August 23, 2005

According to a study conducted by predictive research firm Compete Inc., Internet search engines Google and Yahoo are having a crucial influence on people shopping for various wireless services.

The study found that 37 percent of new wireless subscribers said online searches influenced their offline purchase of wireless service, compared with 21 percent who were influenced by TV commercials and 17 percent swayed by print advertisements.

The survey predicted that by the end of the year, nearly 24 million consumers will perform a search for wireless service on the Internet, representing more than $12 billion in potential annual service revenues.

Nearly 19 million of those searches will involve the industry's five largest operators-Cingular Wireless L.L.C., Verizon Wireless, Sprint Corp., T-Mobile USA Inc. and Nextel Communications Inc.-while more than 5 million customers will search for prepaid services offered by Tracfone Wireless Inc., Virgin Mobile USA L.L.C. or Boost Mobile L.L.C.

Yahoo's Director of Telecommunications Search Marketing David Rubenstein noted the results showed consumers are relying more on the Internet, and more specifically search engines, when looking at wireless services.

"Our research shows there is definitely a link between consumers researching wireless services online and buying wireless services offline," Rubenstein said. "The influence of the Internet shows that carriers need to take a more holistic approach to advertising, realizing how different media influence buying decisions."

Rubenstein added that the survey showed that carriers are well served by having their Web sites prominently displayed on the results pages of wireless-related online searches, which typically involves outbidding competitors for top billing. More than half of those surveyed said perceived brand leaders were generally in the top three of search results.

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The survey found that 2.5 percent of potential wireless customers using search engines to track down wireless information on the industry's five largest operators submitted active phone or plan orders compared with 1.3 percent that did not use search engines. T-Mobile USA and Cingular had the highest percentage of customers using search engines submitting active orders, while Verizon Wireless, Sprint and Nextel posted conversion rates at or below 1 percent.

Wireless consumers using search engines were also more than three times more likely to use lower-cost online self-care services as well as initiate more online self-care sessions.

The survey also found that more than 60 percent of customers searching for wireless services online said they were comparing at least two wireless providers, while 47 percent stated online searches helped them narrow down their eventual wireless choice.

"With so many rate plans, devices and coverage decisions to be made, people are using search to help narrow down their choices," Rubenstein said.

Despite the Web's increasing influence on ultimate decision making, the report found that only 5 percent of total wireless gross additions were completed online. The report noted that nearly half of wireless customers said they were uncomfortable purchasing devices without holding them or did not want to wait for phones to be shipped in the mail.

"There is still a disconnect between customers researching wireless services online and actually buying wireless services," said TJ Mahoney, Compete's managing director. "That might be a large gap to bridge in the near term, but other technology industries have managed the challenge."

Source: RCR News