Looking at our newly expanded panel that includes more than 30,000 sites, we have found that short tail sites (those with a greater than 1 percent reach) remain the most engaging brands online.

It seems that the differentiation between the long tail and short tail is important. Long tail sites tend to have lower engagement levels than short tail sites.

However, it would be reasonable to ask: “well, since not all short tail sites are the same, what happens to those numbers if you remove portals and large social networks?” The answer is interesting. When we look at the data in relation to the highest traffic sites on the Web (e.g., Google, Yahoo!, YouTube, MySpace, Wikipedia, Apple and Facebook) here’s what happens:

Long tail sites tend to have lower engagement levels than short tail sites; however, the largest jump isn’t between long tail and short tail, it is really between everyone and the top 10 sites.

What does this amount to? As much as anyone thinks the future is in the long tail, it’s just not the case-at least not yet. In fact, consumers feel more comfortable on large, mass media sites. We know the Internet is changing. We know there are more blogs, boards, tweets and social networks than ever before. But what’s also clear is that while the Internet itself is fragmenting (like all other media), people continue to spend their time on the sites that offer them the most options and functionality.

Charlie Buchwalter, SVP Research & Analytics, Nielsen Online

SUMMARY: The longer-term prospects for the global online medium continue to be bright. Led by social media, search, video and the continued online ramp up of the leading marketers, online’s share of total advertising spend will continue its steady upward trend as we emerge from the current recession.

Discussing the trajectory of the online medium in the midst of an historic economic downturn is a perilous business. Assaulted every day with downward-facing red arrows, many of the indicators concerning all things digital veer to the negative:

• Online media’s “favorite child” status (i.e., a long track record of outstripping the growth of every other medium by a wide margin) appears to have diminished over the past few months.
• Online advertising by the Financial Services, Retail and Auto industries has shrunk at a dizzying pace over the past six months.
• Online display advertising’s share of revenue has plateaued at 20% of total online ad spend in the U.S., and no panacea appears to be on the horizon.
• Despite online video’s persistent positive buzz, actual usage is averaging around six minutes per day in the U.S.
• The social media trend is today’s industry darling, but a monetization formula continues to elude the globe’s brightest marketers.

The audience growth and engagement quotient of online video is forcing marketers to positively re-assess the value of the online experience. Adoption of social networking capabilities, by both consumers and corporations, has crossed the chasm in what appears to be the blink of an eye. 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.

Search continues to be an indispensable tool for all online denizens and opportunities for additional growth continue to emerge. Search across social media networks is likely to be the next opportunity for search engines. And as consumers increasingly turn to their phones for a wide range of online content—improved network speeds and rising smartphone penetration helped to grow the mobile web in the U.S.—prospects continue to improve.

Bright future
While 2009 will not be a banner year for online advertising revenues, online will once again outperform all other media in terms of growth. China will likely be flat to down, partially due to the global slowdown, but more importantly, because it will be hard to match the Olympics-related surge during 2008. The U.S. and Japan will be flat to slightly up. There will be pockets of significant (+25%) growth, but it will be limited to small-to-mid-sized advertising countries such as Brazil, and throughout Eastern Europe and Southeast Asia.

The longer-term prospects for the global online medium continue to be bright. Led by social media, search, video and the continued online ramp-up of the leading marketers, online’s share of total advertising spend will continue its steady upward trend as we emerge from the current recession. And given the increased focus on all things digital by the leading packaged goods companies, online’s share of commerce will continue to rise as well.

When all is said and done, brands see tremendous opportunity to increasingly exploit the digital environment to maximize brand-favorable media impressions, but they are starting to look at the mix more holistically. Consumer-generated content has gained inclusion into the “earned media” club of marketing preferences, and the big question going forward will be how paid and earned media share the marketing expenditure pie.

Growth leaders
Today, online video and social media lead the way in terms of growth. It is rare to see segments significantly grow from both an audience and an engagement standpoint, but there has been exceptional growth over the past couple of years in both video and social media sites. While Member Communities (i.e., social networking sites) have been garnering impressive audience numbers for the past five years, video audiences have been growing at meteoric rates, surpassing personal e-mail audiences in November 2007. And from a time-spent perspective, Member Communities surpassed personal e-mail for the first time in February 2009.

The growth in social media is the single most significant story in the online media space today. Social networking sites eclipsed personal e-mail in global reach at 68.4% vs. 64.8%, in February 2009. And even more significant—in only the first few months of 2009—the reach of these sites is growing at a brisk pace, faster than any other online sector.

Mobile moves
Of course, any discussion about online audience behavior would be incomplete without understanding the mobile dynamic. In the U.S. today, nearly 50 million mobile subscribers access the Web via mobile devices on a monthly basis. In the U.S., the mobile Internet audience grew 74% between February 2007 and February 2009. Internationally, the U.S. is one of the leading markets for mobile Internet penetration, with more than 18% of subscribers accessing mobile Web. This is the highest penetration of mobile subscribers among the markets for which Nielsen reports mobile Internet adoption, followed by the U.K., where nearly 17% of subscribers used mobile Web in Q1 2008.

There’s an increasingly broad range of content consumed over mobile Web, too. While many initially expected the platform to be dominated by e-mail, news and weather, Nielsen’s latest U.S. mobile Internet research reveals a long tail of content interest. Portals, e-mail, weather and news do garner audiences of more than 20 million unique mobile users each, but categories such as food and dining, travel and health and fitness also attract millions of mobile Internet users each month.

Recessionary impact
From an advertising perspective, it seems funeral dirges for online display advertising were heard throughout 2008, and things went from bad to worse in the fourth quarter, when the bottom fell out of the economy and all forms of advertising were hammered. As the dreary holiday season came to a close and 2008 ended with a whimper, many were wondering if the days of online advertising’s favorite-child status were at an end.

While many other metrics registered all-time worst numbers in 2008, Nielsen reports that online advertising overall did a bit better than the doomsayers thought. Quarter four showed a 4.5% uptick from Q3, and a 2.6% increase from Q4 2007. And for the full year, online ad revenues grew more than 10%. Despite the slightly-better-than-expected year-end performance of online advertising, the true impact of the deep recession will be told in the 2009 numbers.

Global roundup
When scanning the globe, the country-by-country online advertising experience is a true patchwork quilt. The Scandinavian countries, Australia and China are clearly in the fast lane, while the U.K., France, Spain and Japan are moving ahead, but at a slower pace. Germany, Switzerland and Italy are barely growing, and the Benelux countries appear to be moving backwards.

It’s clear that the global economic downturn is having an effect on all markets, and while online ad volumes appear to be brisk in some quarters, online ad rates are under such pressure that many advertisers are finding that rates from publishers are essentially the same rates they’re receiving from ad networks. As many of these international markets are starting from a significantly lower base of online advertising, their growth rates will outstrip the U.S. in many cases as the global economy picks up again.

The recent cataclysmic events in financial markets have jolted many of us into a “back to basics” mentality. Basics such as “what goes up must come down.” Basics such as “live within your means.”

Over the weekend, my colleague Dave Martin and I reviewed a 100 year trend of price/earnings ratios for the S&P 500. For the last 18 years or so, the average has driven far north of the long term average of 15, and a “back to basics” mentality would have indicated that sooner or later it would come back down to the average, and probably overshoot it on the way down. Lo and behold: an article in last Thursday’s Wall Street Journal reported that the P/E ratio went below 11.

It’s interesting to note that the P/E ratio “bubble” over the last 15 years pretty much coincides with the introduction, growth and mainstreaming of the Internet and interactive media. And the dramatic correction in financial markets has made me wonder: what kind of correction is due for online media and market researchers? I suggest this should happen because, as with the financial markets, many have gotten carried away with an exhilaration regarding all things interactive, and this exhilaration has caused many to overlook tried and true research approaches that have withstood the test of time. After all, how often have we heard something like this: “The Internet is different…the research that has worked historically for other media isn’t relevant to the Internet”?

The Media Rating Council (MRC) has looked closely at this, and here is what they have to say: “Overall we’re ready to consider some compromises in strict probability sampling in the name of larger Internet samples for currency measurement. But we will not let certain narrow technical issues to allow us to throw out the quality ‘baby’ with the probability ‘bathwater.’” Here are six essential research anchors according to the MRC:

1. Knowledge of the universe
2. Coverage of that universe (e.g. minimizing totally excluded populations)
3. Efforts to minimize non-response bias in general (e.g. optimizing cooperation)
4. Understanding and minimizing differential cooperation (to achieve proportional samples)
5. Consistency of procedures over time (so that results are replicable)
6. Sample sizes

So with this in mind, let’s ask: “Which financial institutions are positioned to survive the current meltdown?” The answer: those that clung to portfolio quality and didn’t let go. The great financial sages foretold that when turning away from quality, one pays for it sooner or later. Time will tell, but I’ll bet the same lesson will hold true in the online media and market research world. What do you think?

What’s happening in the world’s largest Internet market? Last week we announced our JV in China – CR-Nielsen – the first company authorized to support the delivery of standardized Internet measurement services in China. The top sites are dominated by Chinese brands, with global brands like Google and Yahoo! present with their local sites. Overall, the numbers are quite significant. The top site, Baidu, was visited by slightly more than 171 million unique browsers during a single week. And while there is no exact comparison between unique browsers and unique visitors – historically our standard audience measurement metric – 171 million of anything during a single week is a big number! So while we are just starting to scratch the surface in this growing market, we know more today than we did yesterday – and we look forward to delivering insights into this important market.

The IAB recently announced a 15.2% year-over-year growth rate for Internet advertising for the first half of 2008. When you dissect the 15.2% number, some interesting details emerge. Out of nine industries tracked, only four have grown from last year. In and of itself, this finding would fall in line with all of the other negative things we’re hearing about the prospects for advertising.

However, look at the list of the four growth industries: CPG, Auto, Telco and Computing. Do you see what I see? These industries have consistently been the big overall ad spenders for a long, long time. Companies within these four industries make up 42 of the Top 100 national advertisers, and 52% of the advertising spend. And note that the two largest ad-spending industries, i.e. CPG and Auto, have been largely absent from the digital world until very recently. When you combine these four industries, their online ad spending grew 29.8% on a year-over-year basis from the first half of 2007.

The implications of all this? If the big ad spending industries continue to embrace the online medium more aggressively, chances are good that new, significant waves of growth are in the works for the interactive space. In his recent forecast, Jack Myers makes this interesting statement: “We are in the dead center of a two-decade industry transformation that began with the launch of Google in 1998. It will be 2012 before the industry of the future – the 21^st Century model of the media and advertising industry – will begin to prosper.” While new technology trends typically get all the buzz, I have this sneaking suspicion that some of the leading advertisers that make up big ad-spending industries may be out-innovating all of us, and we will see new online market mojo well before 2012.