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Online Engagement Deepens as Social Media and Video Sites Reshape the Internet, Nielsen Reports

Social media, search and video will bolster online advertising spend in 2009

SAN FRANCISCO, CA April 22, 2009 –Online engagement by Internet users is deepening, according to a new report on the online landscape released today by The Nielsen Company. This increased engagement is in part a result of a shift toward video content and social networking as popular online subcategories. The full report was distributed at the ad:tech conference in San Francisco, CA.

“The Internet remains a place of continuing innovation, with users finding new ways to integrate online usage into their daily lives,” said Charles Buchwalter, SVP, Research and Analytics, Nielsen Online. “In recent years the Internet has changed dramatically as people seek more personalized relationships online. In particular, time spent on social networks and video sites has increased astronomically. Advertisers are starting to positively re-assess the value of the online experience and create more meaningful relationships with consumers.”

Since 2003, interests of the average online user have shifted significantly. Categories that consisted of portal-oriented browsing sites, such as Shopping Directories and Guides and Internet Tools/Web Services, used to be the top categories for user engagement. However, today the active Internet user tends to prefer sites that contain more specialized content. This change in preferences is seen in the fact that video and social networking sites have moved to the forefront, becoming the two fastest growing categories in 2009. 

See downloadable pdf for chart.

Highlights of the report regarding the two fastest growing subcategories — online video and social networks – include:

  • The number of American users frequenting online video destinations has climbed 339 percent since 2003.
  • Time spent on video sites has shot up almost 2,000 percent over the same period.
  • In the last year alone, unique viewers of online video grew 10 percent, the number of streams grew 41 percent, the streams per user grew 27 percent and the total minutes engaged with online video grew 71 percent.
  • There are 87 percent more online social media users now than in 2003, with 883 percent more time devoted to those sites.
  • In the last year alone, time spent on social networking sites has surged 73 percent.
  • In February, social network usage exceeded Web-based e-mail usage for the first time.

Online Advertising Down–But Not Out

With the global recession in full swing, online display advertising has plateaued at 20 percent of total online ad spend in the U.S. In particular spending on online display advertising by financial services, automobile and retail companies has declined steeply.  On the other hand, several key, heavy ad-spending industries such as healthcare, consumer products and telecommunications appear to be moving even more spending online.

See downloadable pdf for chart.

The longer-term prospects for global online advertising continue to be brighter, Nielsen reported:

  • Led by social media, search and video, the Internet’s share of total ad spend will continue its steady upward trend as global economies emerge from the current recession.
  • Given the increased focus on digital marketing by leading packaged goods companies, the Internet’s share of commerce will continue to rise as well.
  • Marketers are being forced to adapt to social networking capabilities. In the age of Twitter, feedback barriers have all but disappeared, creating a near friction-free environment for playing back brand experience, campaign reactions or brand events. Recent public cases involving Motrin, Amazon, and Domino’s show that marketers must be quick and savvy to react to these unprecedented channels of instant feedback.
  • 30 percent of U.S. mobile subscribers recalled seeing some form of advertising while using their mobile phones, up from 18 percent one year prior.

Nielsen’s full report on the global online landscape can be downloaded on The Nielsen Wire: