WWW: Beyond the Basics

2. Demographics and Demographic Tools

2.5 Commerce on the World Wide Web

In this world of increasingly free market enterprise, whenever there is a new form of communication, there exist advertisers who will want to use it to market their products and services. Businesses also use the web as an important form of communication with clients. With the advent of better, more accessible and more error-free software, and more software companies who are willing to offer web and Internet services, many companies are jumping onto the information superhighway.

2.5.1 Businesses Online

The table below summarizes a study conducted by O'Reilly and Associates conducted in June 1996 (O'Reilly 96). This study was done by conducting interviews with MIS directors and Web masters of companies sampled from the Dun & Bradstreet dabatase of over 7 million enterprises.

Business Size% On the Web % Planning to by end of '96
Large 51 15
Medium 25 17
Small 9 8

2.5.2 Are Consumers Buying?

How successful are businesses on the web? According to the 5th GVU Survey, 46.4% of the users have never used the Web for online shopping and 33.5% have used it only a few times ( 5th GVU Survey). It was also found that those in the over-50 age group were most likely to have tried shopping at least once, and were the most frequent shoppers overall. Younger adults have less money and thus spend less on online-shopping, although they contribute to a large amount of CD and music sales on-line. However, in a Coopers and Lybrand survey conducted in the first quarter of '96, consumers expect to use the Internet for purchases once security measures are in place (Coopers & Lybrand, 1996). However, Internet commerce will not take off until consumers are satisfied that this new medium has effective security safeguards. In the meantime, the survey found that the print medium has gained a lot of business from the Internet. In fact, books on the Internet are generating more sales than actual on-line commerce. The survey found that consumers are spending from $300 to $600 million annually on books and magazines on the Internet, compared to the $200 to $300 million in electronic commerce conducted on the Internet last year.

2.5.3 Impact of Advertising on the Web

Users may not actually buy products/services through the Internet because of security reasons, but what is the impact of advertistments in the Internet on the users? The survey shows that 37% of the consumers are turned off by advertiser supported content on the Internet, while the remainder of the users are most interested in interactive ads. Ads with detailed information on the products, coined "advermation" by Coopers and Lybrand, (41%), gained the most favour, while "customization" ads, tailored to meet consumer's interest, had 25% of the vote of users who weren't turned off by ads. Another 25% of the users liked "advermarts", ads that facilitate ordering (25%), while only a 9% of the users were interested in primarily interactive ads.

In the meanwhile, businesses, armed with the knowledge that current web users on the whole are more affluent than the the average consumer are spending heavily on advertistments. According to a report from Frost & Sullivan (Brown, 96), Internet advertising accounts for 3.4 percent or $85 million of all ad dollars spent in 1996. The market is expected to grow to 22.2 percent or $5.48 billion by 2002.

Another type of commerce that is generated through the World Wide Web is access to information. Some web servers have begun to charge for access to their database of information. There are no statistics about how widely used these services are, but since most of the information in cyberspace are currently free, most users would be very hesitant to pay for information if they think that they can get it free from other sources on the Web.

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Copyright © 1996 Mei See Yeoh, All Rights Reserved

Mei See Yeoh <myeoh@vt.edu>
Last modified: Sat Oct 26 13:15:51 1996