Pew: Web Not Key To Final Buying Decisions

by , May 19, 2008, 7:00 AM
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John Horrigan headshotWhile the Internet has become a key information source for researching products, it doesn't have a major impact on consumers' final purchases, according to a new study.

Findings from the Pew Internet & American Life Project survey that track buying habits related to music, cell phones and homes suggest the Web is just one of a variety of resources people use before making purchases. And only a minority of consumers actually end up buying online directly.

John Horrigan, associate director of research for the Pew Internet Project, called the Internet a "tactical tool" rather than a "game-changer" when it comes to purchase decisions. "Even with a digital product such as music, you still see people learning about new music through friends and family," he said. "And they want to buy music in stores as opposed to online," he said.

But Horrigan noted that the Internet's influence is greater when it comes to more significant, long-term transactions like signing a cell phone contract or buying or renting a home. "Whereas, if you buy a bad song online, you're only out a buck or so," he said.

Given the major role attributed to the Internet in shrinking CD sales, one might expect the Web to play a bigger part in music purchases. But only 7% of those who bought music in the past year said it had a major impact on their decisions, and nearly three-quarters made their last purchase the old-fashioned way--at an offline store.

Even among young adult consumers (defined as those under age 36), 69% get most or all of their music on CDs, while 27% buy digital music files at least half the time. (Of course, the results don't take into account unpaid or illegal music downloads.)

The Pew study also notes that even a 10% market shift toward digital sales can have a significant impact on the traditional recording industry business model. "That can still be quite disruptive," Horrigan said.

The Internet also is not the main way people find out about music: 83% said they learn about bands or artists through radio, TV, or in a movie, 63% from friends and family, and 56% online.

The Web plays a more critical role for online users after they buy music. Nearly 40% visit the artist's or band's Web site, 28% look online for live performances, and 26% go to blogs or sites about the music.

The post-purchase activity was also found to encourage further sales. Overall, 26% of Internet users who bought music in the past year said online resources led them to buy more music.

When it comes to buying a cell phone, the Pew survey cited the Internet as a key resource in comparison shopping by consumers. Among those who bought a phone in the last year, 59% asked an expert or salesperson for advice, 46% went to one or more retail stores and 39% used the Internet.

Among those who went online, 48% said it changed the model or brand the got, 43% said it led to getting a phone with more features and 41% said the move saved them some money.

Only 10% overall said the Internet had a major influence on their purchase, however. The vast majority (78%) of those surveyed bought their devices in stores, and only 12% online.

With a wide choice of handsets and calling plans, "people are trying to get a variety of information because a cell phone is a 'commitment' good that people want to do a fair amount of research on before making a purchase," Horrigan said.

The same goes for real estate. Buying or renting a home typically requires a longer-term commitment that involves extensive research. While people have come to rely heavily on the Internet when finding a new place to live, it's not to the exclusion of other sources.

So, while nearly half have used the Web to buy or rent new housing, almost half also look through ads in newspapers and 47% ask the advice of a real estate agent.

The main benefit that consumers derived from shopping online was in reducing their search costs and getting a better feel for the areas they might move to.

Of those who used the Internet, 54% took a video or virtual tour of a house, apartment or neighborhood and 50% visited real estate sites. Nearly 30% said they believed online information helped them save money in their real estate transactions.

Because people still cast a wide net in researching purchases, online businesses need to keep in mind that they operate in a very competitive environment. "This gives online vendors incentives to promote an environment of trust and reliability at their Web sites," Horrigan said.

The Pew findings are based on data from telephone interviews conducted by Princeton Survey Research Associates International from Aug. 3 to Sept. 5, 2007, among a random sample of 2,400 adults.

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