1. Presented by: Steve Mossop UBC Faculty & Students May 26th, 2000 The Canadian Face of the Web

2. 2 Buzzwords that Will Not be Used in This Presentation u E-Transformation u E-Tailing u E-Trust u E-Anything! u B2B-B2C u Value Chain u Vortal, portal u Interface u Killer ap! u Stickiness u u Bricks and mortar u u Clicks and mortar u u Angel funding u u Ipo u u Jeff Bezos u u Steve Case u u Bill Gates u u amazon.com u u MOP (Millionaire on Paper) u u Eyeballs u u Pure-plays Matching Science with Insight™

3. 3 Methods u Findings are taken from three separate studies: Canadian Telecom & IT Review Inter@ctive Reid Report The Global Face of the Web Matching Science with Insight™

4. Myth #1: ‘Soon, everyone will be online, and will be doing everything online’

5. 5 Household Internet Access Home Internet Access Intend to Access the Internet Home PC Ownership Internet Access (all locations) Bases: National sample approximately 1,500 Matching Science with Insight™ 1 In January, included access from “other” locations.

6. 6 Access to Internet/Online Services 21% Base is all Canadian Adults, n=1,500 10% Matching Science with Insight™ 10% 24% 15% 4% 16% 2% No Access 34% Internet Access 66%

7. 7 Size of the Online Market Our numbers show three “tiers” of users in Canada. Those with: Internet Access: 14.1 million adults; or 66% of adults; or 45% of Canadians. One Hour/Week or More: 11.1 million adults; or 52% of adults; or 36% of Canadians. Matching Science with Insight™

8. 8 Reasons For Not Using Internet Matching Science with Insight™ Don’t have computer/needs upgrading Have no real need for it I don’t know how to use it Buying a computer is too expensive Monthly access charges are too expensive Don’t have enough time to use it Connection speeds too slow

9. Myth #2: ‘Internet Users are Primarily Young, Rich, Educated Males’

10. 10101010 Other Demographic Trends u Seniors have always been online, but just 1/2 the rate of other age cohorts. u The 60/40 male/female ratio has reversed: 60% of past year new users are now female. u Age and income representation among Internet users is only two years away. u In two or three years, Internet users will share the same characteristics as the general population. Matching Science with Insight™

11. 11111111 Internet Access in Canada All Canada Region: BC Alberta Man/ Sask. Ontario Quebec Atlantic Age: 18 to 34 35 to 54 55+ Income: Lower income Middle income Higher income

12. 12121212 Level of Internet Expertise Among Canadian Users (n=1,022)

13. 13131313 Understanding Experts and Users u Expert/Very Skilled Users (20%): 70% are male! 70% have been online 3+ years. they spend 14 hrs./week online compared to 5 for beginners. 60% under 34 years of age. 60% have a university degree or higher. u Intermediate: 50/50 male/female. Represented across all age groups. u Beginners: 56% are female. One-half have been online one to three years. 30% have been online for less than one year. 56% of beginners don’t know what speed their modem is. 52% between 35 and 54 years. 36% have high school or less. Matching Science with Insight™

14. Myth #3: ‘Canada is significantly behind the USA when it comes to the Internet’

15. 15151515 Internet Access by Country* Matching Science with Insight™ *Angus Reid “Face of the Web”

16. 16161616 Global Internet Usage— Regional Percentages Base: Prevalence Survey (N=21,298) % of Adults using the Internet Matching Science with Insight™

17. 17171717 Canada Versus USA u If we exclude Quebec, Canada leads the world in Internet access. u Canadians are heavier users: Canadians with Internet access logged on 11.2 days, and 7.5 hours/month. Americans logged on 10.3 days, 5.9 hours/month. u Canadians have higher bandwidth: 16% have high speed, 5% in the USA. u Canada leads the world for online banking and MP3 usage: 31% online bank (22% in USA), and 43% use MP3 (35% USA). u Canadian schools are more connected (95%). u Canada ranks first for Internet access cost: 59% of OECD average, 80% of USA. u Canadians are more likely to have PCs at home: 61% compared to 53%. Matching Science with Insight™

18. 18181818 Canada vs. USA u USA leads in consumer-based e-commerce: Total ’99 spend of $20-$24 billion; Canada $1.65B. Proportion buying online—56% USA, 33% Canada. Proportion trading online—11% USA, 8% Canada u USA has more venture capital: Canada only 5% of USA’s rate ($38B to $2B). u USA has much larger Internet economy: 15X Canada, ($414B to $29B). Matching Science with Insight™

19. Myth #4: ‘Consumer Participation in E-commerce is huge’

20. 20202020 Participation in Internet Activities Whether ever used Internet for… Comparison shopping Purchasing a product or service online Conducting online financial transactions Matching Science with Insight™

21. 21212121 Spending Online u Angus Reid Group Canadian e-commerce spending estimate: $1.7 billion (1999). $3.8 billion (2000) or 125% growth u Experienced users drive e-commerce expenditures: 20% of users, but 43% of expenditures. The top 60% (by experience) account for 93% of spending. Matching Science with Insight™

22. 22222222 Size of Consumer E-commerce Market World: $380B US in ’03 (Dataquest) $1 Trillion US in ’03 (IDC) $1.4 Trillion US in ’03 (Forrester) USA: ’99 ’03 Jupiter: $12B$78B BizRate$16B Forrester: $20B$189B Dataquest:$31B$380B Boston C.G: $36B JC Williams: $54B Matching Science with Insight™

23. Myth #5: ‘E-commerce will grow significantly in all consumer categories’

24. 24242424 Reasons for Shopping Online Not available locally Better selection Could download product Convenience Other Only available on website Lower price Faster delivery Don’t know Base = respondents who ever made purchase online (n=640) Matching Science with Insight™ No salesperson

25. 25252525 Satisfaction with Online Purchase Process Convenience Base = respondents who ever made purchase online (619) Ease of conducting transaction Product met quality expectations Product delivered on time Variety of selection Easy to download Cost Savings Matching Science with Insight™ - Most Recent Purchase -

26. 26262626 E-commerce Spend in US* Matching Science with Insight™ Forrester, in $billions

27. 27272727 Business to Business Ecommerce u The market will be driven by growth in particular sectors: Auto industry in North America will put $88 billion into the Web Forestry sector Technology companies will conduct 15% of their total trade this year over the Web. u The market may be large, but the consumers are very small Only x% of Canadians have ever made a purchase for their business on-line Matching Science with Insight™

28. Myth #6: ‘On-line Advertising Doesn’t work’

29. 29292929 Trends In Advertising u Internet Ad Bureau: $4 billion spent for online advertising in ’99 u Click-through rates have declined to.36% currently, from 2.5% in mid-1990s. u Internet advertising increased 87% in ’99. u Corporate America spent 2.1% of total ad budget online. u 35% have clicked on an ad in the past week. Matching Science with Insight™

30. 30303030 Trends In Advertising u Awareness is the single largest barrier to online success. u There is significant debate about the effectiveness of online advertising: This debate centres on click-through rates. The focus should be on creating awareness and branding, not directing immediate action. u Because of this debate, much of the emphasis has shifted towards traditional media. Matching Science with Insight™

31. 31313131 Internet Advertising Matching Science with Insight™ TV Internet All Mediums

32. 32323232 Trends In E-mail Marketing u Permission marketing through e-mails is a significant trend: According to our report, 75% of Canadian Internet users have ever registered at a website to receive direct email. The average number of sites subscribed to is 4.6 Youth are much more likely to participate—of 18 to 24 year olds, 82% have registered to an average of 5.6 sites. Direct e-mail is generally regarded as two to three times more effective than direct mail. u Effective e-mail marketing must: Provide unique and timely information. Be short and to the point. Make effective use of personalized information provided. Matching Science with Insight™

33. Myth #7: ‘Security concerns about on-line transacting will go away”

34. 34343434 Biggest Barriers to On-line Purchasing Security of Credit Card Information74% Privacy concerns52% Cant see or touch43% Prefer traditional ways41% Follow-up concerns40% Shipping costs35% Not comfortable29% Don’t know merchant27% No need24% Taxes/duties16% Matching Science with Insight™

35. 35353535 Concerns About Giving Personal Information Online

36. Myth #9: ‘The Internet is a huge time-saver”

37. 37373737 A Perspective On Bandwidth... u CEO of Nortel Networks John Roth: “An estimated 2.5 billion hours were wasted online last year as people waited for pages to download”.“An estimated 2.5 billion hours were wasted online last year as people waited for pages to download”. Matching Science with Insight™

38. 38383838 Home Internet Access Speed Matching Science with Insight™ ADSL/TI 33K or less Other Cable 56K Don’t know High Speed (16%) Planning to Upgrade in 2000 (27%) Planning to Upgrade in 2000 (27%)

39. 39393939 Speed is #1 Dissatisfier Matching Science with Insight™ Poor search engines Slow speed Spam mail Lack of security/privacy Other Don’t know Aspects Of Internet Least Satisfied With Ease of access to pornography Too much junk/clutter Too much advertising

40. Myth #10: ‘The Internet is overhyped”

41. 41414141 Conclusions u The hype will continue u The growth curve has leveled in North America u Canada leads the world in the Internet arena u The mainstreaming of the Internet is well on its way u Certain online activites will increase exponentially u Online activities such as e-commerce will continue to be driven by experienced users u Creating awareness of your site is a huge challenge u Security issues will not go away u High-speed will revolutionize the web Matching Science with Insight™