Online Spending Forecast: $14.8B in Q1

  |  January 17, 2003   |  Comments

Yahoo-Nielsen Internet Confidence Index takes a slight dip, but the overall outlook remains positive; broadband users are significantly more upbeat about the Net.

The latest Internet Confidence Index report finds that consumers are slightly less sanguine than a year ago, thanks to the dismal economy, but still projects that U.S. consumers will spend $14.8 billion online in the first quarter of 2003.

The index, put together by portal company Yahoo and market research firm ACNielsen, is a quarterly study designed to measure confidence levels in Internet products and services.

Now in its second year of analysis, the just-released fourth quarter 2002 results indicate a confidence level of 111 versus 115 for the same period last year. But the analysts who wrote the report said that the decline is most likely attributable to macro economic conditions.

That would more or less jibe with another recent report that found that despite horror stories about identity theft, account hijacking and assorted other rip-offs online, American consumers are more trusting than ever when conducting Internet transactions.

"The good news for the Internet community and e-tailers is that confidence levels remain relatively stable compared to other leading consumer related trends and indicators," said Manjima Khandelwal, vice president at ACNielsen International Research.

And the really good news from this report is that projections call for first-quarter 2003 online spending of $14.8 billion, compared to an estimated $14.6 billion in the year-ago period.

Interestingly, how one accesses the Internet seems to have a large impact on one's view of the experience.

Broadband consumers are significantly more confident than dial-up modem consumers, according to this report. Although Internet confidence declined marginally among broadband consumers in the fourth quarter of 2002, confidence within this segment continues to remain significantly higher, by 21 points, than consumers accessing the Internet at slow dial-up speeds. Clearly the World Wide Wait makes shoppers impatient and frustrated.

Even so, 56 percent of consumers polled said they intend to shop online in the first quarter this year.

"The fact that people are consuming more online and are becoming more sophisticated in their use of the Internet is demonstrating how intrinsic the Web is becoming to daily life, and how important it is for online businesses to deliver a quality experience," said P.K. Van Deloo, brand manager at Yahoo Shopping.

The index score for the initial Yahoo/ACNielsen Internet Confidence Index in June 2001 was set at 100 for use as a baseline. The sample size for the telephone survey is about 1,000 adults, who may or may not be currently utilizing the Internet.

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