORMATION ON ITS OWN

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More people are using the Internet, more of them are shopping online and more are tuning out advertising. Those are some of the key findings of Advertising Age's sixth annual Interactive Media Study, conducted by Market Facts' TeleNation, Arlington Heights, Ill.

The survey was based on random sample telephone interviews with 2,000 U.S. adults during the first week of October.

Proving that the Internet is indeed a mass medium, 44.7% of respondents have used the Web compared with just 30.2% last year.

"I was absolutely stunned by the increase in online usage," said Tom Mularz, VP-general manager of Market Facts, noting the jump is the largest year-to-year increase since the research company started doing the survey in 1993.

E-COMMERCE GAINS MOMENTUM

The average time spent online is 5.1 hours per week, the same as last year. Gathering news and information is still the No. 1 activity online (91.2%), followed by e-mail (88.2%), conducting research (79.4%), surfing (68.5%), shopping (26.8%), bulletin boards (22.7%), games (21.8%) and chat (18.4%).

Last year, only 17.8% of respondents said they shopped as an activity. Also showing that electronic commerce is gaining momentum, 28.3% have made a purchase online in the past year, compared with 23.5% last year.

"People are more interested in practical applications from the Internet," Mr. Mularz said.

"There's less play going on. The Net is being taken more seriously," he said.

SECURITY STILL TOP BARRIER

Of those who have used the Web or an online service in the past six months, 29.1% have used a credit card online. This is the first year that question was included in the survey.

For those who have not shopped online, the No. 1 reason is security concerns (71.6%), followed by the inability to touch the merchandise (49.3%), not being familiar with the online merchant (39.2%) and finding it too time consuming or difficult (23.9%).

While shopping is gaining acceptance, advertising isn't faring as well, the survey found. In one piece of good news, 21.4% of respondents found advertising on the Internet "very acceptable," compared with 20.3% last year.

However, those finding advertising "not at all acceptable" jumped to 13.8% this year from 9.6% last year. And those finding advertising "somewhat acceptable" dropped to 63.5% this year from 68.5% last year.

LESS LIKELY TO ACCEPT ADS

For those finding Internet advertising less than "very acceptable," when asked if they would be more accepting of online advertising if it offered something in return, users across the board were less likely to accept it compared with last year.

IN-DEPTH INFORMATION

If users could choose which ads they wanted to see and when, 71.1% said they'd find them more acceptable, compared with 80.7% last year; if users got more in-depth information from advertising, 70% would find it more acceptable, the same as last year; if it lowered fees for interactive services, 66.7% would find it more acceptable, compared with 73.6% last year.

"People are resisting advertising on the Net," Mr. Mularz said. "Over time, they're even less tolerant of it than they have been."

This year, only 9.1% of online users said they look at banner ads "very often" or "often," compared with 16.2% last year. And those who say they "never" look at banners jumped to 48.5%, from 38.7% last year.

However, in a key finding for rich media, 52.2% of Internet users said they had noticed video ads, and 64.3% said they could view video ads on their computers.

More than a quarter (26.5%) of online users said they'd be more likely to click on video ads, and 24.5% said they would download special software to view video ads. This is the first year the video ad questions have been asked.

MORE SEEKING INFORMATION

While users are showing a distaste for online ads, they're making more of an effort to seek out information. In `98, 76.1% of online users said they had visited a company's home page, up from 71.9% last year.

While on company home pages, 89.5% look for product information; 88% seek company information; 29.6% receive discounts or coupons; 22.9% buy products; and 15.2% enter contests.

Last year, 34.5% said they shopped on a company's home page. This year, the wording was changed to buy.

"Buying is much more of a commitment than shopping," said Mr. Mularz.

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