Segmenting the Internet

American Demographics, July, 1996 by Thomas E. Miller

SUMMARY Although Internet users are a seemingly homogeneous group of computer sophisticates, younger and older users focus on communicating, while middle-aged users focus more on seeking information. As the Internet matures along with the people who use it, these patterns will shift gears.

To hear the press tell it, youth dominates the Internet. Hip publications like Wired magazine and popular columns like Newsweek's "Cyberscope" project a cyber-youth image rife with rebellion and iconoclasm. One might conclude that no one over age 30 ever goes online.

Not so. Although twentysomethings are more likely than average to use the Net, those aged 18 to 29 represent only 31 percent of the total adult audience in the U.S., according to Find/SVP's recent American Internet User Survey. Baby boomers in their 30s and 40s are nearly as likely as younger adults to use the Internet, and they make up 53 percent of the estimated 8.4 million adult users. Those aged 50 and older account for 35 percent of all adults, but just 13 percent of Internet users. An additional 1.1 million Internet users are under age 18, based on parents' responses.

Although the Internet reaches a tiny portion of the population today, its reach is growing rapidly. The number of adult users of the World Wide Web tripled from 2.2 million in 1994 to 6.6 million in 1995, confirming press reports of exponential growth. Moreover, between July 1995 and January 1996, the number of commercial host computers (.com) grew from 1.7 million to 2.4 million.

The Internet signifies different things to different people. Those who "surf" view the Internet as an end in itself and a valid use of time, while those who are seeking specific information often find it a frustrating time-waster. Understanding how various groups navigate the Net and how their behavior may change in the future is crucial for those who hope to use the network as a delivery medium for products, information, or services.

AGE MAKES FOR MEANINGFUL SEGMENTS

Many businesses can usefully segment their customers by education or income, two of the strongest predictors of consumer behavior and spending. However, the Internet is still in its infancy. Most of its current users are early adopters, people with high levels of education and income who are likely to try new technology before it becomes mainstream. This means that education and income are not useful ways to segment this particular market, at least not yet.

Other ways to classify Internet users include the manner in which they use the network--for business, personal, or academic purposes--and their level of experience. The latter approach clearly differentiates various types of behaviors, but can be tricky to measure. Someone who has used the Internet for more than a year might be an occasional and relatively inexperienced user, while a recent enthusiast might have both logged more hours and gained a greater understanding of the Net's intricacies.

As it turns out, most users tap the Internet for more than one purpose. Sixty percent of adult respondents to the American Internet User Survey say they employ the Internet for both business and personal activities. Of users who report that more than half their Internet activities are "personal," 30 percent tap the Internet at work, including 8 percent who use it exclusively from their workplace. Similarly, 16 percent of such personal users go online at academic locations, including 7 percent who do so exclusively. Alternatively, over half of all adult users who say their usage is predominantly for business indicate they go online from home, including 19 percent of business users who go online exclusively from home.

One way to divide Internet users into mutually exclusive and easily identifiable groups is by age. The stage of life at which people are introduced to the Internet has a lot to do with what they want and need from it. For example, young adults are likely to have begun using the Net as students, while many older users first encountered it at work. These differences, along with the reality of people's lifecycles, dictate age differences in Internet use.

COMMUNICATION VS. INFORMATION

Younger users communicate more online and are nearly three times as likely as older users to have published their own personal Web sites. Half of under-30 users and 44 percent of 30-to-49-year-olds use e-mail daily. Younger users are also most likely to visit Usenet newsgroups, the closest equivalent to chat rooms on the Internet. Of younger Webheads who also use commercial online services, 36 percent spend the majority of their online time with e-mail and chat.

Clearly, younger users exhibit a heightened proclivity to socialize online. Those aged 30 to 49 communicate less frequently online. Nearly half of boomers who use e-mail say that most of it is for work, versus 25 percent of those under age 30. Those aged 50 and older are about as likely as young adults to use e-mail on a daily basis, at 49 percent, but they are more like boomers in their emphasis on work-related usage. Mature users are less likely than boomers and Generation Xers to visit newsgroups, but those who do are frequent users, nearly matching those under age 30 in hours logged. Overall, mature Internet users resemble young adults more than middle-aged users in their preferences for communicating and socializing online.