Execs predict growth in Internet’s research role

Executives in major American corporations foresee the Internet becoming an increasingly viable tool for conducting marketing and opinion research.According to a survey by the Council of American Survey Research Organizations (CASRO), Port Jefferson, N.Y., half or more of the executives and middle managers who responded believe that "in the future" Internet surveys will "be as reliable and accurate as those done by mail, telephone or in person."

However, half of fewer of those surveyed believe Internet surveys are currently as accurate and reliable as surveys conducted by more traditional methods.

"Given the fact that conducting surveys over the Internet presents a new range of methodological and business concerns that could have a profound impact on the survey research industry, CASRO felt it was time to conduct its own survey among middle managers and executives at large U.S. companies to gauge how they think about and whether or not they use Internet surveys;’ says James Fouss, CASRO’s board chairman and president of Response Analysis Corp., Princeton, N.J.

"As the Internet’s explosive growth continues, American industry is increasingly coming to rely on the Internet’s ever-expanding range of information and business services," says Nick Tortorello, who directed the Internet survey project and is a senior vice president of Roper Starch Worldwide, Inc.

"Business has been quick to pick up on one way the Internet can help them gather critical information at a relatively low cost - survey research via bulletin boards, E-mail, Web sites and others," says Diane Bowers, executive director of CASRO.

The CASRO survey on "Survey Research and the Internet" showed:

  • Seventeen percent of managers/executives surveyed say they have used data collected from Internet surveys.
  • Forty-seven percent of those who have used such data say it was collected either exclusively in-house or both in-house and by outside research farms.
  • Forty-nine percent say they have exclusively used such data collected by outside research firms.
  • Asked if they will continue to rely on outside research firms or do more of their research in-house, 49 percent of such respondents say they will continue to look to outside help. However, 38 percent said they expect their companies will do more survey research in-house.
  • Sixty-four percent of those who have used data collected from Internet surveys say they expect to conduct or purchase more such research during the next five years.
  • Even among those who have never conducted or purchased Internet survey research, 42 percent say they expect to do so in the next five years.
  • Those who have used Internet survey data collected by outside research firms say they hire such firms to conduct: demographic research (18 percent); product research (16 percent); non-panel consumer attitudes and behavior measures (11 percent).
  • Perceived advantages of Internet surveys: faster turnaround (30 percent); best way to reach certain target populations (23 percent); less expensive than other forms of research (20 percent); advantage of being able to do such research in-house (6 percent).
  • Perceived disadvantages of Internet surveys: non-random and non-representative samples (44 percent); not enough people are on the Internet (26 percent); general "bias" (18 percent).

The CASRO survey was conducted among 305 middle managers and executives at Fortune 2000 companies. They are all primary decision makers/advisers regarding Internet marketing applications at their respective companies. They work in departments ranging from marketing, information systems/ services and marketing/ international research to corporate/strategic planning, public affairs and communications. Only one employee per company was interviewed.

Are Americans wearing rose-colored glasses?

In the survey, "Quality of Life;’ conducted by CDB Research & Consulting Inc., New York, two out of three adult Americans claim they are better-off now than they were five years ago despite some alarming facts. The rates of murder, rape and assault nationwide, compared to rates of years past, are increasing. In the case of rape, rates have doubled and have tripled in the case of assault. Women are still earning only about half of what men earn, despite the fact that more women are completing college than men. Hispanics are still typically earning $10,607 per year less than whites earn.

Despite the number of people claiming to be better off now, 46 percent of college-educated Americans and 39 percent of non-college-educated Americans do not believe that their children will enjoy a higher standard of living than did their generation.

The survey concluded that this dichotomy is affecting consumer purchasing decisions in an interesting way. "What was surprising, in the numbers we found, was the disparity between fact and people’s perception of fact," says Jean Farinelli, chairman and chief executive officer of Creamer Dickson Basford. "This perception gap is what has been influencing American consumer behavior."

According to the CDB study, there are many positive indicators. Over past decades the state of the environment, American life expectancy and the GDP have all shown gains over figures collected since 1968. But despite these trends, consumer confidence is down. Americans are feeling anxious about their place in the economy, purchasing items with value that will last. Occasionally they will treat themselves to mini-luxuries, such as high-priced chocolates, clothing or dinners at a restaurant, which provide temporary gratification and comfort. Though more Americans reported feeling "pretty happy" more now than in earlier years, the percent of "very happy" Americans has been dropping since 1972.

"People’s perceptions about their quality of life do not necessarily follow what many broad indicators seem to say about life quality improvements," says Larry Chiagouns, managing dtrector of CDB Research & Consulting,. Perception seems to have lagged behind reality."

The survey, conducted by telephone with 400 people, is a part of a larger CDB report which analyzes changes in quality of life over the past 25 years. The report analyzes 25-year trends in the environment, health, crime, education, the economy, equality in the workplace and life satisfaction.

When it’s time to get away, Americans go far

A Maritz AmeriPoll found that "farther equals better" was the rule for America’s summer vacationers last year. Among those who planned a vacation between May 1 and September 31, 1996, 61 percent said their destinations were more than 500 miles away from home and 38 percent said they were traveling 1,000+ miles away from home. Twenty-three percent planned to go 500-999 miles. Surprisingly, only 5 percent were headed for the more convenient vacation spots, located less than 100 miles away from their homes. Maritz AmeriPoll is a national consumer opinion poll conducted regularly by Maritz Marketing Research Inc., St. Louis. Results are based on telephone interviews with American adults. Accuracy of the results is within +/-3.09 percent.

Last year’s summer travelers preferred the southern states (states were divided into census regions) as vacation spots. Forty-four percent of them vacationed in the south. Western states were also popular; 31 percent selected this region as their vacation destination. Sixteen percent were headed for the midwest, and 12 percent are planning vacations in the northeast.

Ten percent of Americans taking vacations last year said they planned to venture outside the U.S. Among these travelers, Europe was the most popular international destination. Thirty-four percent of international vacationers said they would visit Europe last summer while Canada and Mexico attracted 15 percent and 12 percent (respectively).

When asked what types of activities they planned for their getaways, more than one third (34 percent) of American travelers said they planned on sightseeing (respondents could choose more than one activity). The second most popular activity was visiting family and friends (30 percent) while 28 percent had camping or fishing on their vacation agendas. Other popular activities included theme parks (11 percent) and boating (9 percent).

Corporate sponsorship to reach record high in ’97

North American companies will spend $5.9 billion on sponsorship in 1997, a 9 percent increase over 1996’s $5.4 billion, according to the 13th annual projections of IEG Sponsorship Report, the biweekly newsletter published by IEG, Inc., Chicago.

Total spending will reach a record high, though the growth rate will experience its first single-digit increase since IEG SR began tracking sponsorship outlays in 1984. The projected slower growth reflects the lack of blockbuster events in the next 12 months, as well as the resolve of many companies  to spend less on fees and more on promoting their existing involvements.
Although sluggish in comparison to previous years, sponsorship’s projected gowth continues to surpass the outlooks for advertising and sales promotion. McCann-Erickson Worldwide anticipates a 5.6 percent rise in ad spending for 1997, while Veronis, Suhier & Assoforecast projects a 5.6 percent rise in sales promotion expenditures for 1997.

Entertainment tours and attractions will be the only category seeing growth in its share of total sponsorship revenue in 1997, $650 million or 11 percent of the total. The first increase for entertainment since 1992 still leaves the category a distant second to sports properties, which will receive $3.84 billion, slipping to 65 percent of the total in 1997.
IEG SR projects worldwide spending in 1997 to grow to $15.3 billion, 13 percent higher than ’96 expenditures. Nearly $4.5 billion will come from European corporations, $3.1 billion from Pacific Rim companies, $1 billion from Central and South American businesses and $800 million from firms in all other countries.

Consumers seek information, not entertainment, online

Americans are gravitating to on-line services and the Internet in record numbers, but they’re not going on-line for fun and games. Information, communication and research are the key forces luring consumers to cyberspace.

According to a new survey by Arlington Heights, Ill.-based Market Facts Inc.’s TeleNation polling service, 82 percent of people who are familiar with the Internet said they go on-line primarily to gather news and information; 80.5 percent said they use E-mail, and 69.1 percent log on to conduct research. The activities on which these people spend the most time include E-mail and research both were cited by 27.6 percent of respondents, and 18.8 percent said they spend most of their on-line time gathering news or information.

On the flip side, 39.3 percent of those who’ve been on-line at leastonce in the past six months said they participate in bulletin boards; 25.3 percent use cyberspace for chat sessions; 23.8 percent use it for games; and just 14.9 percent use on-line shopping applications. These activities were mentioned as primary on-line activities by fewer than 5.5 percent of this group.

The fourth-annual survey of interactive media was conducted forAdvel¢ising Age magazine September 6-11, 1996, with randomly selected Americans age 18 and older. Market Facts used a general questionnaire on 1,000 people. To get a close look atdedicated on-line users, Market Facts posed additional questions to 500 people who have been on-line at least once in the past six months. Both surveys were conducted by telephone and have a margin of error of 3 percent.

"The data is striking, because on-line entertainment applications are taking a back seat to information usages," says Tom Mularz, V.P.-group manager of TeleNafion. "When the Internet started growing a few years ago, everyone thought Americans would go on-line primarily for entertainment. That isn’t happening."

In 1994, the second year Market Facts conducted this study for Advertising Age, 45 percent of respondents said they would be interested in on-demand movies or TV programs and 28.1 percent cited E-mail. This year, 42.6 percent of the general respondent pool cited E-mail, and the percentage of people interested in movies or TV shows on-demand declined to 35.8 percent.

"People are using the Internet to research products, or to help with their homework, or to gather information for their jobs," says Mularz. "They’re not going on-line to relax and have fun."

The general population survey asked people about their interest level in a variety of on-line applications. Respondents said they would be most interested in researching products and services before buying them (53.2 percent); conducting research for work or school (50.1 percent); viewing and participating in educational TV shows and computer sites (44.2 percent); sending E-mail via computer (42.6 percent) and making travel reservations (38.6 percent). Respondents were much less interested in on-line applications that are entertainment-driven: 26.5 percent said they would be interested in getting statistics or information about teams during sporting events; and 23.5 percent said they would use chats with friends or celebrities.

The interest in commercial applications also was lower than that for informarion-driven services. Just 23.5 percent of respondents in the general survey said they would be interested in interactive shopping services, and only 18.2 percent cited interest in on-line grocery shopping.

In the four years that Market Facts has been tracking consumer awareness of and interest in cyberspace, awareness has skyrocketed. For example, awareness of the World Wide Web grew to 82 percent this year from 44.7 percent last year. Awareness of the Internet grew to 93.5 percent from 82 percent last year.

It’s boomer, echo boomer or bust

According to a comprehensive U.S. population demographic study commissioned by KGA Advertising of Middletown, Conn., businesses that continue to view 18-34 year-olds as the lifeblood to their success are either currently on life-support systems or have already succumbed to this previously misunderstood silent killer.

The marketplace has already lost thousands of once-powerful industry leaders nationwide to this insidious ailment. The motorcycle industry demonstrates the most dramatic example of a business that was wiped out because of its precipitous fall in sales that hit bottom in 1991. Overall motorcycle unit sales plummeted from 1.2 million at its height in the mid-’80s to an anemic 400,000 over the next five years.

KGA Advertising, which had the northeastern American Honda Motorcycle account at that time, went on a mission to fred out the reason why an entire product category was wasting away. Was it specific to the motorcycle industry? Was it contagious? And what preventive steps could be taken to avoid it? The Strategy and Research department at KGA Advertising discovered what even Honda could not, and realized that virtually any business that solely targets people born between 1966 and 1976 was susceptible. What is this conqueror of formidable businesses?

According to Ken Gronbach, president and CEO of KGA Advertising, "It’s the birth dearth - a cyclical population phenomenon that has historically impacted our economy but that has not been widely recognized or understood before now and as a result has taken marketers by complete surprise." It’s the enormous group of "baby busters," people born between 1966-1976, according to Gronbach, that has moved into the coveted 18-34 age group that the boomers, a market of some 76 million people, have officially exited.

As the first boomers turned 50 this year, this massive trendsetting market with its unprecedented buying power that has commanded the marketplace for the last 30 years has begun its meta- morphosis from the youth market into the mid-life market. The boomers leave a huge void in the marketplace that the birth dearth generation can’t fill.

"Simply put, we’re missing some 38 million consuming Americans in the baby bust generation!" says Gronbach. That’s clearly a prescription for disaster for those businesses that have yet to retool their marketing strategies away from the youth market to either the aging boomers or the next boom generation, the echo boom.

This generation, according to Gronbach, "will be the panacea for whatever marketing strategies currently all you, for those businesses savvy enough to be able to target them." The echo boomers, aged 19 and under today, will move into the 18-34 year-old age group within the next 10 years and will represent the predominant generation in America.

The next big scare that business is going to face will be the realization that there are millions fewer people to hire in the 20-30 year-old age group because of the birth dearth. Who is going to fill management positions to decide what products to sell and then, who is going to sell these products at retail? What impact will this have on marketing strategies?

"It will change what we advertise and who we advertise it to," Gronbach says. "Historically it was the 18-34 year-old market that made business happen. If you had them, then you had the core and you had it made. Now that is not the case. This once sought after, formidable 18-34 year-old market is going to be relatively meaningless by its greatly reduced size," Gronbach says.

So what does this all mean? "If you’re in business and selling either a product or service, you had better be cognizant of these three markets - the boomers, the baby busters and the echo boomers. Marketers better be prepared with both a short- and long-range strategies plan that understands who to target and how to reach them; or what starts out as appearing as nothing more than a temporary upset to the health of your business, may not only flatten your sales, it may flat-line your company," Gronbach says.