Analyst Speak: Recommendation becoming a key means to learn of and buy products

19 February 2009

“More than half of us claim to have learned of a new product via the internet”

Consumers have traditionally gone online to find more information about products they were already aware of, to compare prices or to get discounts on everything from books to dishwashers. A new Deloitte study, The State of the Media Democracy, suggests online product research and consumption is no longer so limited. More than half of us (56%) claim to have learned of a new product via the internet, with recommendations, reviews and lists playing an important role.

We found unexpected consistency across age groups. While 66% of 14-25-year-olds and 61% of 26-42-year-olds have learned of new products online, older users are only slightly less open to discovering new products in this way — exactly half of 43-61-years-olds and 41% of 62-75-year-olds have done so.

But awareness of a product doesn’t imply a purchase. This is where recommendations and reviews come in. They’re becoming a key aspect of converting awareness and interest into sales. Deloitte found 49% of consumers have purchased a product based on an online recommendation, with 26-42-year-olds the group most likely to have done so. Again use was spread across the age ranges, from 54% of under-25s to 41% of 43-61-year-olds and 36% of those over 62, proving silver surfers aren’t lagging far behind in using online recommendations.

The story is very different when it comes to making recommendations, however. Only 26% of consumers said they have ever made an online recommendation, and this dropped to just 11% among 62-75-year-olds, suggesting they’re reading the recommendations of a minority of younger consumers or the data-driven preferences of the wider community. Even among 14-25-year-olds, only one in three claims to have written a product recommendation.

Recommendations, reviews and lists still have some way to go in convincing us to view, buy and advocate. When we asked what type of online advertising influenced consumers most, the banner ad was on the list for 75% of respondents. This compared to 45% mentioning interactive information and entertainment, the broader definition of recommendations, reviews and product-focused user-generated content. It remains to be seen how this balance changes over time.

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