ACSI Commentary July 2010

The American Customer Satisfaction Index (ACSI) Report on E-Business: Internet Portals & Search Engines, News & Information, and Social Media Websites

Commentary by Professor Claes Fornell
The Donald C. Cook Professor of Business Administration,
Stephen M. Ross School of Business, University of Michigan

ACSI Debuts Satisfaction Results for Social Media Website

Google Dips Sharply but Holds Off Bing; FOXNews.com Leads All E-Business Websites; Facebook and MySpace Fail to Satisfy

Portals & Search Engine Websites

Portals and search engines lead all e-business categories with an ACSI score of 77, but declined 7% from a year ago. This decline was driven mostly by a drop for Google, which commands a large proportion of search engine and portal traffic. Despite Google’s 7% fall from an all-time high of 86 a year ago to a score of 80 this year, the dominant player in the search engine business still leads its largest competitors by a wide margin.

The drop for Google may be related to efforts to expand well beyond its core search engine business. With the introduction in recent years of services like email (Gmail), instant messaging (Google Talk), social networking (Google Buzz), and even a Web browser (Google Chrome), Google now offers a full range of Internet services. But in trying to become all things to all people, Google seems to have encountered some of the pitfalls that portals and social media sites face including concerns about privacy, which have led to an upswing in complaints about Google’s policies and practices in the past year. Recent investor reaction to Google has soured somewhat as well—in the past 6 months the company’s share price has fallen nearly 30% compared to an 8% drop for the market as a whole.

Google’s rival Bing was measured in the ACSI for the first time this year, coming in second with a score of 77, followed closely by Yahoo! at 76. Although Bing enters the ACSI with strong customer satisfaction, it has a long way to go to parlay that satisfaction into market share. While Google controls about 70% of the total search market, Yahoo! and Bing are well behind with about 15% and 10%, respectively.

Among the other measured portals and search engines, MSN was unchanged at 75, AOL improved 6% to 74, and Ask.com declined 1% to round out the bottom of the category at 73. AOL has become somewhat smaller in recent years and has transformed from a subscription-based Internet service provider to a portal very similar in format and content to its competitors. As a result, the portal’s remaining users are those that typically have been more satisfied over the years and are more strongly loyal to AOL.

News & Information Websites

Sites that provide news and information (in particular, the online versions of national newspapers and television news media) were unchanged from a year ago with an ACSI score of 74. Gains by nearly all of the biggest news sites were offset by a drop in satisfaction for the aggregate of smaller sites, especially local newspaper and TV news sites. Although scoring lower than the portals and search engine category, online news and information sites continue to outpace their print journalism counterparts by a strong margin—the newspaper industry ranks near the bottom of the ACSI with a score of 65.

FOXNews.com is on top in the news and information category. With an ACSI score of 82 in its first year of measurement, FOXNews leads all e-business websites, besting even perennial leader Google’s score of 80. FOXNews has a highly loyal following and has been very successful at integrating its on-air personalities into its website presence, strengthening the appeal of the site. Other news websites also have become better integrated with their newspaper or TV channels, directing viewers and readers to their websites for more in-depth stories or unique information. The enhanced experience has contributed to higher satisfaction scores for many of the largest sites. USATODAY.com improved 4% to a score of 77, followed closely by NYTimes.com, up 4% to 76, and ABCNews.com, up 6% to 75. MSNBC.com and CNN.com made smaller gains to round out the industry at 74 and 73, respectively.

Social Media Websites

New to ACSI measurement this year are social media websites. Composed primarily of user-generated content, social media represent one of the fastest growing groups of websites. Satisfaction is measured with four social media websites—Facebook, MySpace, Wikipedia, and YouTube—plus an aggregate measure of smaller sites. The social media category debuted with an ACSI score of 70, well below portals & search engines and news & information sites.

Given the popularity of the four measured social media sites, each boasting hundreds of millions of users worldwide, the first round of ACSI scores offered some surprises. At the top is Wikipedia—the massive, multilingual, user-produced encyclopedia run by the Wikimedia Foundation. With an ACSI score of 77, Wikipedia is more satisfying than most of the ACSI-measured news and information websites. Like Google, Wikipedia’s user interface has remained very consistent over the years, and its nonprofit standing means that it has not been impacted by commercialization and marketing unlike many other social media sites. Below Wikipedia is the Google-owned website YouTube with a score of 73. YouTube streams billions of video clips created and uploaded by registered users to approximately 200 million Americans each year. While newer competitors like Hulu have attempted to cut into its market share, YouTube remains the video website of record for many publicity-seeking celebrities, stumping politicians, and ordinary folks.

Coming in well below both Wikipedia and YouTube are the two largest U.S. social networking websites, Facebook and MySpace, with ACSI scores of 64 and 63, respectively. Facebook, which boasts approximately 500 million registered users worldwide, was the upstart to MySpace’s market leader just 5 years ago, but these roles now have been reversed. Still, controversies over privacy issues, frequent changes to user interfaces, and increasing commercialization have positioned the big social networking sites at satisfaction levels well below other websites and similar to poor-performing industries like airlines and subscription TV service (both 66). While privately-held Facebook continues to attract new members from virtually all age groups, MySpace’s dwindling traffic and page views may soon cost the website (owned by media giant News Corp.) its once-lucrative advertising partnership with Google.