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Hispanics and Asians are more likely to be
online at home than Caucasians and African-Americans, according to
Insight’s primary survey, and their Internet penetration rates are
growing several times faster than the rest of the population.
Insight’s research shows that meeting the needs of ethnic consumers
will be financially rewarding. Internet access revenues will more than
triple over the next several years, reaching $11.1 billion by 2005, and
revenues from ethnic households will account for an increasingly larger
piece of the pie.
With the rising buying power of ethnic groups, service
providers cannot afford to ignore this market segment. In-culture,
in-language marketing messages, billing, and customer care will be
essential to attract and retain ethnic consumers. Today’s immigrants
are more anxious to preserve their own cultures than past generations,
even as they embrace their American lives.
Bridging the Digital Divide will help service providers
understand what types of US households have Internet access by
quantifying penetration by ethnicity, income, education, and access
location. Insight discusses ethnic Web portals and their appeal to
Asians, Hispanics, and African-Americans, plus we examine adoption of
other high-tech products and services among these groups.
Insight’s primary survey of over 1,100 households, combined with US
Census demographics, Internet access forecasts, and secondary research
defines the ethnic Internet consumer. This comprehensive report is a
must-read report for ISPs, carriers, and Web portals who want to be
successful in marketing their services to the ethnic consumer.
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Web Portals
Only a year ago more
than a dozen online companies were competing fiercely to become the
most popular sites on the Internet and gain the majority of the Web’s
growing ad revenue and e-commerce dollars. As long as the top,
general market horizontal portals continued to grow, marketers
generally paid little attention to ethnic markets. Last April’s
crash in Internet stocks had an impact on the value of dozens of
high-profile Internet companies; many lost more than 75 percent of
their market value. In today’s environment, traffic increases
mean little if visitors cannot be retained or converted into
revenue-generating loyal customers.
Our thesis is that
affinity portals based on demographics, such as gender or race, can
attract users disenfranchised or not culturally-addressed and served
by the large horizontal generic portals. And while these ethnic
portals can never draw the numbers of eyeballs that look to see the
large all-purpose portal—since by definition they are targeting a
minority of the general online population—they do have an
off-setting advantage. Multicultural Web portals are customized
to meet the interests of their constituencies. When sites go
beyond “in-language” translations and move in the direction of
cultural sensitivity to address the special communities they serve,
they have the potential to induce a loyalty not usually associated
with the more generic sites.
Which is not to say
targeting ethnic communities is a sure-fire bet. If these ethnic
portals are too narrowly focused and undifferentiated from their
competitors, they too can fail. Non-Caucasian ethnic portals are
proliferating among the African-American, Hispanic-American, and
Asian-American markets, yet their long-term viability remains to be
tested in the US Internet marketplace.
Ethnic Internet
Users
Insight Research
commissioned a telephone market research study to solicit feedback
from US consumers on their information technology usage across a
national random household sample, including a quota sample for the
three major ethnic groups. The Insight study consisted of 1,171
interviews with approximately equal numbers of male and female adults,
18 years of age and older.
This report focuses
on the consumer segment of the Internet and uses the consumer survey
to help understand it. In particular the report looks at the US
ethnic groups’ Internet usage. While Internet usage by various
ethnic groups has been documented as lagging general adoption of the
technology, the gap is quickly narrowing. In some groups, in
fact, the rate of usage exceeds the US average.
Half of the
households in the US now have computers, and the number with Internet
access has increased sharply in the last two years, growing from 26.2
percent in December, 1998 to 41.5 percent in August, 2000 as reported
by the National Telecommunications and Information Agency (NTIA) and
the Economics and Statistics Administration (ESA) in Falling Through
the Net: Toward Digital Inclusion. The number of people using the
Internet has increased by nearly 32 million in that same time period.
While access to computers and Internet usage for all Americans has
soared, the digital gap still persists within certain segments of the
US population.
The average Internet
user though is still far from reflecting the average American
demographic profile on several variables. Research on the Internet
population has found that Internet users, in the aggregate, have
nearly 50 percent higher household earnings than the general public.
Internet users also tend to be better educated and younger than the
general population. They are also fluent and comfortable in their use
of English, an important factor since most Web pages are written only
in that language.
With the increase in
Internet usage worldwide will come an increase in Web sites and
portals in languages other than English that will address non-English
speaking users with different cultures and values. And because Web
sites created in other countries are just as easily accessible to
American users as local ones, foreign portals will help meet the needs
of ethnic groups in the US. Likewise American Web sites targeting
ethnic markets are reaching beyond the US borders.
Ethnic Access
If the Internet is to
expand into ethnic minority segments, it will have to become more
entertaining, engaging, and relevant to the lifestyles and needs of
these groups. Web portal content must also reflect the diversity
of America’s landscape; it is in meeting this need that
multicultural Web portals become important.
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Chapter I
EXECUTIVE SUMMARY
1.1 Web Portals
1.2Defining Ethnic Groups
1.3Ethnic Internet Users
1.3.1 Ethnic Access
Chapter II
UNDERSTANDING PORTALS & ACCESS
2.1 The Internet
2.1.1 What is a Portal?
2.2 Portals and the US ISP Marketplace
2.2.1 The Need for Free Access to the Internet
2.2.1.1 First Wave of Free Internet Access
2.2.1.2 Second Wave: Retailers Enter
Market
2.2.1.3 Third Wave: Free Offers with ISP
Contract
2.2.2 Other Internet Access Schemes
2.2.2.1 Internet Access without a PC
2.2.3 Competition Among the ISPs: the Faltering Free Internet
Market
2.3 Internet Access in Latin America
2.3.1 Free Internet Access in Latin America
2.4 What is IP Telephony?
2.4.1 VoIP/IP Telephones
Chapter III
PROFILE OF THE ETHNIC INTERNET USER
3.1 Profile of US Online Users
3.1.1Definition of Ethnic Groups
3.2The Digital Divide
3.2.1Level of Income
3.2.2Educational Level
3.2.3Language Spoken
3.2.4Age
3.2.5Alternative Places for Access
3.2.6Is Race A Factor?
3.3Minority Internet Usage
3.3.1Asian-Americans Online
3.3.1.1Reaching Asian-Americans Online
3.3.2African-Americans Online
3.3.2.1Marketing to African-Americans Online
3.3.3Hispanics Online
3.3.3.1 Marketing the Internet to Hispanics
Chapter IV
UNDERSTANDING THE MARKET THROUGH SURVEY RESULTS
4.1Insight’s Technology Research
4.1.1Survey Methodology
4.1.2Scope of Study
4.2Online Racial Divide in the United States
4.3Understanding Internet Demographics
4.3.1Technology in the US Home
4.3.2Internet and Race/Ethnicity
4.3.3 Internet and Income
4.3.4 Internet and Education
4.4 Conclusions
Chapter V
LEADING PORTALS
5.1General Market Horizontal Portals
5.2Ethnic Portals
5.2.1Hispanic Portals
5.2.1.1America Online Latin America
5.2.1.2T1msn
5.2.1.3MovilGo
5.2.1.4soloella.com
5.2.1.5StarMedia
5.2.1.6Terra Lycos
5.2.1.7Univision
5.2.2Asian Portals
5.2.2.1SINA.com
5.2.2.2Yahoo! China
5.2.3African-American Portals
5.2.3.1BlackPlanet
5.2.3.2 BET.com
5.2.3.3 Blackvoices
5.2.3.4 NetNoir
5.2.3.5 Other Popular African-American Web Sites
Chapter VI
INTERNATIONAL INTERNET USAGE
6.1Global Internet Market Growth
6.1.1The Digital Divide Worldwide
6.1.2Overcoming the Digital Divide
6.2Global Inequities in Access to US Internet Backbone
6.3Internet Markets by Region
6.3.1Western Europe and the Internet
6.3.1.1European Wireless Internet
6.3.2 Growth in Asian Internet Usage
6.3.3 Dynamic Net Growth in Japan
6.3.4 Taiwan’s Internet Penetration
6.3.5 Chinese Government Crackdown on Internet Use
6.3.6 The Latin American Market
6.3.6.1 Favorable Market Conditions for Latin America
Chapter VII
MARKET FORECAST
7.1The Web’s Future
7.2Internet Access Market
7.2.1DSL
7.2.2Cable Access
7.2.3Wireless versus PC-centric Internet Access
7.2.4IP Telephony Market
7.5US Internet Growth By Ethnicity
7.5.1Growth of the Ethnic Population in the US
7.5.2Growth of Internet Penetration among US Ethnic Groups
7.6 The Future of Web Portals
7.6.1 Portal Strategies
7.6.2 Revenue from Portals
7.6.2.1 Advertising
7.6.2.2 Revenue from Household Access Charges
7.6.3 Looking Ahead
Table
of Figures
Chapter I
I-1 Internet Access Revenue from US Households, by Race/Ethnicity,
2000 and 2005 ($Billions)
Chapter III
III-1 Increase in Buying Power of African-Americans, Hispanics, and
Asians in the US, 1990-2001 ($Billions)
III-2 Percent of US Households Using the Internet at Home, by
Race/Ethnicity and Income, 2000
III-3 Internet and Computer Usage in US Households, by Educational
Level, 2000
III-4 Comparison of US Online Users by Education and Income, by
Race/Ethnicity, 2000
III-5 Languages Spoken by Internet Users, 2000
III-6 Internet Access by Location, by Race/Ethnicity, 2000
III-7 Adjustment of Internet Penetration Rate for Education and
Income, 2000
III-8 Products African-Americans Order Online, 2000
Chapter IV
IV-1 US Population Distribution by Race/Ethnicity, 1999
IV-2 Forecasted US Population Shifts, 2000 and 2025
IV-3 US Households that Access Internet Sites In a Language Other Than
English, 2000
IV-4 US Households Using Various Technologies, 2000
IV-5 Percent of US Households with Computers and Internet Access,
1994-2000
IV-6 US Households with Internet Access at Home, 2000
IV-7 Percentage of US Households with Home Internet Access, 1997-2000
IV-8 US Home Internet Access, by Income, 2000
IV-9 US Households with Internet Access at Home, by Level of
Education, 2000
IV-10 US Households with Internet Connections at Home, 2000
IV-11 Where US Households Have Internet Connections, 2000
Chapter VI
VI-1 Internet Users Worldwide, by Region, 2000 and 2005
Chapter VII
VII-1 HFC Architecture
VII-2 Worldwide Wireless Growth, 2000-2005 (Millions)
VII-3 IP Voice Calls as Percent of US Long Distance Minutes, 1998-2005
VII-4 US Population, by Ethnicity, 2000
VII-5 US Ethnic Households with Internet Connections, 2000-2005
(Thousands)
VII-6 Internet Access Revenue from US Households, by
Race/Ethnicity, 2000-2005 ($Billions)
Table of Tables
Chapter II
II-1
Top US Internet Service Providers, as of September,
2000
II-2 Retailers Who Have Become ISPs, 2000
II-3 Internet Access Growth in 2000, by Type (Thousands)
II-4 Selected Latin-American Free Internet Service Providers, 2000
II-5 Major IP Telephony Providers, 2000
II-6 AT&T and Net2Phone Prices for Long Distance Calls, 2000
Chapter III
III-1Education, Income, and Age of US Households, by Race/Ethnicity,
1999
III-2 Languages Spoken by Americans who Do Not Know English Well, 1990
III-3 US Children Who Use the Internet, by Race/Ethnicity, 2000
III-4 Number of Wage Earners in Household, by Race/Ethnicity, 1999
III-5 Breakdown of Asian-Pacific Islanders in US by Country of Origin,
1990
III-6 Use of the Internet by African-Americans Who are Online, 2000
III-7 Educational Level of US Hispanics, by Background, 1999
III-8 Brand of Computer Owned and Awareness of Computer Brands by
Hispanic Households, 2000
III-9 Reasons Hispanics Gave for Not Having a Computer at Home, 2000
Chapter IV
IV-1 Forecasted US Population Shifts, 2000-2025
IV-2 Percentage of US Households with Home Internet Access, 1998-2000
Chapter V
V-1 Top 25 Web Properties, 2000
V-2 Selected Latin American Portals and Web Sites, 2000
V-3 Top Chinese Web Sites, August 2000
V-4 Reasons US Chinese Use the Internet, 2000
V-5 Top Ten African-American Portals, Web Sites, and E-Commerce Sites,
2000
Chapter VI
VI-1 Nations with Highest Numbers of Internet Users, 2000
VI-2 Percent of Country’s Population with Internet Access, 2000
Chapter VII
VII-1Advantages and Disadvantages of DSL and Cable Modems
VII-2 Voice over Packet and Circuit-Switched Telephony Revenue
Forecast, 2000-2005 ($Billions)
VII-3 US Population Growth by Ethnicity, 2000-2005 (Millions)
VII-4Forecast of US Household Penetration of Internet, by
Race/Ethnicity, 2000-2005 (Thousands)
VII-5 Monthly Advertising Revenue for Web Sites, October, 2000
($Millions)
VII-6 Internet Access Revenue from US Households, by Race/Ethnicity,
2000-2005 ($Billions)
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Telecom
Market
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