Print Article Monday, 24 March 2008

Social sites gain in popularity amongst wealthy Americans, study finds

By Dave Porter

(AXcess News) Reno - According to astudy by the Luxury Instititute, thenumber of affluent Americans visitingsocial sites rose dramatically in Januarycompared to the same period last year,eMarketer says.

eMarketer.com said Wednesday that the rate of affluent US Internet user participationin online social networks increased dramatically to 60% in January 2008, from 27%in January 2007. The Luxury Institute's latest WealthSurvey "The Wealthy andWeb 2.0" was released earlier this month and according to the Study, six in tenwealthy US consumers use social networks.

"While some in the luxury industry are still debating e-commerce, search andbanner ads, the majority of their customers have leaped into the online dialogue,"said Milton Pedraza, CEO of the Luxury Institute. "Luxury needs to catch upquickly."

The study noted that, on average, affluent US Internet users are members of aboutthree onlne social networks and have 110 online connections through these sites.

Online communities are likely to continue fragmenting into selective and specializedentities of like-minded members. This should make it easier to reach targetmarkets, 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 toleratebehaviors exhibited recently by social networks that force opt-out techniques onmember's private purchase information, and make it difficult to exit."

Nearly two-thirds of wealthy consumers say that giving out personal data withoutpermission will cause them to disconnect; 63% have an interest in "do not track"lists.

"The Luxury Institute's findings suggest that membership in social networks is oneof the factors driving the growth in Internet usage among the affluent," said PaulVerna, 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 Internetpopulation. In 2007, an estimated 25% of US Internet users were affluent, upsignificantly from 16% in 2001. eMarketer projects that this percentage will increaseto 27% in 2011.

Nielsen Online said last year that nearly 30% of Facebook's users came fromhouseholds with at least $100,000 in annual income. Comparatively, 22% ofMySpace users were from similarly-affluent households.

While Nielsen's numbers appear to contradict the Luxury Institute's finding thatMySpace commands a higher percentage of affluent Internet users than Facebook,there is no actual discrepancy when one considers that MySpace's user base isconsiderably larger than Facebook's. Hence, 30% of Facebook's user base isactually a much smaller number than 22% of MySpace's users, eMarketer finds.

Source: eMarketer.com