Print Article Monday, 24 March 2008
Social sites gain in popularity amongst wealthy Americans, study finds
By Dave Porter
(AXcess News) Reno - According to a
study by the Luxury Instititute, the
number of affluent Americans visiting
social sites rose dramatically in January
compared to the same period last year,
eMarketer.com said Wednesday that the rate of affluent US Internet user participation
in online social networks increased dramatically to 60% in January 2008, from 27%
in January 2007. The Luxury Institute's latest WealthSurvey "The Wealthy and
Web 2.0" was released earlier this month and according to the Study, six in ten
wealthy US consumers use social networks.
"While some in the luxury industry are still debating e-commerce, search and
banner ads, the majority of their customers have leaped into the online dialogue,"
said Milton Pedraza, CEO of the Luxury Institute. "Luxury needs to catch up
The study noted that, on average, affluent US Internet users are members of about
three onlne social networks and have 110 online connections through these sites.
Online communities are likely to continue fragmenting into selective and specialized
entities of like-minded members. This should make it easier to reach target
markets, although luxury firms must jump some critical hurdles to get it right.
"The wealthy have a great deal to lose," Mr. Pedraza said. "They will not tolerate
behaviors exhibited recently by social networks that force opt-out techniques on
member's private purchase information, and make it difficult to exit."
Nearly two-thirds of wealthy consumers say that giving out personal data without
permission will cause them to disconnect; 63% have an interest in "do not track"
"The Luxury Institute's findings suggest that membership in social networks is one
of the factors driving the growth in Internet usage among the affluent," said Paul
Verna, senior analyst at eMarketer.
This demographic segment - defined as people with annual household income of
$100,000 or above - represents a large and growing percentage of the US Internet
population. In 2007, an estimated 25% of US Internet users were affluent, up
significantly from 16% in 2001. eMarketer projects that this percentage will increase
to 27% in 2011.
Nielsen Online said last year that nearly 30% of Facebook's users came from
households with at least $100,000 in annual income. Comparatively, 22% of
MySpace users were from similarly-affluent households.
While Nielsen's numbers appear to contradict the Luxury Institute's finding that
MySpace commands a higher percentage of affluent Internet users than Facebook,
there is no actual discrepancy when one considers that MySpace's user base is
considerably larger than Facebook's. Hence, 30% of Facebook's user base is
actually a much smaller number than 22% of MySpace's users, eMarketer finds.