Changing habits, changing minds
Universal access to information via the Internet is giving consumers the confidence to change their buying habits, as Simon van Wyk writes.
Two developments reported on recently demonstrate the growing influence of the Internet in an area where it really counts - the hip pocket.
The first was the success of an obscure US presidential candidate in raising funds for his campaign to become the Democratic candidate to face off against George Bush next year. Howard Dean, governor of the tiny state of Vermont, raised US$7.5 million in three months, more than twice as much as his higher profile opponents. And nearly all of that fundraising was via donations through his website - 60,000 of them.
The other development was the soaring influence of independent movie rating websites on cinema-goers (and, by extension, the major film companies). The mediocre performance of “The Hulk” at the box office has been attributed largely to bad reviews on these fan movie sites.
As the Sun-Herald reported, “The Hulk appears to have become the latest victim of Hollywood’s worst enemy - the Internet. Sites such as Ain’t It Cool and Dark Horizons - visited by millions of young movie fans a week - have been buzzing about The Hulk for months, and the buzz hasn’t necessarily been good.”
Largely on the strength of the bad Internet pre-publicity, The Hulk’s box office receipts in the US for its second week were 70% down on the opening weekend - a direct hit of tens of millions of dollars to the film’s makers.
Had these two things happened three years ago, they would have sent Internet stocks soaring. As it was, they were noted and reported on, but without the fanfare seen during the dotcom boom. These incidents were simply acknowledged and taken in stride by a marketplace that has accepted the reality of the power of the Internet.
As far as the competition goes, the reaction was, if you can’t beat them, join them. Howard Dean’s Democratic opponents, and even US President George Bush, have already beefed up their own websites in an attempt to emulate Dean’s feat. Meanwhile, the Hollywood studios, instead of dismissing movie websites, are now actively engaged in trying to influence them through free trips to movie sets for site writers, lucrative advertising and sponsorship deals, and in the case of Steven Spielberg’s Dreamworks, buying the sites from their owners.
The Internet has become the key instrument of discontinuity to the accepted order of consumer behaviour.
The Dieringer Research Group, which conducts the annual American Interactive Consumer Survey, recently published study results which showed that brand switching and modified brand opinions were on the increase and the Internet was the leading cause of this change. The survey estimated that 40 million US consumers have changed their minds about shopping brands as a result of online information in 2002, and the trend is on the increase.
According to the research, the number of adults in the US who changed their brand opinions rose by more than 50% from 1999 to 2003. Sixty percent of those online adults whose opinions changed ended up switching brands at purchase, whether they bought online or at a store.
Nearly 50% of all adults who have been online longer than five years said their brand opinions changed because of online information, compared to only 28% of new Internet users. Half of all adults who have abandoned online orders changed their opinion of brands due to their online experience, and “major mall brands” were found to be among the most likely products that were subject to the change in perception. Households with incomes of US$75,000 or more are also more likely to switch brands.
One area where this is happening most strongly is, not surprisingly, in the information gathering arena. The Yellow Pages is having its brand position eroded by search engines as more marketers understand the benefits of search engine marketing and move more money into it.
A recent survey of small and medium sized businesses by the Kelsey Group and OneStat showed that 43% SMEs use web site marketing and 17% use search engine marketing. Most small businesses still use the Yellow Pages but indicate that more marketing dollars are likely to shift to the web.
The biggest beneficiary worldwide is undoubtedly Google. An estimated 55% of all searches are now done through Google - more than 200 million searches per day. That’s a lot of fingers that would otherwise be walking through the Yellow Pages.
Australian online marketing researcher Guy Cranswick writes in australia.internet.com that “the flux in consumer attitudes, and their readiness to change opinions, is a potential headache. The obvious answer to these consumer trends is a consistent counter-action to ensure that branded websites and all online interaction are consistent with the overall brand image.”
“Perhaps that is the right thing to do. But it’s not the brand image alone that is the cause of the disloyal consumer: rather the switching and opinion changing is arising from information easily gained online. That means that consumers aren’t seduced or rendered passive by brand image when access to information is readily at hand. They check it out.”
The Internet promotes brand switching because, by its nature, it makes it easy to find comprehensive information before making a buying decision. What does this do to the cost of relationships for businesses? It means that, shock horror, decisions will be made more on the basis of product quality and utility, rather than image. The whole concept of brand image could be in for a big shake-up.