Big enough for Bill – Internet survey; Bill Gates, of Microsoft Corp – Editorial

Brad Edmondson

How many people use the Internet? What is the growth rate in its use? While the hype for this new technology is deafening, no one really knows the answers. And it’s interesting that so many corporate leaders, including Microsoft’s Bill Gates, don’t seem to care.

Last fall, Nielsen released a survey commissioned by Commercenet, a group of companies that promote business online. The survey of 4,200 persons aged 16 and older produced an estimate that 24 million had used the Internet in the U.S. and Canada in June, July, or August.(*) Most other estimates hadn’t gone higher than 10 million. The survey excited investors so much that the stock market jumped on the day it was released. Internet experts soon charged that Nielsen’s numbers were deeply flawed. Its estimate is much higher than estimates for U.S. adults simply because it includes Canadians, teenagers, and users who only log on once in three months, according to Thomas Miller of the Emerging Technologies Research Group of Find/SVP. More serious is the charge, made by the survey’s principal academic advisor, that Nielsen did not use a representative sample. Its respondents were much more likely than the general population to be affluent and college-educated, and therefore to use the Internet. A projection based on such a sample could be inflated by millions.

The furor may hurt Nielsen’s credibility, but it didn’t slow down investors. Microsoft announced in December that it would re-orient its services toward the Internet, and company officials said that the specific number of users was unimportant given the broader trends. Others say that the number of users is increasing so quickly that a precise count is impossible.

It isn’t surprising to see investors taking risks so they can stake an early claim to something big. But there are other reasons why a headcount is less important to the Internet than it would be to other media. Internet users are a niche market: they tend to be affluent, so businesses are willing to go to some trouble to reach them. Also, the Internet offers one-to-one communication between companies and their customers. Like direct mail, the results of an online marketing effort are apparent almost immediately.

Once growth slows down, surveys that segment Internet users will become more important to online marketing. But even then, businesses will get a continuous stream of useful information by simply asking and answering their customers’ questions. Instead of counting users, which would be the most important question for a mass market like television, online businesses must pay more attention to what users want and what they do online. How big is the Internet? We may never know. But it’s big enough for Bill Gates and thousands more entrepreneurs, and maybe that’s all you need to know.

(*) See page 8.

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