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Brand New World

Brand New World. How the internet is changing consumer attitudes to brands. Research context. Forrester, Jupiter AOL/NOP e-commerce study Academic Research American Interactive Consumer Survey 40 million US consumers changed their minds about brands as a result of online information.

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Brand New World

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  1. Brand NewWorld How the internet is changing consumer attitudes to brands

  2. Research context • Forrester, Jupiter • AOL/NOP e-commerce study • Academic Research • American Interactive Consumer Survey • 40 million US consumers changed their minds about brands as aresult of online information. • 60% of those consumersthen switched brand at purchase, whether that purchase had been made online or offline. Source: Dieringer Group: American Interactive Consumer Survey, 2002

  3. Why we did the research • If online information isaltering brand opinions and purchasing behaviour and it’s affecting online and offline sales, then greater investment in online branding is required • If we can mapthese information flows and evaluate their relative importanceto consumers (NEW) then we can make branding investment more effective • As a brand & e-commerce provider, understanding customer dynamics allows us to improveour web, retail, brand and communication strategies (AOL Snapshot)

  4. Hypothesis Information obtained on the web and personal online experience is modifying brand opinions and purchasing behaviour, regardless of whether the final purchase ismade online or offline

  5. Methodology • 4 phase: • Extensive desk research audit • Qualitative – 10 in-depth interviews • Quantitative pilot • Quantitative – 750 CATI respondents • Sampling: • Online Consumers • Weighting • Weighted to BMRB Internet User monitor • Project management • Henley Centre • For more detail, contact AOL UK

  6. Slightly more men Older Less ABC1s More men Younger Brand embracers Brand short cutters (22%) (23%) Brand irrelevants Slightly more females More 35-44 yr olds (55%) Brand is unimportant Consumer clusters Brand is important Consumers segmented according to attitude to brands & price Source: Henley Centre / AOL 2004

  7. The impact of the internet on brands • What is happening • Consumer Researching and Purchasing Behaviour on the Internet • The “Information” Effect • Brand Switching • Other important aspects • Redressing the balance

  8. Consumer Researching and Purchasing Behaviour on the Internet

  9. A highly valued research tool • 74% of online consumers have “personally researched and looked for information about a product or service before making a purchase”. • 76% of online consumers feel that the internet helps them make more informed purchase decisions Source: Henley Centre / AOL 2004

  10. The bottom line 77% of online consumers have personally bought a product or service over the internet inthe past (ever).

  11. The internet is used at every stage of the purchase process Purchase process Initial scan Purchase ‘ I know nothing ‘ I know nothing ‘ I want to ‘ I want to ‘ Final just in ‘ Final just in ‘ I want reassurance ‘ I want reassurance about about …’ …’ compare compare … …’ case case …’ …’ about my choice about my choice ’ ’ Source: Henley Centre / AOL 2004

  12. As a result, the purchase process is more considered… 73%of online consumers agree that “I spend more time researching products now that I have access to the internet” Source: Henley Centre / AOL 2004

  13. ...and even brand embracers “test” their decisions % agreeing ‘I spend more time researching products now that I have access to internet’ % 90 80 81 70 72 66 60 50 40 30 20 10 0 Irrelevants Embracers Short Cutters Base: excl. don’t know Source: Henley Centre / AOL 2004

  14. Decision John Discussion Purchase Discussion Lewis John with with partner Lewis partner Comet Google Cheap washing John Discussion machine Lewis Decision with Discussion websites shop partner with John John partner Lewis Pop Lewis Comet Purchase Online ups Online The new purchase model – the need to be informed An example of buying a washing machine Pre - internet With internet ONLINE OFFLINE Cheap AOL AOL washing John machine Lewis Decision Discussion shop Google Google with partner Lewis Pop Lewis Comet Purchase Online ups Online Example taken from Qualitative Research

  15. Consumers are price-sensitised % agreeing, as a result of using the internet ‘I am more aware of the cost of products and services’ % 80 82 70 72 69 60 50 40 30 20 10 0 Irrelevants Embracers Short Cutters Base: excl. don’t know Source: Henley Centre / AOL 2004

  16. 77% of consumers view information online as important to their research process 69% view their ability to compare product features online as important to their research process

  17. Online experience and information also translates into offline purchase % (by category) who bought offline after researching online 69 Cars 63 Garden/DIY products 62 Home furnishings 58 Mobile phones 57 Large home appliances 57 Consumer electronics 54 PC/Computer hardware 53 Small home appliances 53 Clothing/accessories 51 Health and beauty products 44 Computer games 40 Financial products or services 39 Food/groceries Source: Henley Centre / AOL 2004

  18. Consumer researching and purchasing behaviour on the internet The internet is a vital part of the research process The internet is used at every stage of the research process The purchase process is more considered and is more convoluted Consumers are more informed from a multiplicity of sources; price is not exclusively the primary driver Online information and experience (and modified brand opinions) also translates into Offline purchase

  19. The “Information” Effect

  20. Online information alters behaviour 77% of online consumers agree that if they ‘saw a negative review on the internet about a product or brand I would think twice about buying it’ Mpeg: Online information Alters behaviour Source: Henley Centre / AOL 2004

  21. Search engines 71 Personal recommendations 67 Websites of well known brands 57 Websites of well known retailers 57 Price comparison websites 56 Reviews/opinions on the internet written by experts 50 Customer opinions/reviews on websites 47 Product information in shops 46 Content provided by your Internet Service Provider 38 Television 34 Newspapers/magazines 34 Salespeople in shops 24 Information sources ranked by “importance” % who consider the following to be importantsources of information when researching/considering a product or service Base: excl. don’t know Source: Henley Centre / AOL 2004

  22. 90 Personal recommendations 90 73 Price comparison websites 73 73 Websites of well known retailers 73 68 Websites of well known brands 68 67 Search engines 67 61 Customer opinions/reviews on websites 61 60 60 Product information in shops 60 60 Reviews/opinions on the internet written by experts 53 53 Content provided by your Internet Service Provider 44 44 Newspapers/magazines 35 Television 37 31 Salespeople in shops 35 Information sources ranked by “honest and fair” % who trust the following information sources are honest and fair Base: excl. don’t know Source: Henley Centre / AOL 2004

  23. Online information is trusted.. “If there was a hundred reviews out there on a product, they’re not all going to be nutcases and they’re not all going to be murderers … if a hundred people are saying ‘This product is crap’ it’s going to be pretty bad and enough people are saying ‘This product is really good’ it’s got to be pretty good” Source: Henley Centre / AOL 2004

  24. Customers seek out information Source: Henley Centre / AOL 2004

  25. 68 Visited a favourite retailer website 53 Visited an auction website 48 Visited a favourite brand website 44 Visited newspaper/magazine websites 38 Visited a price comparison website Visited a specialist consumer review website 26 Consumers seek out information about brands Which, if any, of the following have you done in last 6 months? Source: Henley Centre / AOL 2004

  26. 31 Subscribed to email newsletter by company/brand Forwarded information on product/service to friend/colleague 30 26 Given email feedback to product/brand website 21 Posted a message on online message board/computer forum 19 Followed/took part in an online chat And they pass it on…… Which, if any, of the following have you done in last 6 months? Source: Henley Centre / AOL 2004

  27. The “Information” Effect Online information alters purchasing behaviour Certain Online sources of information are regarded as being more important and are trusted more than Offline sources Consumers are not just passive recipients of information, they are actively seeking it out and communicating it

  28. Brand Switching

  29. I look more favourably on certain brands 56 I came across a new brand, which I was not aware of before 53 I came across a new brand, which I then bought (anywhere) 45 I decided not to purchase a certain brand or make 43 I changed my mind about a brand I was going to buy and switched to a different brand 42 What is happening to consumer’s brand perceptions & behaviour % who agree that as a result of using the internet Base: excl. don’t know Source: Henley Centre / AOL 2004

  30. Short Cutters Embracers 42 I decided not to purchase a certain brand or make Irrelevants 55 39 I changed my mind about a brand I was going to buy and switched to a different brand 34 54 40 38 I came across a new brand, which I then bought (anywhere) 61 42 47 I came across a new brand, which I was not aware of before 68 49 56 I look more favourably on certain brands 76 49 The Internet is influencing Brand Perceptions and Behaviour across the spectrum % (by segment) who agree that as a result of using the internet Base: excl. don’t know Source: Henley Centre / AOL 2004

  31. Consumers are changing their minds As a result of using the internet: • 42% of online consumers have changed their mind about a brand they were going to buy and switched to a different brand • 43% of online consumers decided not to purchase a certain brand Source: Henley Centre / AOL 2004

  32. 26 Give Email Feedback % of Total 35 % of Brand 29 Subscribe to Email Switchers 36 Newsletter 40 Visit Price Comparison Site 49 51 Read Product Reviews 59 Brand “Switchers” are particularly information sensitive…

  33. Use Internet Ads 26 to Help Them Find Things 35 They Want Clicked on 33 Online Ad in Last 12 44 months .. And that means all forms of information: brand switchers are more receptive to online advertising % of Total % of Brand Switchers

  34. Large home appliances 47 Financial products or services 39 Holidays and travel 31 Consumer electronics 29 Mobile phones 28 26 Cars Small home appliances 24 Health and beauty products 24 Clothing/accessories 22 PC/Computer hardware 21 Computer software 18 Garden/DIY products 17 Home furnishings 6 Some categories are more at risk % consumers who bought ‘a different brand from the one you had intended to before you went on the internet’ Source: Henley Centre / AOL 2004

  35. Brand switching As a result of using the internet significant numbers of consumers change their minds and switch brands Brand Switchers are information sensitive, and that includes receptivityto marketing and advertising information Some categories are more at risk than others

  36. Other important aspects The role of brand attitudes The role of internet expertise

  37. 54 41 34 Irrelevants Embracers Short Cutters Consumers are actively switching their brand decisions because of the internet, and this is happening for those whom you would expect to be brand loyal % who agree, as a result of using the internet, that they changed mind about brand they were going to buy, and switched to a different brand Base: excl. don’t know Source: Henley Centre / AOL 2004

  38. Consumer self-assessment of expertise 19% 18% A beginner Quite knowledgeable but occasionally need help An expert 63% Source: Henley Centre / AOL 2004

  39. Internet experts are more likely to appreciate and rely on information % agreeing with the following A beginner Quite knowledgeable An expert 71 I feel that the internet helps me make more informed purchasing decisions 84 95 80 I prefer to buy on the internet from companies that have a physical presence 78 70 63 I find there is too much information on the internet when I use it for research/purchasing 45 28 Base: excl. don’t know Source: Henley Centre / AOL 2004

  40. 52 42 33 A beginner Quite knowledgeable but An expert occasionally need help “Experts” are more likely to switch % of self confessed expertise of users who agree, as a result of using the internet, that they have changed their mind about a brand they were going to buy and switched to a different brand Base: excl. don’t know Source: Henley Centre / AOL 2004

  41. Redressing the Balance

  42. The internet is having a fundamental influence on the way your customers see your brand Online influences are making your customers less brand loyal, more open to try new brands, more willing to experiment You cannot ring-fence your offline sales from these online influences There are factors that counter this seeming“anarchy” On one side……

  43. retailer I am familiar with the Yes No No Yes I am familiar with the product brand Trust is key: If you are not trusted, you are not in the ballpark…. When buying online, I will buy a product if… Yes Yes No No 90% 82% 13% 54%

  44. 51% of online consumers pay more attention to ads on sites that they trust. “Oh here we are, Top Gear Magazine… Because it’s Top Gear and it’s What Car and what I mean is it’s another decent make, it’s another decent brand rather than Joe Bloggs’ reviews on cars.” ..the need for trust goes for information sources too… Source: Henley Centre / AOL 2004

  45. `If I am actually reading the page and the advert is there, maybe a banner on the page, then, yes, I am more likely to trust it and more likely to click through. Actually come to think of it I’ve got an Internet Bank account.. And I saw that and I clicked through and now I bank with them” Q: But did it make a difference where you saw the advert? “I think it would because there are some sites… They seem like here today, gone tomorrow Source: Henley Centre / AOL 2004

  46. Take-out The internet is having a fundamental influence on the way your customers see your brand Easily accessible, comparative information online is a primary driver of change Online influences are making your customers less brand loyal, more open to try new brands, more willing to experiment Some online influences are considered more important information sources and are trusted more than offline information sources Your customers’ offline brand attitudes are not a predictor of their online brand behaviour You cannot ring-fence your offline sales from these online influences

  47. To put it in a nutshell…. As a result of using the internet, almost half of online consumers are switching brands; this affects both online and offline sales, and you cannot even rely on those who are most emotionally attached to brands

  48. Greater branding investment online is critical If brand trust is not reinforced, then your brand is not even an option for consideration There are things you can do

  49. Increased brand investment needs to be specifically invested online because of the need to: Counter or exploit information flows at source Address consumers’ sensitivity and appetite for all kinds of information, including commercial Harness the trustworthiness of online information sources, which surpasses that of the more traditional, offline branding backdrops There are things you can do..

  50. There are things AOL can do Brand trust can be improved by using very specific online levers identified in the study • Marketing Solutions Presentations • Snapshot guide & Microsite, March 2005

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