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The growing popularity of online social networking and video content is deepening web users’ engagement with the internet and is causing a dramatic shift in the global online landscape – both for consumers and for advertisers, according to a report from The Nielsen Company, which was distributed at the ad:tech conference in San Francisco.

Nielsen’s research shows that since 2003, the interests of the average online user have shifted significantly, evolving from use of “short-tail” portal-oriented browsing sites – such as shopping directories, guides and internet tools – to sites that contain more specialized “long-tail” content geared to specific and interactive user interests:

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This change is manifested by the fact that video and social networking sites are the two fastest growing categories in 2009, and will necessitate new ways of thinking about online marketing, Nielsen said.

Major highlights from the Global Online Media Landscape report (pdf) regarding online video and social networks:

  • The number of American users frequenting online video destinations has climbed 339% since 2003. The unique audience for online video surpassed that of email in November 2007.

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  • Time spent on video sites has shot up almost 2,000% over the same period.
  • In the past year, unique viewers of online video grew 10%, the number of streams grew 41%, the streams per user grew 27% and the total minutes engaged with online video grew 71%.
  • There are 87% more online social media users now than in 2003, with 883% more time devoted to those sites.
  • In the past year, time spent on social networking sites has surged 73%.
  • In February 2009, social network usage exceeded web-based e-mail usage for the first time:

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Online Advertising Down But Not Out

With the global recession in full swing, Nielsen reported that online display advertising has plateaued at 20% of total online ad spend in the US. Not surprisingly, online advertising by financial services, automobile and retail companies has declined steeply as a result of ongoing troubles in those industries.

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On the other hand, several key industries that historically spend significant amounts on advertising – such as healthcare, consumer products and telecommunications – appear to be moving even more spending online, Nielsen said.

As a result, though online advertising appears to have lost some of its “favored child status,” the longer-term prospects for global online advertising when the recession abates are brighter, Nielsen said, suggesting several reasons why online advertising will continue to be critical:

  • 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.
  • The growing use of the mobile web is supporting increasing consumer engagement with web content, in more places and at more times. Some 30% of U.S. mobile subscribers recalled seeing some form of advertising while using their mobile phones, up from 18% one year prior.

“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.”

The Nielsen report, which examines trends in a multitude of countries on several continents, also noted that advertisers are increasingly starting to look at their media mix more holistically than ever before. For example, consumer-generated content has gained inclusion into the “earned media” club of marketing preferences. The big question going forward, Nielsen said, will be how paid and earned media share the marketing expenditure pie.

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