Jill E. Posnick
New York
+1 (917) 452 4947

Amy Federman
+1 (305) 347 4343

Caroline Brown
+1 (404) 962 8616

November 29, 2000
Study Shatters Internet Marketing Myths

Accenture and Online Insight’s Study Reveals Simplicity Matters and Questions Who Companies Are Really Attracting to Their Websites

ATLANTA and NEW YORK, November 29, 2000 – Companies that are spending lavishly on Web brand marketing and advertising in hopes of attracting young and trendy customers to their websites are overlooking the most profitable consumer sector and the simplest marketing remedies. These are just two of the surprising findings, released today, in an eBranding study conducted by Accenture, a leading global management and technology consulting organization and Online Insight, an eCustomer Relationship Management technology company.

The nationwide study on Internet marketing spending, "Beyond the Blur: Correcting the Vision of Internet Brands," shows that companies could realize dramatic returns from online marketing efforts if only they targeted their marketing to the ten percent of the population that buys 70 percent of all products online. That ten percent is primarily comprised of people 35-and- older, not the GenX segment so often associated with the Internet. Furthermore, the study found that the best ways to reach the buying public are:

  • Provide a rewarding customer experience, instead of barraging them with massive brand advertising.
  • Recognize who their customer really is; consumer needs are very, very different between segments and a website should not be designed as "one size fits all."

"When it comes to online marketing initiatives, companies are ignoring the basic marketing principles traditional businesses use – first, choose your target more deliberately, and then focus marketing efforts to reach them," said Stephen Dull, partner in Accenture’s eBranding practice. "Instead, many companies are spending a lot of money on sweeping Internet marketing initiatives and huge advertising buys that are not targeted. This study affirms that ’Marketing 101’ applies in the Internet world. Success is not achieved by throwing around as much money as possible, but by inspiring customers to buy more."

This U.S.-focused B2C research of online customers, offers important new insight into the perceptions of digital consumers. The landmark study’s findings will help companies to measure and understand the true driving force behind their online customers’ purchasing and, in turn, to devise better brand-building strategies across all customer interactions. The study’s findings are especially vital to companies seeking to profit from online marketing initiatives during the expensive holiday and Super Bowl advertising cycle.

Another surprising finding is that nearly a third of online consumers are not motivated by price. According to the study, these online consumers are more interested in website speed, ease of use, security, and overall brand selection.

“The secret to building brand equity is not so much in huge advertising buys, fancy logos or constant price- slashing; it’s in fully understanding customers’ needs and providing them with an exceptional experience tailored to those needs,” said Dull.

The comprehensive study’s findings are pertinent to companies seeking to establish, build, and sustain an Internet brand.

The study measured the desires of more than 2,000 online purchasers using B2C websites across 17 industries, including automotive, entertainment, communications, financial services, high technology, healthcare, retail and travel. Participants also were surveyed on a variety of issues regarding their Internet usage, brand awareness, knowledge of pricing and product information, and customer service.

“For many people, a brand conjures up thoughts of company logos, product packaging or images and feelings associated with a particular product or company,” added Mark Wolfe, lead strategy partner in Accenture’s Customer Relationship Management service line. “Yet, a brand is so much more. This research shows that a brand should be defined as ‘the sum total of the customer’s experience with, and perceptions of, a product or service.’”

“It’s a highly competitive marketplace and companies must move quickly to protect their eBrands,” said Ken Forster, president and CEO of Online Insight. “Our research proves that understanding how consumers make decisions is key to surviving in this Internet economy.”

Three of the eleven B2C marketing myths that this study proved false include:

Myth #1: Target the young. Success in the online world comes from grabbing as many young, hip and trendy customers as possible.
Reality: In fact, only 10 percent of the population accounts for 70 percent of all online spending and the heavyweight spenders are 35-years and older.
New Strategy: ‘Forget the eyeballs and focus on the wallets.’

Myth #2: It’s all about the price. Most customers opt to buy on the Internet to get things more cheaply.
Reality: Pricing contributes no more than 10% to the eBrand value. The other 90 percent has nothing to do with price but everything to do with website features and brand availability.
New Strategy: ‘Focus on your experience to raise the bottom line.’

Myth #3: Marketing is the key to brand building.
Reality: The consumer experience is key. Online brands can build more value by improving the overall customer experience and by tailoring their websites to their target audience.
New Strategy:Think segments to streamline the right experience for the customer.’

About the Study

The study was conceived by Accenture’s eBranding practice and conducted jointly with Online Insight. Online Insight conducted the nationwide research of more than 2,000 online consumers focusing on consumer needs, including Internet usage, broadband usage, spending, brand reputation and satisfaction, and demographics. The results address issues on branding that apply across 17 industries.

This study is the first in a series conducted by Accenture and Online Insight to collect empirical data about the value of brands in the New Economy and the impact of the Internet on the total customer experience and their chosen brands.

Understanding how consumers make choices has long been a “hot” topic for social scientists, psychologists and marketers. Marketing is the late-comer, borrowing mathematical models developed in the field of psychology to measure preferences and predict buyer behavior. One such model, “conjoint” (or trade-off) analysis, has been reliably used since the 1970s and has become one of the top choices for understanding consumers and extensively used by the best marketing companies.

The fundamental idea behind conjoint analysis is that choices usually involve a trade-off. We never get all of our decision criteria perfectly met: a Rolls Royce for $3,000. The goal for marketing researchers is to figure out how people make those tradeoffs. By showing consumers enough realistic options and watching how they choose, conjoint can reliably measure how we buy and what we really want.

About Online Insight

Online Insight is an eCRM technology company offering a unique integrated guided selling and customer insight solution. Unlike most technologies used on the web today, Online Insight uncovers the "why" behind purchase motivations by engaging the consumer in a real-time dialogue that captures their explicit trade-offs and preferences at the individual level. By understanding the exact needs and motivations of each buyer, companies can more profitably drive sales, marketing, product planning and customer care systems. Founded in 1998, the company is based in Atlanta, Georgia. www.onlineinsight.com

Study From Accenture and Online Insight Shatters New Economy Myths

Myths of eBranding That Will Make Many Rethink the B2C Marketplace

Accenture, a leading global management and technology consulting organization and Online Insight, an e- Customer Relationship Management company, today released the findings of an eBrand study entitled “Beyond the Blur: Correcting the Vision of Internet Brands” -- the first of its kind in the New Economy to focus solely on the consumer. The report finds that quantifying the value and impact of a business-to-consumer brand in the eEconomy is what drives its value. The results, which are quite surprising, offer practical insights into identifying attributes most critical to understanding brand and Internet interaction by consumers.

“For many people, a brand conjures up thoughts of company logos, product packaging or images and feelings associated with a particular product or company,” said Stephen Dull, partner in Accenture’s eBranding practice and co-author of the study. “Yet, a brand is so much more. From this research, all should define a brand as ‘the sum total of the customer’s experience with and perceptions of a product or service.’”

This unprecedented study found the facts of commercial life online are in many cases exactly the opposite to the myths on which many marketing decisions with million- dollar ramifications have been based. B2C myths that should have the entire online marketplace redirecting its online strategies are detailed below:

Myth #1: Target the young! Success in the online world comes from grabbing as many younger generation customers as possible.
Reality: The truth is 10% of the population accounts for 70% of spending. Moreover, 44% of big- spenders online are over thirty-five and another 36% is over 25.
New Strategy: ‘Forget the eyeballs and focus on the wallets. Most specifically, think skis, not snowboards.’

Myth #2: Advertising doesn’t cost, it pays because brand awareness is worth the price! You have to throw a ton of advertising dollars at developing a strong online brand reputation and building awareness.
Reality: A large segment of the online buying population doesn’t care how familiar the eBrand is. In fact, brand familiarity ranks tenth among the top ten value attributes for the total market. Investing in other attributes to create the ‘customer experience’ could be more powerful – and create differentiation.
New Strategy: ‘Don’t automatically dish out the ad dollars… build a phenomenal customer experience

Myth #3: It’s all about price! Most customers opt to buy on the Internet to get things more cheaply.
Reality: Pricing contributes no more than 10% to the eBrand value, so the other 90% has nothing to do with price… rather web site features and brand availability are most favored by customers.
New Strategy: ‘Total online experience raises your bottom line.’

Myth #4: Success comes from understanding customer demographics and segmenting customers by finer and finer demographic criteria.
Reality: If you’re trying to determine how to treat customers differently, you should look at needs- based segmentation rather than age, sex, and income. In other words, it’s understanding customer needs that is the key to delivering an exceptional experience.
New Strategy: ‘Demographics may matter far less than you think.’

Myth #5: Marketing is the key to brand building and ubiquity creates customers.
Reality: The consumer experience is key. Online brands can build more value by emphasizing the consumer experience and by developing a range of experiences tailored to identified segments.
New Strategy:
‘Think segments to streamline the right experience for the consumer.’

Myth #6: Convenience outweighs privacy. Customers don’t care about divulging personal information if it means they get what they want, when they want it and at the price they want it at.
Reality: The more people use the Internet and purchase online, the more they care about what happens to their personal information.
New Strategy: ‘The quickest way to damage your brand reputation is to sell customers’ personal information without their knowledge.’

Myth #7: Personalization makes people come back again and again.
Reality: Site personalization is the second to last in value to consumers of all attributes studied. Across all segments, consumers express strong concerns about the privacy of their personal information.
New Strategy: ‘eBranders should raise a caution flag when personal information is tapped, even for internal marketing purposes.’

Myth #8: Online customers like highly interactive and media rich sites.
Reality: Interactivity ranks eighth of the thirteen value attributes studied on a total market basis. This strongly suggests that marketers can deploy resources more effectively elsewhere than in interactive technology.
New Strategy: ‘eTailers need to emphasize features that are truly valuable to customers such as speed and convenience

Myth #9: The consumer experience must be consistent.
Reality: Online market segments differ in their needs and preferences and therefore demand different experiences. Consumer needs vary greatly from industry to industry. A single approach is unlikely to dominate multiple categories.
New Strategy: ‘eTailers need to segment their customers by need and deliver value to them that addresses those needs.’

Myth #10: Bricks and mortar make a relationship solid.
Reality: Online consumers are all but indifferent to a brand’s presence offline. Online/offline presence ranks dead last among value builders for the market as a whole.
New Strategy: ‘Consumers care least about dual presence… it may not be worth the cost for pure plays.’

Myth #11: Every other e-tailor is a potential threat.
Reality: Brand selection is one of the most important value builders in the market as a whole and in every segment identified.
New Strategy: ‘Because consumers place such a high value on variety and selection, it behooves e- Branders to learn to cooperate with each other.

###