EQUALITY STILL ELUDES THE INTERNET

Byline: Dick Silverman

NEW YORK — A Digital Divide separates ethnic and minority groups with different interests and buying priorities online.
Rather than serving as the gateway to a virtual melting pot, the Internet increasingly appears to be segmented in ways similar to society at large, with niche marketing approaches more likely to yield success than those approaching the online community as a single mass.
According to a Forrester Research study, ethnicity not only serves as a determinant of what people do online but also the likelihood of them having online access. Asian and Hispanic Americans lead in online use, while African Americans, who tend to own fewer personal computers due to lower incomes, lag significantly behind, the study, written by Ekaterina Walsh, reported.
The January 2000 survey of Internet use of over 80,000 U.S. households revealed Asian and Hispanic Americans lead all other groups in online access. Internet penetration in Asian American households already matches their market share in other technologies such as cable TV. Hispanic American households are 9 percent more likely than Caucasian American homes to be online. African American households still lag far behind other minority segments in Internet acceptance — but the group was the fastest-growing online audience last year.
Internet access from home has increased for all ethnic groups, Forrester reported. Last year, connection to the Internet from homes increased at least 11 percent for all ethnic segments.
While Asian American and Hispanic American consumers again lead the charge online, African Americans were the least likely to connect from home, the study revealed.
Forrester reported a number of issues contribute to the likelihood of consumers going online, but income was the strongest factor driving Internet access.
With lower average incomes, African Americans’ usage falls behind that of other groups. Forrester noted studies reveal more than one in four African American households have incomes of less than $15,000 a year, compared with only 7 percent of Asian American, 14 percent of Hispanic American and 17 percent of Caucasian American households, leading to less computer ownership and use.
“As long as income remains a critical driver of online adoption and household incomes differ markedly across ethnic groups, the U.S. will be stuck with a digital divide,” Walsh said.
Asian Americans were the most avid Web visitors, with 69 percent online in January 2000, up from 64 percent in January 1999. Online use by Hispanic Americans rose to 47 percent in January 2000, up from 36 percent the prior year. Forty-three percent of Caucasian Americans were online in January 2000, up 34 percent from the year before.
But while African Americans were the least frequent Internet users, the group had the biggest jump in the number of online users — 33 percent were online in January 2000 versus just 23 percent a year earlier.

The Web’s Who and Wear
The study found differences among the groups not just in how much money they spent online, but in what products they bought. African Americans may have the smallest presence on the Web, but Forrester Research found a higher percentage of the group purchased clothing on the Web than any other group, with 40 percent having bought apparel online. Caucasian Americans were second, with 38 percent buying clothing online, followed by Asian Americans, with 36 percent purchasing apparel on the Web. Forrester reported 33 percent of Hispanic Americans surveyed bought clothes online.
African Americans and Asian Americans also made the most online jewelry purchases, according to Forrester, with 12 percent of each group reporting Web buys. Forrester noted 11 percent of Hispanic Americans and 10 percent of Caucasian Americans reported buying jewelry online.
Asian Americans bought the most health and beauty aids on the Internet, according to Forrester, with 26 percent reporting purchases. The study showed 24 percent of Hispanic Americans, 23 percent of African Americans and 20 percent of Caucasian Americans purchased health and beauty aids over the Web. Asian Americans were the most likely to buy online, Forrester contended, with 61 percent of the group’s online users reporting Web buys. Forrester added that 51 percent of Caucasian American online visitors, 49 percent of Hispanic American Internet users and 40 percent of African Americans surveyed had purchased items online.
Asian Americans also were the group that spent the most online, an average of $331 in the last three months of 1999, Forrester found. Caucasian Americans and Hispanic Americans both spent an average of $254 in the last three months of 1999, and African American online users spent an average of $225 in that period.
Despite the many differences, once consumers from any minority or ethnic group actually enter the Web, they tend to act similarly. “Once online, the divide disappears,” Walsh noted. “Regardless of ethnicity, consumers use the Internet for the same reasons and to do the same things.”
Using the Internet for fast, inexpensive communication was a primary motivation shared by consumers in all the ethnic groups.
Forrester’s survey showed sending e-mail was the most popular online activity for all consumers, regardless of ethnic background, with more than two-thirds of respondents in each ethnic group reporting it prompted them to “get wired.”
Ethnic background had little impact on reaction to other online communication technologies like chat rooms and instant messaging, Forrester noted.
Forrester’s surveys revealed the Internet is used by all ethnic groups to research purchases, with 57 percent of Asian Americans, 44 percent of Caucasian Americans, 43 percent of Hispanic Americans and 40 percent of African Americans reporting they research purchases online.
Consumers in all ethnic groups said they mine the Internet for fresh information on everything from the weather to nutrition.
Only minor differences exist in the types of information that interest different ethnic groups, Walsh noted.
While African Americans were more likely to seek health and job information, Asians generally use the Web for its search engines and to read newspapers and magazines, the study found.
The quest for entertainment also is a major influence on how consumers from all ethnic groups use the Net. Forrester stressed that only minor differences exist in the types of Web entertainment they seek: while African Americans are more likely to use the Internet to play online games, Asian American web users are more likely to download music.

Filling the Shopping Cart
To succeed in drawing traffic, Web sites must specialize and appeal to various groups’ specific interests, the study found. “The era of the broad-based portal is coming to an end,” Forrester projected.
Niche sites serving special interests and special ethnic needs have the best chance of survival, Forrester predicted. To effectively reach various groups, dot-com companies should segment and then subsegment the markets they want to hit, agreed Cynthia Cohen, president, Strategic Mindshare, a retail business consultant specializing in consumer and online issues.
“This is not: ‘Internet it and they will come,”‘ she said. “E-retailers can’t just say: ‘Hi! I’m here, and this is what I sell!’ The challenge today is for sites to cut through all the clutter out there.”
To fully understand the various markets, Internet firms should first study media aimed at minority groups, she said. “If you’re an e-commerce company, to effectively penetrate ethnic markets you need to read the Spanish magazines to see what they’re doing and talking about; watch the Spanish TV stations and soap operas, because that’s where their fashion cues are coming from.”
Targeting ethnic customers via the Internet in a cost-efficient way requires specialization. “Customization is the way it’s going to be,” Cohen said. “Everyone talks about the high cost of acquiring new customers — it all comes back to the difference between mass marketing and niche marketing.”
Companies aiming at the Spanish- speaking market must realize it actually is several different groups, she noted.
“There may be three to five common denominators true to all Hispanics, but then you need to break them down by their differences: Cuban, Puerto Rican, Mexican, South American, Caribbean, etc. All are different.”
Cohen, who conducts focus groups with minority consumers, noted ethnic markets had been forgotten by many Internet firms.
While African American children are being schooled on computers, many have lower-income parents who cannot afford computers. “A lot of the Digital Divide is PC penetration,” Cohen said.