Internet a golden chance for advertisers

By SIMON HENDERY, marketing writer

What does the average internet surfer look like? Surprisingly normal, according to a new survey of online activity.

As part of a programme to standardise measurement of internet use, Phoenix Research polled 2500 households to build a profile of who uses the medium regularly and what they are looking at.

While there is still a bit of a skew towards the young and the well paid in the breakdown of "regular" users (those who log on at least once a month), Phoenix says a key finding of its research is that the internet has moved into the mainstream.

This has implications for advertisers, who the company says have still to embrace the net's potential.

"The challenge for advertisers is to get to grips with and exploit the full potential of the new medium," says Phoenix Research director Carola Cullum.

"Customers will increasingly expect suppliers to have a web presence and be able to deal with them online. For the advertisers, that is a huge opportunity to exploit all of that potential - to get goods and services in front of people on screen."

The Phoenix telephone survey found that 49 per cent of New Zealanders use the net at least once a month, and many of those "regular" users spend an average of 10 hours a week online, more than twice as long as they spend reading newspapers.

They showed a willingness to either buy online, or at least research potential purchases over the net.

About 30 per cent said they had bought online in the past six months and 84 per cent said that over the same period they had researched products or services they were considering buying over the net.

Phoenix's report on its findings, New Zealand Online, will be produced every six months from interviews with 4000 households a year.

The initiative is part of a three-way monitoring programme overseen by industry body the Online Publishers Group.

Last year, in a bid to implement a generally accepted standard within the industry, the OPG endorsed rating firm RedSheriff as its preferred supplier of internet tracking data.

RedSheriff collects internet traffic statistics from member sites, and also runs random pop-up surveys which are offered to visitors to the sites.

The Phoenix survey is seen as providing internet-wide context for RedSheriff's data, and the OPG's aim is to provide advertisers with evidence of the effectiveness of the internet as an advertising medium, and the pulling power of specific sites.

Cullum says the results of the first Phoenix survey should help agencies to sell the internet to their clients as incredibly good value for money, given the costs of advertising on the net in terms of the potential reach.

"They should be able to use it to promote the whole idea of advertising online and to counter some of the prejudice that might exist."

Internet advertising accounts for less than 1 per cent of the country's total advertising spending.

John Stewart, managing director of Auckland online media buyer The Internet Bureau, estimates that the market has grown from between $8 million and $10 million last year to between $10 million and $12 million this year.

It could reach $15 million next year.

He says the Phoenix survey offers an insight into the influence of the internet on purchasing decisions, even when the transaction might ultimately occur in a traditional retail environment.

Cullum says the challenge is for agencies to work out how to use the internet effectively, given that the components of a successful television commercial may not be the same as the components of a good internet ad.

"The advertising agencies have to take the time out to learn the language, learn the dynamics of that space."

Associate Professor Richard Brookes, of Auckland University Business School's marketing department, says that while companies are comfortable having a presence on the internet, there is resistance when it comes to shifting their marketing or business models to embrace internet advertising.

Only a small proportion of companies are using IT-enabled interactivity (including the internet) to fundamentally transform the way they do business, he says.

A problem for some is that pushing their internet marketing would upset traditional retailers who stock their products.

"Most companies are saying: 'Yes, we'll use the internet but we won't make too many fundamental shifts to the way we do business'."

He says there is a "chicken and egg" problem with the internet being picked up as an advertising medium because its effectiveness has yet to be proven, something which will not happen until it is more widely used.

"Many companies won't embrace the technology because they don't necessarily see that there is a strategic advantage in it because they don't know what the results will be."

New Zealand online

Phoenix Research findings

* Forty-nine per cent of adults (1.46m people) use the internet regularly (at least once a month).

* Regular users spend an average 10 hours a week online, more than twice as long as they spend reading newspapers.

* One in 10 regular users is aged over 60.

* Fifty-two per cent are female.

* Most regular users are willing to use their credit cards online at a site they know and trust.

* In the past six months, 84 per cent used the net to browse for products and services they were thinking of buying.

* About 30 per cent (440,000) have bought something online in the past six months.

* Two in five expect to buy more goods and services online in the next two years.

* Phoenix Research's report, New Zealand Online, costs $195 and can be ordered at Marketing Magazine.