Consumers Broaden Their Bandwidth, Will Marketers Follow?
This is a trend that looks certain to continue, given the increased consumer demand for broadband access and aggressive marketing from cable modem, phone companies (DSL) and satellite broadband services for homes and businesses. As Parks Associates revealed in an August 2003 report, 48.3% of narrowband users in the U.S. say they are likely to upgrade to broadband from dial up services.
"The always-on nature of broadband access enables more use of the web for all kinds of activities that aren't as accessible to web-users who connect via dial-in," said Rob Leathern, Commerce Analytics Group Director and Senior Analyst at Nielsen//Net Ratings. "An open connection allows for everything from digital downloading to streaming technology, to facilitating the processes of information-gathering and online shopping."
That last point, in particular, is likely to transform the way people consume online. A MediaPost review of a variety of recent research studies shows broadband users are more likely to shop online than their dial-up counterparts. Arbitron and Edison Media Research, for example, found 73% of at-home broadband users in the U.S. had purchased online before, whereas 58% of dial-up users could make the same claim. When asked about online purchases in the last month, 48% of broadband users claimed to have done so to just 32% of dial-up users.
eMarketer, meanwhile, recently forecasted there would be 101.7 million online shoppers by the end of 2003. This number is expected to grow to 121.5 million by 2005. Total business-to-consumer e-commerce spending will top $90.1 billion for the year ($20 billion more than the previous 2002) and will reach $133.3 billion in 2005.
The main factor driving this, says Ross Rubin, Senior Analyst at eMarketer, is "the increasing availability and adoption of broadband; add in refinement in marketing and transaction techniques, and it's little wonder that consumers are doing more of their shopping online."
Which brings up an interesting point: while broadband is paving the way for the future of e-commerce, several elements need to come together in order to bridge the online-offline retail gap. It will be on marketers, national advertisers and local retailers alike, to capitalize on the growth of broadband use and e-commerce spending if they are going to realize the potential of this growing market.
"The web is no longer just an order-taking channel to reach distant customers; it needs to be better integrated into retailers' consumer value proposition," says NetRatings' Leathern.
He cites big retailers such as Wal-Mart, Target, Home Depot, Barnes & Noble, who are struggling to drive online customers to their offline stores and then back to the web. "There is a large disconnect in how frequently customers interact with a brand's store vs. a brand's web site. The big opportunity here is for large retailers to attract customers to their online sites not just for the purpose of selling products, but also for information on products and services, which is a convenience any retailer would want their customers to have."
Leathern believes that this 'disconnect' is principally a matter for marketers and advertisers to consider. "These days," he says, "we don't see the Wal-Marts and the Home Depots working together with search engines and portals; these are untapped opportunities. Certainly everyone in the industry became weary after recent economic setbacks. But online shopping and banking are showing real growth, and now broadband and Wi-Fi-two compelling consumer propositions-are also becoming more widespread. Then, with the help of more efficiently targeted advertising, and an up-take in the cost of premium ad placement, we should start to see growth in the online advertising industry as well. All the elements seem to be coming together now to bring attention back to commerce on the Internet."