March 2009 Global Faces and Networked Places A Nielsen report on Social Networking’s New Global Footprint INSIDE: Social networks/ blogs now 4th most popular online category – ahead of personal e-mail These sites account for one in every 11 minutes online Orkut in Brazil has the largest domestic online reach (70%) of any social network anywhere in the world Facebook has the highest average time per visitor amongst the 75 most popular brands online worldwide Introduction How social networks are creating and advertisers to connect with their a potentially transformational audiences. So how do they need to Report Highlights change their strategies accordingly? change in consumer behaviour 1. Putting the growth of social Consumer engagement within social Social Networking has been the global networks – popularity and networks has the potential to change consumer phenomenon of 2008. engagement – into context the way consumers are targeted, not Two-thirds of the world’s Internet just through the digital medium, but 2. How the audience to social population1 visit a social network or through all forms of traditional media. networks is changing blogging site and the sector now Whilst a few billion dollars of ad revenue accounts for almost 10% of all internet 3. The challenges facing can’t be wrong, the prevailing wisdom is time. ‘Member Communities’2 has advertisers on social networks that the current level of advertising overtaken personal Email to become the activity on social networks isn’t 4. What advertisers can do to world’s fourth most popular online consummate with the size – and highly find the magic formula for sector after search, portals and PC engaged levels – of the audience. The advertising in social networks software applications. social networks and advertising industry 5. Factors contributing to the The story is consistent across the world, haven’t quite yet found that magic Facebook phenomenon ‘Member Communities’ has taken a formula to make this happen. foothold in every major market from 6. Why localisation has won the The industry is faced with a real ‘Catch-22’ 50% of the online population in Switzerland day in many countries situation. Part of Facebook’s extraordinary and Germany to 80% in Brazil. Facebook subscriber growth is due to a clean 7. Where mobile social networking has become the largest player on the design with little advertising clutter; has taken the greatest hold global stage, dominant in many countries, consequently, the audience growth yet localised offerings have won the day 8. What ‘traditional’ publishers hasn’t been accompanied by a similar in many others. can do in the face of the social surge in advertising revenue. On the network phenomenon However, the growth in popularity of other hand, MySpace’s more customisable social networks – and the resultant entertainment and content-oriented broadening audience – is only half the offering – carrying more advertising – story. The staggering increase in the has been more successful at attracting amount of time people are spending on advertising revenue, yet MySpace’s these sites is changing the way people audience is flattening. The industry will spend their time online and has be watching very closely at which one of ramifications for how people behave, these fundamental differences in strategy share and interact within their normal will prove the most successful in daily lives. attracting advertising revenue in 2009. Consequently, the global media and This report puts the global social advertising industries are faced with new network phenomenon during 2008 into challenges around the opportunities and context, providing insights and lessons risks this new consumer medium for the networks themselves, advertisers creates. Social networks provide and the media industry on how to take competition to traditional publishers for advantage of what’s happening online consumer attention and at the same around “Global Faces and Networked time, facilitate new ways for publishers Places”. 1 In this report, the terms ‘Global’ or ‘World’ encompass the following countries in which Nielsen Online has a NetView panel – USA, Brazil, United Kingdom, France, Germany, Italy, Spain, Switzerland and Australia. (Whilst Japan figures are shown in certain graphs, Japanese data isn’t included in any global figures.) 2 Nielsen Online’s ‘Member Community’ category includes both social networking and blogging websites. 1 Copyright © 2009 The Nielsen Company Social network and blogging sites Figure 1: Member Community growth twice that of any of the other fi ve are now the fourth most popular most popular sectors activity on the Internet Global1 Global1 % Point Active Active Increase in ‘Member Communities’ now reach over Rank Sector 5 percentage points more of the Internet Reach Reach Active population than it did a year ago – a Dec 08 Dec 07 Reach growth rate more than twice that of any 1 Search 85.9% 84.0% 1.9% of the other four largest sectors. 2 General Interest Portals & Communities 85.2% 83.4% 1.9% The strongest growth has come in 3 Software Manufacturers 73.4% 72.0% 1.4% Germany where the sector now reaches 51% of Germans online compared to 4 Member Communities 66.8% 61.4% 5.4% 39% a year ago – an actual increase of 5 E-mail 65.1% 62.5% 2.7% over 12 percentage points. Source: Nielsen Online, Global Index, December 2007 – December 2008. E.g. In Dec 08 the Search sector reached 1.9% (points) more of the world’s online population than it did in Dec 07 Large growth has also occurred in the 1 ‘Global’ refers to AU, BR, CH, DE, ES, FR, IT, UK & USA only UK, Spain, Italy and Switzerland – the sector reaching 10% percentage points Figure 2: Germany has seen the greatest increase in online reach of more of the online population in each of Member Community websites these countries than it did a year ago. 80% 1.4% 75% 73% Dec-08 70% 69% Germany arrives later to the 9.9% 67% 67% Dec-07 67% 9.9% 2.7% 10.3% 2.6% 2.9% social network party 5.4% 59% 4.9% Natural German reserve when it comes 51% 51% to disclosing personal data resulted in 12.5% 9.6% social networking taking off later than in 78% most other countries. As in many 78% 67% 65% 63% countries, younger people were the fi rst 61% 59% 64% 64% in Germany to embrace social networks. 55% However, the activity is starting to 39% 41% spread to the wider online population due to sites like “Wer-kennt-wen”, literally translated as “Who Knows Whom.” Including neighbourhood communities and job-related networks, Italy UK USA 1 Global Brazil* Spain Japan France “W-k-w” addresses a more mainstream Australia Germany* Switzerland* audience than previous dominant players such as StudiVZ, which targets students. Source: Nielsen Online, NetView, Home and Work Data, December 2007 – December 2008 (*Home only). E.g. In Dec 08 ‘Member Communities’ reached 67% of the global online population compared to 61% in Dec 07 Takeovers by big traditional media 1 ‘Global’ refers to AU, BR, CH, DE, ES, FR, IT, UK & USA only (JP fi gure not included in Global fi gure) companies – bringing signifi cant investment and management experience – have also helped bring Facebook has started to make a bigger local players already had a signifi cant head social networking to a wider audience. impression since launching a German start (MySpace, third, is the most popular Publisher Holtzbrinck bought StudiVZ language interface in March 2008 – the last ‘international’ player). In fact, StudiVZ, (within eight months its audience grew six months of 2008 saw the site triple its started in 2006, was so similar to Facebook by 168%) and after TV network RTL, a audience to over 2.4 million Unique Visitors. that Facebook sued it in a Californian court subsidiary of media giant Bertelsmann, in 2008, alleging that StudiVZ copied its bought “W-k-w”, its reach tripled However, Facebook is still only the sixth look, feel, features and services. StudiVZ within a year. most popular social network in Germany as denied the claims. 2 Copyright © 2009 The Nielsen Company Time spent on social network and Figure 3: The total amount of time spent on Facebook increased by 566% blogging sites growing at over 3x the rate of overall Internet growth Change in total minutes between Dec 07 and Dec 08 This increase in popularity is only half the story when it comes to the social All Internet 18% networking phenomenon – the time people spend on these networks is also increasing dramatically. Member Communities 63% The total amount spent online globally increased by 18% between December 2007 and December 2008. In the same period, however, the amount of time Facebook 566% spent on ‘Member Community’ sites rose by 63% to 45 billion minutes; and Source: Nielsen Online, Global Index, December 2007 – December 2008 on Facebook by a massive 566% – from 1 ‘Global’ refers to AU, BR, CH, DE, ES, FR, IT, UK & USA only 3.1 billion minutes to 20.5 billion. Facebook’s time is so high due to being the ninth Figure 4: Switzerland has seen the greatest increase in share of time most popular brand online and having accounted for by Member Community websites the highest average time per person Member Community Member Community Relative Change (three hours 10 minutes) amongst the Country 75 most popular brands online worldwide. Share of Time Dec-07 Share of Time Dec-08 in % Share Global1 6.7% 9.3% 38% Switzerland* 3.0% 9.3% 207% Germany* 3.1% 7.5% 140% UK 8.0% 17.4% 118% Consequently, social networks and blogs are eating into the share of Italy 7.2% 15.4% 113% time held by other sectors Spain 6.7% 12.5% 87% Because time spent on social networks is France 4.0% 6.3% 59% growing at a dramatically faster rate Australia 6.9% 10.9% 58% than the Internet average, social networks are gaining a larger share of all USA 5.8% 6.4% 11% Internet time.