Surprise stock implications of wealthy online user growth

by: David Jackson

Nielsen/NetRatings reports (PDF) that the fastest growing segment of Internet users by income during 2004 was the top group - those with household incomes over $150,000. Details of the Nielsen/NetRatings report, then analysis including stock implications:


  • The number of Internet users with household incomes over $150k grew by 20%, to 10.3 million as of January 2005.
  • This group also spends the most time online - averaging 76 hours per month.
  • And it views the most Web pages - 2,126 pages per month.
  • Among high-income households, men spent more time visiting financial sites, women visiting entertainment sites.
  • Top sites for high-income-household men: Fidelity Investments, Sabre Travel Network, CBS MarketWatch, United Airlines and American Airlines, each capturing over 12 percent of this demographic in January, 2005.
  • Top sites for high-income-household women: AOL Travel, Moviefone, AOL Living, Expedia, and AOL Entertainment, each of which drew over 5 percent of this demographic in January, 2005.

ClickZ adds that:

The findings gel with a related study conducted recently by JupiterResearch that isolated young affluent Internet users as the most active online demographic. According to the Jupiter study, Internet users between the ages of 25 and 34, with household incomes over $75,000 are more likely to be connected to broadband and engage in a broader range of online activities than overall Web users.

Analysis/Quick comments:

  1. The most important and surprising data point is the popularity of AOL among affluent women. Every site in the top list for women is an AOL owned or affiliated site. (Moviefone is owned by AOL and Expedia has a marketing deal with AOL.) Implication? Perhaps AOL's unrealized marketing value is under-appreciated by investors.
  2. CBS MarketWatch's appearance as a top site for affluent-household men confirms that it is a good demographic fit with The Wall Street Journal, the rationale behind the purchase of MarketWatch by WSJ owner Dow Jones.
  3. Fidelity Investments does not tend to be the online brokerage of choice for active and hyper-active traders. So that suggests that wealthy males tend to be long-term investors rather than short-term traders, and would also explain why MarketWatch ranks as a top site whereas (which is more short-term trading oriented) doesn't.
  4. Interesting that the only e-commerce sites to rank were travel sites. Wealthier people travel more.
  5. IAC's (ticker: IACI) spin-off of Expedia may solve an under-valued stock problem, but it makes no strategic sense. This data confirms that: IAC should be cross-selling high-margin goods and "destination services" from other IAC units to Expedia customers, particularly given the spending power of Expedia customers. Obvious example: event tickets from TicketMaster.
  6. Potential beneficiaries of growing Web adoption by wealthy
    Americans: luxury goods e-tailers. Stocks include: Blue Nile (ticker:
    NILE), Provide Commerce (ticker: PRVD), Red Envelope (ticker: REDE).
  7. Absences of note: top shopping sites Amazon (ticker: AMZN) and eBay (ticker: EBAY) didn't appear. Neither did Fidelity competitor Schwab. And where were Yahoo! (email, stock quotes, news) and Google? Baffling.

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