Marketing to the Internet Generation

Introduction

Background
Overview of Report

Scope and Methodology

Scope of Report
Methodology

Overview of the Internet Generation

Internet Generation Has 42.5 Million Members with At-Home Internet Access
Internet Generation Households Have High Incomes and Two Parents
Computers Still Trail Other Media but TV Begins to Lose Ground
Internet Generation Expects Active Media Engagement
Distinct Values Affect Consumer Behavior of the Internet Generation

Survey of the Market

Analysts See Cause for Optimism
But Obstacles Remain
Number of Internet Generation Families Will Grow at Rapid Rate
Aggregate Income of Internet Generation Families Exceeds $1.3 Trillion
Online Expenditures of Kids, Tweens, and Teens Expected to Top $4 Billion in 2004
Online Expenditures by 18- to 24-Year-Olds Projected to Exceed $10 Billion in 2004
Online Purchases by College Segment Will Exceed $2 Billion in 2004
Nearly 66 Million Members of Internet Generation Expected to Be Online at Home in 2004
Total Online Expenditures Will Exceed $14 Billion

Marketing and Advertising Strategies

E-Marketers Need to Break through Internet Generation Defenses
Opinions Differ on How to Promote Teen E-Commerce
Teens Expect Retailers to Synchronize Online Marketing with Bricks-and-Mortar Facilities
E-Commerce Sites for Kids and Teens Need to Meet Basic Expectations
Internet Remains Only One of Many Marketing Tools
Contests and Giveaways Drive Many Online Promotions
Street Marketing Techniques Extended to the Internet
Teens Web Sites Face Shakeout
Permission Marketing Gains Ground
Schools Become Promotional Partners

The Kids Segment of the Internet Generation

Young Kids in Internet Generation Total 23.2 Million
Internet Access Available to 4.8 Million Young Kids
TV Still Dominates Media Usage by Young Kids but Core Group of Computer-Users Grows
Toy Sites Try to Tap into Expectations of Internet Generation Kids
Marketers Begin to Use Web to Get Kids' Attention
Kids Sites Try to Combine E-Commerce with Education

The Tweens Segment of the Internet Generation

More than 10 Million Tweens Have Access to the Internet at Home
Television Gets the Most Media Attention
Games and E-Mail Outpace Shopping
Many Parents Closely Supervise Online Tweens
Parents Object to Online Buying by Tweens
McDonald's Uses Special Web Site to Reach Tweens
Disney Tries to Capture Attention of Tweens with Enhanced Web Site

The Teens Segment of the Internet Generation

Teens Most Likely to Have Computer at Home
More than 8 Million Have Internet Access at Home
Multitasking Common
Online Shopping Still Has Low Priority but Internet Plays Role in Teen Spending
Internet Banner Ads Bother Teens
Internet Is Key Component of Teens Marketing Programs

The College Segment of the Internet Generation

College Students Remain Elite Group
College Students Are Webcentric
College Students Are Big E-Spenders
Surveys Generally Agree on Most Popular Online Purchases
Internet Helps Marketers in Hard-to-Reach College Market
Marketers Use Offline Promotions to Build Online Traffic
Marketers Push Envelope to Create Successful Online Promotions
Textbook Marketers and Membership Programs Top College Sites

Market Definition

The Internet Generation Defined
Table 2-1: The Internet Generation: by Year of Birth and Length of Internet Exposure, 1976-1998
Echo Boomers Form the Core of the Internet Generation
At-Home Internet Access Key Criterion
Packaged Facts Analyzes Four Segments of the Internet Generation

Key Demographic Features

Nearly 90 Million Members of the Internet Generation
Table 2-2: The Echo Boom Generation: by Age Group and Gender, 1999
Non-Hispanic Whites Remain Largest Component of Echo Boomers
Table 2-3: The Echo Boom Generation: by Race and Hispanic Origin, 1999
More than 45 Million Members of Internet Generation Have At-Home Internet Access
Table 2-4: Number of Echo Boomers with Internet Access at Place of Residence, 1999
Internet Generation Households Have High Incomes
Table 2-5: Percent of U.S. Households Using the Internet at Home: by Race and Hispanic Origin and by Income, 1998
Internet Generation Kids Live in High-Income Neighborhoods
Table 2-6: Availability of Computer and Internet Access at Home: by Community Income
Internet Generation Kids Tend to Live in Two-Parent Households
Table 2-7: Percent of U.S. Households (with Child) Using the Internet at Home: by Household Type, Income, and Race and Hispanic Origin, 1998
High-Income Families Over-represented in Internet Generation
Table 2-8: Number of Families with Children with Internet Access
vs. Number of All Families with Children
Internet Generation Includes Large Number of Middle-Income Families
Table 2-9: Families with Children with Internet Access: by Income Level

Media Usage by the Internet Generation

Computers Still Trail Other Media
Table 2-10: Amount of Weekly Time 2- to 18-Year-Olds Exposed to Various Media
Table 2-11: Proportion of Time Each Medium Contributes to Total Media Budget: Ages 2 to 18
But TV Begins to Lose Ground
Tweens and Teens Place Highest Value on Computers and Internet
Table 2-12: Preferred Media of 8-to 18-Year-Olds
Table 2-13: Attitudes of 8- to-18-Year-Olds Toward Benefits of Computers vs. TV
Multimedia Usage and Multi-tasking Routine
Internet Generation Expects Active Media Engagement
Youngest "Speeders" Prefer E-Mail to the Phone
Internet Generation Will Spend One-Third of Lives on the Net

Life Experiences and Values of the Internet Generation

Echo Boomers Know Only Unprecedented Prosperity
Tweens Worldview Described
Distinct Values Define the Internet Generation
Diversity Seen as Normal
Teens Expect To Be Wealthier than Their Parents
Girls More Socially Concerned than Boys

Consumer Behavior of the Internet Generation

Echo Boomer Values Shape Consumer Behavior
Internet Generation Shoppers Want Things Their Own Way
Internet Generation Wants to Find Things Out on Their Own
Internet Generation Demands Authenticity from Marketers
Echo Boomers Are Smart Shoppers

Factors Promoting Market Growth

The Broadband Wiring of America Accelerates
Online Population Will Grow Rapidly
E-Commerce Hopes Remain High
Wider Availability of "E-Wallet" Sites Will Facilitate Market Growth
Table 3-1: Selected E-Wallet Sites, by Target Age Group and Features
DoughNet.com Offers Financial Services to Teens
DoughNet.com Offers ATM Card
DoughNet.com and Harris Interactive Team Up
RocketCash Enables Teens to Shop Online
RocketCash Creates Online Currency Exchange
RocketCash Expands E-Commerce to Latino Community
Cybermoola Provides Teens with Pre-paid Cards
Cybermoola and Footaction Form Alliance
PocketCard Offers Teens Visa Spending Card
Alloy Online and PocketCard Team Up

Factors Limiting Market Growth

Most Kids and Teens Still Lead Traditional Lives off the Internet
Younger Members of the Internet Generation Face Obstacles to Online Buying
Many Teens Find E-Shopping Pale Imitation of Real Thing
Echo Boomers Continue to Frustrate E-Commerce Strategies
Online Victimization of Tweens and Teens Becomes an Issue
Parental Concerns Begin to Be Heard
Government Regulation Starts to Affect Online Kids and Teens

Size and Growth of the Kids Segment of the Internet Generation Market

Young Kids Will Become Larger Component of Internet Generation Market
Internet Generation Kids Market Will Increase Five-Fold
Table 3-2: Projected Growth in the Number and Annual Expenditures by or for Kids Ages 2-7 Shopping Online, 1999-2004

Size and Growth of the Tweens Segment of the Internet Generation Market

Online Buying by Tweens Expected to Increase Substantially by 2004
Table 3-3: Projected Growth in the Number and Annual Expenditures of Tweens Ages 8-13 Shopping Online, 1999-2004

Size and Growth of the Teens Segment of the Internet Generation Market

Online Buying by Teens Expected to Increase Eight-Fold by 2004
Table 3-4: Projected Growth in the Number and Annual Expenditures of Teens Ages 14-17 Shopping Online, 1999-2004

Size and Growth of the College Segment of the Internet Generation Market

Online Purchases by College Segment Will Exceed $2 Billion in 2004
Table 3-5: Projected Growth in the Number and Online Expenditures of Full-Time Students at Four-Year Colleges with Internet Access at Place of Residence, 1999-2004

Size and Growth of the Total U.S. Market for the Internet Generation

Number of Internet Generation Families Will Grow at Rapid Rate
Table 3-6: Projected Growth in the Number of Families with Children Ages 2-17 and with Internet Access at Home, 1999-2004
Nearly All High-Income Families Will Have Internet Access at Home in 2004
Table 3-7: Projected Growth in the Number of Families with Children Ages 2-17 and with Internet Access at Home: Family Income over $75,000, 1999-2004
Middle-Income Families Will Be Largest Segment of Internet Generation Families
Table 3-8: Projected Growth in the Number of Families with Children Ages 2-17 and with Internet Access at Home: Family Income $35,000 to $74,999, 1999-2004
Internet Access at Home Will Grow Most Rapidly in Low-Income Families
Table 3-9: Projected Growth in the Number of Families with Children Ages 2-17 and with Internet Access at Home: Family Income Under $35,000, 1999-2004
Aggregate Income of Internet Generation Families Exceeds $1.3 Trillion
Table 3-10: Aggregate Income of Families with Children Ages 2-17
and with Access to the Internet at Home, 1999
Aggregate Income of Internet Generation Families Will Nearly Double by 2004
Table 3-11: Projected Growth in the Aggregate Income of Families with Children Ages 2-17 and with Access to the Internet at Home, 1999-2004
Internet Generation Kids, Tweens, and Teens with Internet Access at Home Will Total 44.7 Million in 2004
Table 3-12: Projected Growth in the Number of Children Ages 2-17 with Internet Access at Home, 1999-2004
Online Expenditures of Kids, Tweens, and Teens Expected to Top $4 Billion in 2004
Table 3-13: Projected Growth in the Number and Annual Expenditures of Members of the Internet Generation Ages 2-17 Shopping Online, 1999-2004
Online Young Adult Population Ages 18 to 24 Likely to Grow
Nearly 50%
Table 3-14: Projected Growth in the Number of Individuals Ages 18-24 with Internet Access at Place of Residence, 1999-2004
Online Expenditures by 18- to 24-Year-Olds Projected to Exceed $10 Billion in 2004
Table 3-15: Projected Growth in the Number and Annual Expenditures of Members of the Internet Generation Ages 18-24 Shopping Online, 1999-2004
Nearly 66 Million Members of Internet Generation Expected to Be Online at Home in 2004
Table 3-16: Projected Growth in the Number of Individuals Ages 2-24 with Internet Access at Place of Residence, 1999-2004
Total Online Expenditures Will Exceed $14 Billion
Table 3-17: Projected Growth in the Number and Annual Expenditures of Members of the Internet Generation Ages 2-24 Shopping Online, 1999-2004

Fundamentals of Marketing

Successful E-Marketers Adjust Quickly to Fads
Internet Generation May Redefine Brand Loyalty
E-Marketers Need to Break through Internet Generation Defenses
"Convergence Marketing" Advised
Opinions Differ on How to Promote Teen E-Commerce
Teens Expect Retailers to Synchronize Online Marketing with Bricks-and-Mortar Facilities
Restaurants Advised to Use Internet to Connect with Young Customers
Teens Have Definite Preferences Regarding Web Site Designs
E-Commerce Sites for Kids and Teens Need to Meet Basic Expectations
E-Commerce Sites Trying to Be "Cool" Do Not Work
Rules for Designing Tweens Sites Offered

Advertising and Promotional Strategies

Five Rules for Marketing to the Internet Generation Offered
Online Market Research Seen as Only One Component
Internet Remains One of Many Marketing Tools
Contests and Giveaways Drive Many Online Promotions
Street Marketing Techniques Extended to the Internet
Marketers Find It Difficult to Blend Online and Offline Strategies
Teens Web Sites Face Shakeout
Malls Leverage Internet to Promote Bricks-and-Mortar Shopping
Permission Marketing Gains Ground
Personalized Online Ads Recommended
Marketers Enlist Schools as Promotional Partners
Word of Mouse Helps Online Advertisers Promote Their Sites in
Schools
Alloy Online Enlists Support of Schools
Multimedia Advertising Employed by iTurf
MaMaMedia Launches TV and Print Campaign
E-Wallet Sites Have Multifaceted Promotional Strategies

Population Size and Growth

Young Kids Total 23.2 Million
Diversity Increases
Table 5-1: Number of 2- to 7-Year-Olds by Gender, Race, and Hispanic Origin, 1999
Table 5-2: Projected Growth in Number of 2- to 7-Year-Olds by Race, and Hispanic Origin, 1999-2004
More than 14 Million Young Kids Have a Computer at Home
Table 5-3: Number of 2- to 7-Year-Olds with a Computer at Home:
by Race and Hispanic Origin, 1999
Internet Access Available to 9.3 Million Young Kids
Table 5-4: Number of 2- to 7-Year-Olds with Internet Access at Home: by Race and Hispanic Origin, 1999
Two out of Three Kids Will Have At-Home Internet Access in 2004
Table 5-5: Projected Growth in the Number of Kids Ages 2-7 with Internet Access at Home, 1999-2004

Computer and Internet Usage

Internet Access Contributes to Fundamental Changes in Child Development
TV Still Dominates Media Usage by Young Kids
Table 5-6: Amount of Weekly Time 2- to 7-Year-Olds Exposed to Media: by Race and Ethnicity
Table 5-7: Amount of Weekly Time 2- to 7-Year-Olds Exposed to Media: by Race and Ethnicity
Table 5-8: Preferred In-Home Media of 2-to 7-Year-Olds
But More than 25% of Young Kids Use Computers Often at Home and in School
Babyware Prepares Infants to Join Internet Generation