Software - Web Watch - Internet influence

Web Watch - Internet influence
Web of influence? Just how pervasive has the Internet become in our lives and how does public usage compare with that of business?

The Public

Simon Cheshire, Director of NOP Research's New Media Team, joined the Internet Advertising Bureau (IAB) team to present an annual keynote speech about online audiences and the changes that are happening in this fast moving sector. Here are some of their findings:

Who uses the Internet?
More people are using the Internet than ever before: 24.9 million at the end of 2003. Over half of UK homes have Internet access.

Of the 46.5 million adults (15 years+) in the UK, 57% intend to use the Internet over the next 12 months.

We can expect a 3% growth year on year between 2003 and 2004 in Internet usage, which boils down to 1 million more adults coming online in the next 12 months.

There are now approximately 8 million "expert" users in the UK, which represents a real shift in the online knowledge base.

What are the shifts in demographics?
In terms of use, women are closing the gap with men. In December 2003, 49% of female adults used the Internet (compared to 60% of the male population).

The strongest age group is 18-24 which makes up 10% of the population but comprises 16% of the estimated Internet user population.

There has not been a great deal of real growth in users aged 65+ ( the so called "silver-surfer" market) since figures have been boosted by Internet users maturing out of the 55-64 age group.

Although the south of England has the highest percentage of users with 63% of the population in London using the Internet, 50% of adults are now online in Scotland and 52% in Wales. In urban areas, where there are high student populations and government initiatives, Internet usage is booming.

Rise in broadband penetration
Home broadband usage increased substantially from 15% in December 2002 to 27% in December 2003. Forecasted penetration will have increased radically since the last wave of research, perhaps up to 10% for some of the major ISPs due to their recent broadband initiatives.

With four million connections in place and around 40,000 new ones being made each week, consumers seem to be making the switch to broadband.

Broadband is changing the amount of time people spend actively online. People tend to do more multi-tasking with broadband use, they can download, stream, and copy whilst consuming other media.

There is an emerging group of users that have been called "leap-froggers," people who started using Internet at work but held off from getting Internet at home until broadband was an attractive and competitively priced option. Approximately 9 out of 10 Internet users now have a home connection.

Predictions are that broadband use would continue to grow strongly and adoption would probably plateau at about 50% by early 2006.

Impact of internet usage
NOP's research shows that Internet users are online for an average of 11 hours a week. Usage differs according to age, with under 35s spending the most time online.

As a result of increasing Internet usage, people are watching less television: 34% of users surveyed by NOP said that they watched television less than before as opposed to just 2% who said they were now watching more. This trend was even more marked for broadband users.

While these findings suggest that the Internet and television are competing for the same territory of media consumption, radio proved to be a more complementary medium: adoption of the Internet does not seem to have affected levels of radio use.

E-commerce
Online shopping is an area which has shown significant growth.

Of the 54% of adults online, 50% of those have shopped online in the last 4 weeks. There is an "increased sophistication" of the online audience - once people are online they are taking less time to get familiar with the medium and are thus moving on more rapidly to making purchases online.

Two years ago an average person would take 10 to 12 months before attempting to shop online. People have become more confident and broadband makes things much quicker. It's more like a period of 6 to 7 months now between adoption of broadband and shopping online.

Finally, Britons in context

Britons are the second most web-savvy people in the world, with only the Danes more clued up, according to research carried out by IBM and the intelligence unit of The Economist.

The differences were small between the top eight, which all scored more than eight points as a result of plentiful, cheap Internet connections, software and technical support, legal and government frameworks and populations keen to spend time on the net.

Britain at number two pushed Sweden into third place, while Norway and Finland ended fourth and fifth respectively.

The US dropped to sixth place from a shared third place despite having the world's best social and cultural environment for the Internet, because the percentage of broadband connections was falling behind other nations.

Of the 64 countries surveyed, Azerbaijan and Kazakhstan remained at the bottom of the list with just 2.43 and 2.60 points respectively out of a possible 10.

Business

The number of UK manufacturers using the Internet for purchasing goods and services is on an upward trend, according to the latest UK Manufacturing e-commerce survey carried out by Capgemini and the Chartered Institute of Purchasing and Supply (CIPS). However, manufacturers are still not necessarily gaining the full potential from e-commerce:

Usage
For the first time in the survey's four-year history, the number of manufacturers that use the internet either "a little", or "a lot" for the purchasing of goods and services rose to over 50%.

The latest data showed that 73% of online expenditure was on indirect goods, against just 20% on direct goods. Services, such as travel and the procurement of IT goods, were the most commonly made online purchases.

Almost 90% of these respondents claimed to use the Internet to source suppliers and over 50% collaborate with suppliers online.

Business benefits?
A link between business size and cost savings from the introduction of e-commerce was noticed in the survey, with 39% of larger manufacturers - those with over 500 employees - reported that their costs had decreased, due to buying through the Internet, but only 11.7% of smaller manufacturers (less than 100 employees) had benefited from lower costs.

Of the 294 companies surveyed, a significant number reported they did not currently use the Internet and that they did not expect to over the coming year, with a perceived lack of business benefits and the preference to deal with customers and suppliers more directly over the phone or face-to-face.

A significant proportion believed that the Internet was not suitable for their businesses, a lack of customer demand and establishing cost benefits were the most widely given reasons for slower-than-planned adoption.

Slow to adopt
Paul Sloman, Management Consultant for Capgemini said: "Although the use of e-commerce for the procurement of goods and services has risen steadily over the past four years, the use of online auctions and marketplaces has remained low. This is particularly surprising, as this is an area that continues to realise significant benefits for many clients. In addition, we are seeing a change in the types of good procured through these technologies, with greater emphasis on direct spend and high value services."

Roy Ayliffe, Director of Professional Practice at The Chartered Institute of Purchasing and Supply said: "The latest research has highlighted that manufacturers are still showing signs of concern about the way in which they use e-commerce. The fact that significant numbers of participants are not expecting to make any use of online purchasing facilities in the future attributed to low customer demand and a lack of supplier compliance. This means that many manufacturers still need to understand the actual business benefits that true e-commerce can offer and decide if the barriers to adoption are still realistic or are preventing them from making actual long-term cost savings."