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Marketing in the internet – as seen from Italy

No. 37 – August 15, 1999



loghino.gif (1071 byte) 1. Editorial:
Is it good business to mislead customers?


There have always been two trends in marketing. One is to consider the "consumer" as a moron: some sort of clumsy creature with poor judgment and weak brains, with no other role or desire than to "consume". The other is to see customers simply as people, who aren't more stupid than we are; and are more competent and experienced in things they know well (such as products and services they buy) than in more complicated issues – such as the maneuvers and intricacies of politics and finance.

For many years now we've been hearing that people are changing: "consumers" are more aware and careful, it's better to give them reliable information that can help them in their choices. This is quite true, though it seems to be ignored by a lot of the advertising (or generally corporate communication).

If it's true in traditional marketing, it's more so on the net. People online have higher education and more curiosity than average; they have greater opportunities to check and compare; and (because it's all so new) they are less willing to trust people they don't know well. The best writers on this subject – such as Gerry McGovern in the book that we discussed in issue 36 – emphasize the importance of customer care and building relationships. Why, then, do we see so many people trying to hide what they are up to, to trick customers into giving away information without knowing that they are doing so?

In my country recently there was considerable debate online (less so in mainstream media) about one of the "free internet" offers. A telephone company called Infostrada is advertising heavily its offer of internet connection at no charge, but customers don't understand (unless they read the small print in the contract) that there are strings attached – such as the obligation to receive a certain amount of advertising, the right of the provider to collect, use and sell their personal data and even to in inspect their behavior online and control what they are reading. The issue has come to the attention of the regulating authorities, and we shall see what they will do about it. But what's important here is not a single case in one country; there are many other people doing similar things around the world.

The issue is not a "quid-pro-quo" deal, that I guess can be legitimate (as long as it doesn't violate privacy rules) if both sides agree. The problem is that customers are "tricked" into a situation of which they are not aware.

Is that good business? I don't think so. Misleading people can lead to retaliation on the individual company as well as general mistrust of all online transactions. And it's also bad business because the quality of the information "captured" in that way isn't very good.

Experience shows that people offer better cooperation when they intentionally do so – and understand which benefits they are getting. The quality of personal data is much more valuable when people are aware of what information they are giving, and to whom, and why. Some data snatchers say they do so to give "better service"; but generally they fail to explain which service, and they don't allow their customers to decide if the transaction is worthwhile.

All of this cloak-and-dagger business of trying to steal information behind people's backs doesn't produce good marketing – or good data. It may be profitable for the people that collect and sell the information, but not for the companies that buy it – or try to aim their communication by means of the data snatcher's alleged "selectivity". I am not aware of a single case in which this skullduggery has led to a genuine marketing success.

I think aggressive competition could solve this problem faster than any rules and regulations. I would like to see more companies treating their customers fairly; they could gain a relevant competitive advantage by doing so – and saying it boldly.

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loghino.gif (1071 byte) 2. More people online in Italy


Most of this issue is about the internet in Italy. This may not be interesting for international readers, but I think it's a good example of what is happening in one of the European countries with relatively low online activity. Of course there are differences, but I would be quite surprised if similar trends weren't found in other parts of Europe.

We have seen in issue 36 some new data that show a growth of the internet in Italy. Other sources confirm that the number of "internet users" is growing.

It's always very difficult to measure the number of people online, because all research has its limitations and it isn't easy to define who is a "user". As I said many times, I don't think the number is very relevant, because the internet is not a homogeneous "market". But, for what it's worth, let's venture into the maze of numbers and statistics. As usual, figures are contradictory and different sources don't agree with each other. However two things are clear: there is considerable growth, and in spite of that Italy is still far behind the United States and the more developed European countries.

According to a study by Assinform (April 1999) 3.5 million Italians were online "at least once", 2.5 million in the last three months and 1.5 million are "frequent" users.

ISPs are cagey about their numbers, but according to reports in the press Tin (owned by Telecom Italia) has 750,000 customers and covers about 50 percent of the market. Therefore there should be approximately 1.5 million people with personal internet access.

According to research by Eurisko, in October 1998 7.1 percent of the population age 14 or higher (3.3 million people) were internet "users"; 4.2 percent (1.9 million) were online "at least once a week". A survey by the same research company in May, 1999 showed an increase of "all users" to 9.1 percent (4.2 million). A different study by Eurisko in May 1999 shows a presence of the internet in 6 percent of families (1.2 million); with a wider definition of "users" (including anyone who ever had an occasional connection in a friend's home or a public place, etc.) it estimates a total of 12 percent of the population (5.2 million) – 5.8 percent (2.7 million) "in the last seven days".

A similar survey by Ipsos-Explorer (February 1999) estimates people connected "at least once in the last three months" as 7.1 percent (3.5 million) and a connection in 4.2 percent of families (860,000).

A study by Bocconi university (June 1999) reports "occasional users" as 14 percent (6.8 million) and people connected "at least once in the last month" as 10 percent (4.8 million); 2.3 percent (1.1 million) say they have a personal internet connection.

Other sources give different figures. It's quite common in such matters to have conflicting information, depending on survey methodology. There is also a (hard to measure) "exaggeration" factor whenever people are asked about something that is perceived as fashionable and upscale; what people say is more than what they do. The difference is usually larger in telephone surveys (as in the case of the Bocconi study) that in personal interviews.

A "calculated guess" is that probably today there are 4 million people "occasionally" online in Italy and about 2 million "relatively frequent users". Still few, compared with more advanced countries; but many more than there were a year or even six months ago.

Last year's data showed people connected predominantly from their workplace. There may be a change, but the trend is still unclear. According to Explorer, 37 percent of the people connect from work, 38 from home. Bocconi says 36 percent from work, 31 from home. Eurisko reports 47 percent from work and 38 from home; but "frequent users" ("last seven days") connect more from home. Assinfom says that 68 percent of "frequent users" connect from home, 49 from work. The figures are quite confusing – but use of the internet at home seems to be increasing, especially in families where there are young people.

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loghino.gif (1071 byte) 3. A few peculiarities


Some of the information from the surveys looks a bit peculiar. For instance 25 percent of the people interviewed say that they have a computer, but less that 10 percent say that they are online. So there are approximately 7 million Italians using a computer and ignoring the internet. Some simply aren't interested – and in this case what's needed is better content and better information about useful stuff on the net. Some are concerned about cost and probably have been led to believe that they should upgrade their computer to work well online. What's needed in this case is better education about how to use the internet effectively and how that can be done with any computer – using appropriate, not too cumbersome, software.

It's even stranger to find that about 5 percent of the people in some surveys say they own a modem but they aren't on the internet. This may be partly due to survey errors, but I don't think the figure is meaningless. What they do with their modems may be hard to explain, but there are several people that connect only to their company's system and are not interested in anything else. Here again, it's a cultural problem: what sort of content and education is needed to attract these people?

There is too much fussing about technology or "unusual" content that isn't very interesting for most people; not enough information about more down-to-earth use of the net or how to personalize its use according to individual tastes and needs.

Sometimes teenagers are more "adult" than grownups. For instance there's a little story that Don Tapscott told in his book Digital Economy (1996). He asked his daughter Nikki, age twelve, to join a consumer panel on new technologies. She answered:

"Okay, Dad. I'll do it if you want me to. But I don't understand why you adults make such a big deal about technology. Kids just use computers to do stuff. We don' think of them as technology. Like a fridge does stuff. It's not technology. When I go to the fridge, I want food that is cold. I don't think of technology that makes food cold."

Of course it's easier for people who were born after the PC and after the internet. But we don't need to be young to have a "mature" view of computers – and the net. Many people didn't see a fax or a videotape before they were forty – and now treat them simply as "things that do stuff". There is no insurmountable reason why people shouldn't feel comfortable with a computer or a modem – regardless of age, education and income level.

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loghino.gif (1071 byte) 4. Italians online


Recent Eurisko surveys confirm, in part, the picture that we saw last year, but there are some relevant changes. Other sources report different data, but the broad trends are fairly clear.

Let's start with distribution by geographical area.

Internet "users" by area
Source:Eurisko – July 1999  

No change from last year; but an analysis of "new users" shows an improvement in the South.

Other surveys show a different picture; for instance Ipsos-Explorer reports a higher concentration in the North-East and a more balanced situation in central Italy. Bocconi confirms a higher level in the North-West.

Internet "users" by size of place of residence
Source:Eurisko – July 1999  

There is still higher concentration in the cities but net usage is spreading to smaller towns. The same trend is confirmed by other surveys.

Internet "users" by age
Source:Eurisko – July 1999  

There is considerable change – many more young people online. Other surveys still show concentration in the 25-54 age group, but agree on an increasing number of young adults and teenagers. Penetration is still very low with people over 54. But the net is not dominated by the young. The more active and experienced people are mostly "grownups" – and of course they are getting older.

Internet " users" by education level
Source:Eurisko – July 1999  

There is still a (pretty obvious) concentration in higher education levels, but there are many more people online with lower school degrees. This is due only in part to an influx of young people that are still at school.

Internet "users" by income
Source:Eurisko – July 1999  

Here again, we see considerable improvement: more people online from not-so-high income levels. Data on "new users" show an even higher percentage of medium or medium-low income people.

Other sources of information and entertainment
Source:Eurisko – July 1999
The criteria are: watches television for more than two hours daily;
listens to radio every day; has been to a movie house in the last 30 days;
read a newspaper in the last 7 days; a weekly or monthly magazine in the last 30 days.


This doesn't indicate "replacement" of television with the internet; quite simply, the people on the net aren't in the same categories as the "heavy users" of television. People online use other information media more than the average. The difference, however, is declining: for instance readers of newspapers "every day" are 52 percent of people that were online in 1997 or earlier, 42 percent of those that came online in 1998-99.

Other cultural differences between people online and the general average are shown in the next graph.

Cultural activities
Source:Eurisko – July 1999  
The criteria are: read a book or went to the theater or a cultural event in the last 30 days;
visited a museum or a bookstore in the last three months.


Of course there is exaggeration in all "cultural" activities: people don't read, go to the theater, visit museums or bookstores – or use the internet – as often as they say when they are interviewed. But what is relevant here is the difference between internet "users" and the average. People online are much more active culturally than the rest of the population.

Knowledge of English
Source:Eurisko – July 1999  

Once again, this picture is "optimistic"; unfortunately much less than a third of Italy's population understands English. But it's no surprise that people online know the international language much better than the rest.

% of women online
Source:Eurisko – July 1999  

According to Eurisko, women are 37 percent of the people online. Other surveys report a lower percentage (Ipsos-Explorer 32 percent, Assinform 30) but all agree that it's increasing. Women are 44-46 percent of new "users". The ratio of women online in Italy is above the European average.

How long online
Source:Eurisko – up to April 1999  
The dotted line for 1999 is a projection
based on new people online in the first four months.

Only five percent of today's "users" have five years' experience. 76 percent of the people online today weren't connected before 1997. Probably by the end of this year half of the people will be "new" – online for the first time in 1999.

The net in Italy (as well as in several other places) is young. By age, but especially by lack of experience. It will take a while before usage and behavior patterns take shape - especially in a constantly changing environment. The growth rate is high, but this is only the beginning of an evolution that will be largely unpredictable.

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loghino.gif (1071 byte) 5. Selling and buying online


A Bocconi team conducted a census of Italian companies online. The definition is very restrictive – counting only e-commerce websites where products can be bought online. Even so, the number is quite small: about one thousand companies. But they are more than the 300 that were found by another study two years ago. Two thirds are "tourist" sites.

Note: three categories including only two or three sites are not included in this graph.

Something is missing here – for instance it's surprising that this census found no clothing and only two sites offering services. Of course the number of sites doesn't represent volume of activity, but there are remarkable differences between what is offered and what people are inclined to buy. Before we get to that, let's look at the distribution of e-commerce websites by area as reported by Bocconi.

Quite unbalanced, especially when most of the sites in this survey are about tourism.

If we look at the situation from the other side – what people buy – the numbers in Italy are very small. Very few people buy something online and those that do often buy abroad (especially in the US). According to a survey by Ipsos-Explorer (February 1999) people who buy online are mostly men (75 percent), age 25-44 (65 percent) with high education and high income.

According to Asssinform "intentions to buy" are mostly music (38 percent), books (31), tickets for shows and events (30), travel (20), hardware (20), software (20) and online banking (18).

According to Bocconi, this is what people buy online.

The picture looks quite different in the Eurisko survey.

The differences aren't surprising. The numbers of people buying are so small that they are a tiny part of the sample and statistical values are questionable.

A study by Eurisko indicates that online buying is a relatively late development in user's behavior patterns. People want to experiment and learn before they get into any transaction. Most of the people that buy online are experienced users.

The next chart has hardly any statistical value, but I think it's interesting: it reports the online buying habits of people subscribing to a local mailing list about online marketing.

Of course these people are not "average"; but they may be setting a pattern that other people will follow. Their choices, by the way, are not very different from the general trend; except for the fact that they buy more books and information services.

There is a comment by Eurisko that I find particularly interesting: "In its turbulent growth the internet has become progressively more heterogeneous and diversified."

It's more and more important to understand that the net is not a single environment (or "market") but a communication system in which many different behaviors evolve. A problem, maybe, for anyone looking for simplistic solutions; but a great opportunity for people and organizations who understand the value of diversity.


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Home Page Gandalf

List of links

For the convenience of readers that print the text before they read it, here is a list of the links.

The power of stupidity http://gandalf.it/stupid/
The value of trust http://gandalf.it/netmark/netmar35.htm#heading03
"The Caring Economy" http://gandalf.it/netmark/netmar36.htm#heading02
The value of relationships http://gandalf.it/netmark/netmar35.htm#heading04
Data on the internet in Europe http://gandalf.it/netmark/netmar36.htm#heading03
Internet "users" – March 1998 http://gandalf.it/netmark/netmar16.htm#heading03
Italian companies online in 1997 http://gandalf.it/netmark/netmark6.htm#heading04