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Net/TV convergence myth exploded

Researchers find contradictions in market's development

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The US online market is not behaving as predicted. For example, there is no evidence that the TV and Internet markets are converging, according to a study by NPD and Iconoclast. Some 57 per cent of Americans can watch TV and surf at the same time, and 86 per cent of the group do so and are much influenced to visit a site by an advertisement on TV. These imaginative surfers are spending 35 per cent of their time visiting just 50 sites, according to Nielsen/Net Ratings, up from 27 per cent last year. The top-ten US sites now get 20 per cent of surfing time, and a third of them arrive there via AOL. What is disappointing for ecommerce is the low conversion rate from surfers to buyers in the USA. According to the Internet Commerce Briefing, the rate is just 2.7 per cent, and only one-in-three users had made a purchase online. What is surprising is that 65 per cent claim credit card security to be a concern, and 58 per cent cited personal privacy. There appears to be a reluctance by Internet merchants to recognise that many people do not have the money to make a purchase, and that they are, if you will, window shopping. Meanwhile, IDC is saying that Web-based procurement is more than doubling each year, and that last year's $147 million will become $5 billion by 2003. We doubt that. US Internet marketers continue to beat the drum that the European market is backward, but it seems not to have occurred to them that many of the goods and services offered are not wanted or are too expensive after delivery costs and tax are taken into account. Cultural differences are also very significant. Some of the wilder forecasts concern the Asian market. The Yankee Group is saying that the number of Asian users will go from a present 38 million to 374 million by 2005, with China passing Japan (14 million users today) in the number of users by 2001, when China is predicted to reach 40 million users. We doubt all this too. Many of these predictions are made by people in the US who dine at McDonalds, drink Coca Cola, and have little experience with the reality of developing markets. If they drank beer, smoked, and munched Scotch eggs they might have a better understanding. But that's market research for you. ®

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