Message from Michael -- Digital Year in Review -- February 11-2011

Message From Michael                                 

                                                                                                                        February 11, 2011                                                                                                                                                                                                                                                                                                                                                                

      THE DIGITAL YEAR IN YEAR – A SPECIAL REPORT

·         A MILLION HERE, A MILLION THERE

·         KNIT ONE, PEARL TWO

·         SEEK AND YE MAY FIND

·         I LIKE TO WATCH

·         THE PERFECT STORM

 

 

      A MILLION HERE, A MILLION THERE.  And pretty soon, to paraphrase the famous quote about the U.S. budget by Senator Everett Dirksen, you’re talking real money.  Specifically advertising dollars type money.  That’s one of the key take-aways from Internet measurement company comScore’s Digital Year in Review.  This may elicit a Homer Simpson “DOH” response from some Message readers, but I’m going to say it anyway.  The over-riding impression one gets from a read of the annual report is that the Internet has really and truly become an advertising medium.  For example, the so-called Cyber Monday online shopping day passed $1 Billion in online retail spending for the first time.  Eight of the holiday shopping days topped the $900 Million mark.  Total U.S. e-commerce spending reached $227.6 Billion last year – an increase of 9% over the previous year.  And there are more factoids to make the point: --

Last year, American Internet users “received” (the word the comScore analysts use) a total of 4.9 Trillion display Ads.  That’s up 23% year to year. And that’s just display ads.  Video Ad Networks “served” (again, the word the comScore analysts use) 5.9 Billion Ads a month.  Video ads, according to the analysts, now reach seven out of ten Americans online and one out of every two Americans nationwide.  The report says a clear indication of the brand advertisers shifting to digital is that 104 companies are serving up more than a Billion ads.  That’s a 30% increase over last year when 80 brand advertisers did that amount of advertising.  And that’s just for starters.  While advertising accounts for a quarter (25%) of all Television programming, advertising ‘only’ accounts for one of every six (16.4%) of all Online Video viewed, meaning there’s room for growth.  Online video ads apparently face similar challenges as TV faces with DVR’s because the report says online video ads account for only 1.6% of all time spent viewing video online.

SIDE NOTE:  Consider this in the Online Video advertising equation. Facebook alone delivered more than 1 Trillion display ads… the first company to pass that milestone.  Yahoo!, which was last year’s top display ad publisher, ranked second with half a Billion ads (529.4 Billion).  The use of standard GIF’s and JPEG’s in advertising actually grew (295 Billion a month compared to 236 a year ago).  Flash Ads meanwhile dropped from 162 Billion a month to 147 Billion.  As the report authors note, that seems counterintuitive.  The reason is that Facebook uses the static ad format and it is such a huge force that it impacts all advertising.

THE FUTURE:  The report not only looks backward but, briefly, looks forward.  For example, the authors say the key issue for advertisers will be the need for holistic, end-to-end measurement “across the digital advertising ecosystem.”   On the issue of e-Commerce, the authors say you can expect online to be a greater driver of off-line in the future.  They also say the fairly recent phenomenon of group buying and “flash sales” will become a more common, accepted phenomenon.

      KNIT ONE, PEARL TWO.  The report says social networking has become so woven into so many different online activities that it is now an “integral part of the fabric of the Internet.”  Which is something most of you readers of the Message already know or already suspect.  The comScore report says it has now reached the point that 9 out of every 10 Internet users in the U.S. visit a social networking site each month with the average user spending more than 4.5 hours on these sites each month.  In fact, social networking sites account for 12% of all time spent online in 2010.  Oddly, Americans spend slightly less time at social networking sites than people around the world.  Globally those aged 15 and up spent 15.6% of their online time on social networking sites while in the U.S. it was 14.4%.  Not so oddly, but interestingly, women spend more of their online time visiting social networking sites than men. One out of every six minutes (16.8%) compared to one out of every eight minutes (12%) for men.

Okay, let’s get the obvious out of the way – Facebook is the number one site, accounting for 10% of all U.S. page views in 2010 and three out of every ten Internet sessions.  Beleaguered MySpace is #2, but way back at 50 Million visitors a month, a decline of 27%, but still a respectable number and one that makes you wonder why it’s for sale.  Business networking site Linkedin takes the number three spot with 23.6 Million a month, an increase of 30% year to year, but still half of MySpace which raises the question why everybody is in love with Linkedin and so disaffected with MySpace.  Coincidentally, Twitter had the same number of visitors per month based on December numbers as Linkedin.  But here’s the surprise – Tumblr.com jumped 168% year to year to reach an average 6.7 monthly visitors.  Here’s the even bigger surprise – Formspring.me reached 5.3 Million visitors by December, a growth spurt of 1000%.  At this point, I hope there are at least some of you who are saying… What the heck is a formspring, because I sure didn’t about it.  It is a social networking site aimed at young people and which, in its own words, “helps people find out more about each other through sharing interesting and personal responses… in a simple and fun way.”  I’ll let you make your own judgment about what that means.      

SIDE NOTE: So-called “portals” still remain the primary online activity with a fifth (20.2%) of the time spent.  But that’s down (1.4%) while social networking is up (3.8%), and is now the second most engaging activity online (at 14.4%).  Entertainment is third (12.6%).  The report authors note that the increase in social networking and mobile usage has meant a decrease in the use of  web-based email.  It’s down 8% overall year to year, but down an astounding 59% amongst 12-17 year olds.  Interestingly the decline wasn’t as significant in the 18-24 year olds, but definitely in the 25-34 year old demographic (18%), only somewhat in the 35-44 year olds (8%), and somewhat more in the 45-54 (12%).  But as more older people go online, email usage has increased with both 55-64 year olds (22%) and 65-plus group (28%) using it more. 

THE FUTURE:  The report is, to put it mildly, ambiguous about the future of social networking for businesses, advertisers and marketers.  On one hand, they say without a social media presence, you will be left behind.  On the other hand, they say, it may not be worth “significant investment for every company or brand.”  Then again, it is important to “understand how consumers may (or may not) use the medium.”  And that, at the very least you should be listening to them and “most should probably engage directly with them.”  So, you figure it out.  Actually, as a side note to the side note, the Council for Research Excellence which represents media and advertising researches has just issued an RFP for digital measurement.      

      SEEK AND YE MAY FIND.  It all depends on what kind of search you end up using.  This is way too arcane to get into, but I will anyway… briefly.  Before I do, let’s get another obvious one out of the way.  Google continues to dominate search, accounting for more than 3 out of every 5 U.S. searches (66.6%).  Yahoo is a far distant second with one out of six searches (16%).  Second point, search continues to be a critical element for all Internet users, businesses and advertisers.  But back to the arcane.  Some marketers have figured out a way to “game” the system with searches that are unintentional searches.  It’s called “contextually driven search” in which you, the consumer, click on a slide show, or picture or an un-related link on a web page and it generates a ‘search’ for that item.  That’s why comScore has initiated what it calls “explicit core search” which is ‘intentional’ searching.  You are actually using the search engine to get a specific result. Okay, now you know.   

SIDE NOTE:  Take a guess what the most searched for phrase is.  Put down the message and think about it….tick, tick, tick. Okay, what’s your guess.  Well, the answer is… Facebook, with 1.9 Billion searches over the last year.  No I didn’t get it either.  But apparently lots of people use search engines for navigation on the Web instead of simply typing in the service.  So, instead of typing in the YouTube URL, they’ll search for it (791 Million times last year).  Same for Google itself, which is even stranger (616 Million searches), Yahoo (562 Million), Craigslist (547 M), MySpace (360 M), and Craigslist (311 M).  Weird, huh?  Then again, maybe some of you do that.  Anyway, moving on… the top user of paid searches is eBay which got 99.2 Million clicks for its effort while Netflix was second with 43.1 Million clicks.

      I LIKE TO WATCH.  It’s a line from the movie Being There, the last film by Peter Sellers in which he played a simple gardener who becomes a national celebrity even though his only knowledge of the world comes from his garden and watching television.  For whatever reason, it came to mind after reading the figures from the report on Online Video viewing.  An estimated 179 Million Americans watch video online each month.  By the end of the year last year, 88.6 Million Americans were watching on an average day, an increase of 32% from the year before.  The average American spent 14 hours watching online in December, up 12% from the year before.  Hulu continued to dominate the online video market, racking up 323 Million hours last year.  The five networks did about half that number – 162 Million hours.  But while Hulu’s usage increased 17% year to year, the five networks increased their online viewing by five times that (82%).  Again, indicative of the advertising theme of the report, the authors say online video continues to be an opportunity for advertisers. I should also note here other reports that the various networks are looking at re-examining the Hulu model because it is cannibalizing their own sites.

THE FUTURE:  Rather than paraphrase the author’s comments, here’s the direct quote from the report:  “In 2011, look for cross media relationships to take center stage as the convergence of traditional TV and online video viewing continues to blur the lines between media channels.”      

      THE PERFECT STORM.  Admittedly that phrase has become an over-used cliché lately, but that’s the description used by the report authors in talking about Mobile usage in 2010.  They also call it a “game changing year.”  The reason -- a combination of Smartphone adoption, device innovations such as tablets and increased network speeds all aligned.  Major milestones during the year included the fact that Smartphones now reach one in four Americans and that 3G penetration crossed the 50% threshold.  More than two thirds (68%) use their phones to text, while half (52.4%) use them to take and send photos.  To give my news brethren heart, the next big Mobile activity is accessing news and information (39.5%).  About a third (36.4%) used the phone’s browser while another third (34.4%) used it to access Apps.  Email has dropped to less than a third (30.5%).  A fourth used their phones to either get weather reports (25.2%) or to access social networking and/ or blog sites (24.7%).  Slightly less than that (23.2%) use them to play games.  After that, it’s search (21.4%), video capture (20.2%), maps (17.8% ), IM (17.2%), Sports (15.8%) and Music (15.7%).       

THE FUTURE:  The authors say you can expect more real time price and product information searches on mobile devices for consumers looking to make an in-store buy, but they also expect an increase in on-line buying as a result.  Also as a result, the authors say the “nearly ubiquitous nature” of Mobile along with its convenience will make it “potentially extremely valuable for advertisers.”  (See what I mean about this report being all about advertising?)  Then they make an important point.  Mobile Internet use is not just an extension of PC-based Internet use, but “is itself a unique platform that by its nature will influence the how, what, where, why and when of consumers’ media consumption.”    

      FOOTNOTE:  I apologize for the length of this Message, but the report had a lot in it.  Even then there’s no doubt I left something out.  If so, we’ll make up for it in the next report.  And, yes, you’re not mistaken.  There were two Messages this week -- The Super Bowl and the comScore report.  Both were timely and both required their own message.          

      SUBSCRIPTIONS:  We encourage people to pass on copies of Message from Michael.  But if you would like to get your own copy, you can subscribe by sending an e-mail to Michael@MediaConsultant.tv with the word “subscribe-MM” in the subject line.  If you wish to stop receiving this newsletter, e-mail Michael@MediaConsultant.tv with the word “unsubscribe-MM” in the subject line. Also, back issues of MfM are available at the website, media-consultant.blogspot.com.  You can reach me directly at Michael@MediaConsultant.tv.