Are your customers becoming digital junkies - McKinsey Quarterly, July 2011

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New McKinsey research …

New McKinsey research
highlights a dramatic increase in the intensity with which people use digital devices and platforms. Nearly 50 percent of US online consumers are now advanced users of smartphones, social networks, and other emerging tools—up from 32 percent in 2008.

We have been tracking consumers’ digital habits through a series of surveys covering more than 100,000 respondents across North America, Europe, and Asia.1 Our 2010 US findings highlighted the growth of advanced multidigital and rich-media segments: the people most likely to be early adopters of new technologies (whom we label “digital-media junkies”), often younger men; those spending more time on social networks (“digital communicators”), often women; and those more likely to consume Internet-based video (“video digerati”). Meanwhile, we have seen a decline in segments focused primarily on one kind of digital use (such as e-mail or gaming), as well as late adopters whose digital consumption is superficial. Behind these broad category shifts are meaningful changes in how consumers use core technologies.

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  • 1. J U LY 2 0 11H I G H   T E C H   P R A C T I C EAre your customersbecoming digital junkies?Bertil Chappuis, Brendan Gaffey, and Parviz ParviziConsumer behavior is shifting rapidly as more people use digital devices andplatforms intensively. New McKinsey research adopters whose digital consumption highlights a dramatic increase in is super cial. Behind these the intensity with which people broad category shifts are meaningful use digital devices and platforms. changes in how consumers use Nearly 50 percent of US online core technologies. consumers are now advanced users of smartphones, social networks, Social networks as and other emerging tools—up from communications gateways 32 percent in 2008. Social networks, particularly Face- book, are emerging as the We have been tracking consumers’ dominant digital-communications digital habits through a series of channels. For people aged 34 surveys covering more than 100,000 and under, they already are respondents across North America, the preferred channel (by minutes Europe, and Asia.1 Our 2010 of use per day), displacing US ndings highlighted the growth e-mail, texting, and phone calls. of advanced multidigital and Social-network use, growing rich-media segments: the people swiftly among all segments of our most likely to be early adopters survey population, has doubled of new technologies (whom we label among those over 55. Such networks “digital-media junkies”), often also are becoming information younger men; those spending more portals for people seeking items time on social networks (“digital such as videos, photos, and communicators”), often women; and content posted by friends. In our those more likely to consume latest survey, 33 percent of the Internet-based video (“video digerati”). respondents said they use social Meanwhile, we have seen a networks to navigate content decline in segments focused primarily on the Web, up from 13 percent in on one kind of digital use (such 2008. While search engines as e-mail or gaming), as well as late continue to be the leading way
  • 2. 2 consumers access online content, Smartphones are also becoming the use of social networks is the device of choice for e-mail, Web growing. As consumers spend more browsing, and product research. time on them, decisions about A third of smartphone owners prefer what to purchase often re ect inter- using it for Web browsing or actions with friends and other e-mail even when they are near PCs. in uencers. In response, leading Over the past two years, iPhone marketers are adapting their users have spent 45 percent more strategies to reach increasingly time e-mailing on their smart- networked consumers and placing phones and 15 percent less time more stress on tactics such e-mailing on their PCs. More as word-of-mouth marketing and than 60 percent of smartphone storytelling. users would consider buying goods with it or have already done so. Smartphone as ‘Swiss Army knife’ As the power and functionality As the usage and processing of devices grow, the possibilities for power of smartphones increase in making money from mobile tandem with the rising speed of platforms will continue to improve. 3G and 4G data networks,2 mobile We found, for instance, that devices are invading the domains smartphone users already are more of single-purpose gear such as game accustomed to paying for digital consoles and portable media content and services than traditional players, as well as PCs. online users are. Three-quarters of iPhone users, for example, now pay for one or more apps each month, though most remain free.Advertisers must refine As more products are distributed over mobile channels, greatermarketing plans so competition will raise the importance of design, ease of use, andthat they reflect new video- new mobile payment options. These findings are good news forviewing behavior, while content and service providers that wonder if mobile solutions willgetting creative about deliver real returns.targeting users who are Internet video: Challenging traditional TVtime-shifting and As digital platforms multiply, consumer video-viewing habitsdividing their attention continue to change. Among our survey respondents, 69 percentamong platforms. now view videos on their PCs and
  • 3. 3Q3 2011iConsumerExhibit 1 of 1Digital consumers fall into seven distinct groups characterizedby the consumers fall into seven distinct groups characterizedDigital types of digital experiences they prefer.by the types of digital experiences they prefer.US exampleSegment Size of segment, 2010, Absolute change in Behavior relative to n = 16,839, % share, 2008–10, % survey averageEngaged with multiple digital platformsDigital-media 3 times more likely to be early 19 +7junkies adopters of new technologiesDigital Use social networking 16 +4communicators 3.2 times moreDeeply involved with a single digital experience View 2.6 times more videosVideo digerati 14 +6 across all platformsGamers 10 –6 Play video games 2.2 times moreProfessionals 6 –8 Spend 44% more time on e-mailLimited digital engagement Spend 79% less time onTraditionalists 24 0 social networkingOn-the-go Use mobile phones for voice 11 –2workers 3 times moreSource: 2008, 2009, and 2010 McKinsey surveys of ~20,000 US Internet users, aged 13–64 33 percent on their smartphones. That should open the door to new Twenty-four percent view areas of competition and innovation; Internet content on their TVs—a pay-TV companies, for example, percentage that has tripled are starting to offer their program- over the past two years as Internet- ming across tablets and mobile enabled game consoles, DVD devices. players, DVRs, and TVs have prolif- erated. Although these users Web search and video providers, are 1.5 times more likely than the meanwhile, see opportunities general population to say that for services that help consumers they intend to cancel their pay-TV navigate the fragmented domain service, only a quarter of them of online video, a role similar to that are satis ed with the experience. of traditional TV-programming
  • 4. 4 1packagers. Advertisers must This article focuses on recent results from our US research, covering 20,000re ne marketing plans so that they people since 2008. Respondents agedre ect this new video-viewing 13 to 64 with Internet access were askedbehavior and get creative about about their digital behavior in areas including social interactions, e-commerce,targeting users who are time- video preferences, and device ownership. 2shifting and dividing their attention The term 3G, or third generation, refers toamong platforms. a generation of multiple standards for mobile phones and mobile telecommuni- cations devices, while 4G is the fourthWe have seen similar digital generation of cellular wireless standards— with higher speeds.disruptions in other key platforms,such as gaming, e-publishing,and music. The digital revolution, Bert Chappuis is a directorstill in its earliest days, will continue in McKinsey’s Silicon Valley of ce,to upend how we interact, entertain Brendan Gaffey is a principal inourselves, buy, and work. the Dallas of ce, and Parviz Parvizi is an associate principal in the Boston of ce. Copyright © 2011 McKinsey & Company. All rights reserved. We welcome your comments on this article. Please send them to quarterly_comments@mckinsey.com.