Tuesday, March 10, 2009

Nielsen: Social Nets Overtake E-mail

Nielsen: Social Nets Overtake E-mail

As online paradigm shifts, advertisers must find a way to add value,
rather than follow the 'push' model

March 9, 2009

-By Brian Morrissey

NEW YORK Social networking has overtaken e-mail as the most popular
Internet activity, according to a new study
> released by Nielsen.

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 its 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

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.


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