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Active reach in what Nielsen defines as "member communities" now exceeds e-mail participation by 67 percent to 65 percent. What's more, the reach of social networking and blogging venues is growing at twice the rate of other large drivers of Internet use such as portals, e-mail and search.
Nielsen, which is the parent company of Adweek, concluded that the shift to social activity online would have profound effects on marketers and publishers. For publishers, social networks are eating into time spent with other online activities, according to Nielsen. For advertisers, the phenomenon at this stage represents mostly unfulfilled promise for a deeper connection with consumers who are more difficult to reach in social environments.
The rise of social media coincides with the decline of portals. Social networking appears to be snatching away users' online time formerly spent with e-mail, traditionally a large draw to portals. Such fragmentation is decreasing portals' importance to advertisers. In a separate report, top digital shop Razorfish said it's spending at portals declined from 24 percent in 2006 to 16 percent in 2008.
Nielsen found that two-thirds of the world's Internet users visited a social networking site in 2008. All told, social media now accounts for almost 10 percent of Internet time. Facebook is leading the pack worldwide, with monthly visits by three out of 10 Internet users in nine global markets, per Nielsen.
The growth in social media is not confined to the U.S. Nielsen charted comparable or higher growth for Australia, Spain, Italy and the United Kingdom.
Yet for now, user growth at social sites is outpacing advertising increases, per Nielsen. This will likely change, Nielsen said, as models shift to value engagement over exposure.
"As the online industry matures and the value of online real estate is increasingly measured by time spent, rather than pages viewed, a significant shift in advertising revenue from 'traditional' online media towards social media could be realized -- if the successful ad model can be found," the report stated.
The search for a workable ad model is even more urgent now that social media has broken out of the youth demographic, Nielsen found. For example, Facebook's greatest growth has come from 35-49 year-olds, and it has added twice as many 50-64 year-olds as those under 18.
Yet advertising and social media to date have mixed like oil and water. Part of that is a function of social media's communications role -- advertising has typically performed poorly in chat and e-mail. The larger challenge for advertising is to move from an interruptive role to joining conversations.
That means advertisers need to find ways to add value to users' experiences, Nielsen found.
"Whatever the successful ad model turns out to be, the messaging will have to be authentic and humble, and built on the principle of two-way conversation -- not a push model -- that adds value to the consumer," the report said.