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.

James Russo, Vice President, Global Consumer Insights, The Nielsen Company

SUMMARY: While the emerging markets of Russia, United Arab Emirates, and Brazil suffered the biggest falls in consumer confidence over the past six months, there was no significant further decline in North American consumer confidence, which may signal the first cautious signs of hope that the recession is finally bottoming out. Fears of unemployment and job uncertainly reached new heights as job security was cited as the leading concern.

Global consumer confidence has plummeted to a record new low in the past six months, falling seven Index points from 84 in the second half of 2008 to 77 in the first half of 2009 according to the latest twice-yearly Nielsen Global Consumer Confidence Index, which tracks consumer confidence, major concerns and spending habits among 25,420 internet users in 50 countries.

Indonesia topped Nielsen’s Global Consumer Confidence Index at 104 points, followed by Denmark (102 points) and India (99 points). The world’s most pessimistic nations in the Nielsen Index are Korea (31 points), followed by Portugal and Latvia at 48 Index points. Confidence fell in 48 out of 50 countries—Taiwan was the only country to buck the global trend, edging up three Index points from 60 to 63, although it is still 14 points below the global average.

Hardest hit
The survey found that the emerging markets of Russia, United Arab Emirates, and Brazil suffered the biggest falls in consumer confidence over the past six months as currency devaluation, weakening export markets and falling global commodity prices took their toll. Consumer confidence plummeted by 29 Index points in Russia (down to 75 points from 104 in September 2008), marking the biggest fall in consumer confidence tracked by Nielsen globally, and UAE and Brazil both fell by 21 points.

And while six months ago, Latin America was the world’s most optimistic region, they have suffered the biggest consumer confidence hit regionally, falling 15 Index points (down to 82 points from 97). Consumer confidence in Europe and Asia Pacific also both fell by seven Index points.

Biggest fears
While global consumer confidence plummeted to a new low, fears of unemployment and job uncertainly reached new heights. Job security was cited as the leading concern among Internet consumers in 31 of 50 countries surveyed. Global concern for job security rose to 22% globally from 9% in the latest round of the survey.

Six months ago, global consumers cited the economy and work/life balance as their two top concerns in life—but consumers’ priorities have rapidly changed along with the economic deterioration. Consumers who cited job security as their top concern in life today include those in Vietnam (36%), Spain (34%), Hong Kong (33%), Singapore (32%), Hungary (31%), China, India and Mexico (29%), and Italy (24%).

Signs of hope
In the last six months, consumer confidence in the regions of Middle East/Africa and North America both declined by two and three index points, respectively. However, no significant further decline in North American consumer confidence may signal the first cautious signs of hope that the recession is finally bottoming out.

Specifically in the United States, while clearly adjusting their spending and savings—with 40% stating they are paying off debts and putting money into savings—American consumers are increasingly optimistic about a light at the end of the tunnel, with close to 20% seeing a recovery in the next 12 months, which is an improvement on the October 2008 results.

And while 77% of online consumers think their economy is in recession, China is the one exception where 65% of Internet consumers thought their economy is not currently in a recession. The Central Government’s stimulus package of US$585 billion equates to 13.3% of GDP and is an enormous shot in the arm for Chinese consumer confidence. February retail sales are still 15% up on last year and many Chinese Consumers now believe the next 12 months could be a good time to go back to investing in stocks and property. Chinese consumers are also maintaining their love affair with travel during the economic slowdown and top the list of markets surveyed by Nielsen when it comes to their intention to spend spare cash on travel.

Saving time
As interest rates continue to fall, consumers appear to be less concerned with paying off their debts and more interested in bolstering their savings accounts. Nearly half (48%) of global consumers said they were putting any spare cash they had into savings while 32% were using spare cash to pay off debts, credit cards and/or loans, up from 30% in October 2008. Nine of the top 10 markets putting their money into savings hailed from the Asia Pacific region.

Slower recovery
Europe remained the world’s most pessimistic region at 70 Index points, seven points below the global average, a clear indication that economic recovery in Europe will be longer and slower to take effect. Within Europe, consumer confidence in Hungary suffered the biggest fall by 19 Index points, followed by Latvia (-17 points) and Finland (-15 points).

Among global online consumers who believe they’re currently in a recession, 52% said they were bracing themselves for a global recession to last 12 months or longer. One in two consumers isn’t expecting any miracles for a quick rebound—steady but stable is probably the best approach they are hoping for.

Recovery is imminent
Not everyone is prepared to suffer a prolonged recession, however. Some consumers are already planning their post-recession party. Among current recessionistas, nearly one in five (23%) online consumers believes their country will be out of recession within the next 12 months, spearheaded by the Vietnamese (60%) and Indians (56%). Two in five Danish and Dutch consumers also believe they’ll be out of recession within a year, along with one in three consumers in Austria, Sweden, Norway, Russia, Indonesia, Israel, Mexico and the UAE.

While 53% of those surveyed by Nielsen think their country has hit a prolonged recession that will last more than 12 months, 18% of consumers, concentrated in a handful of emerging markets, like India, Vietnam, China, and Russia, told Nielsen they expect their countries to be out of recession within the next 12 months.

In contrast, consumers in Japan, Germany, Argentina, Mexico, Turkey, Italy, Taiwan, the U.S., and Spain were the least optimistic about the prospects for quick economic recovery.

Nielsen surveyed 28,663 Internet users in 52 markets across Europe, Asia Pacific, the Americas, and the Middle East between September 22 and October 6, 2008, as part of its Global Online Consumer Survey.

The survey’s results reveal that global consumer confidence fell to a new low this month, dropping from an index of 88 in May 2008 – previously the lowest index on record – to 84 in October, according to Nielsen.  Only Brazil, the Philippines, New Zealand, China, Thailand, South Africa, and Hungary showed improved consumer confidence, compared with May 2008.

Not surprisingly, consumers worldwide are adopting new strategies to reduce discretionary spending and shore up household finances.
 
On average, 49% of global consumers plan to spend less on new clothing, as well as gas and electricity, according to Nielsen. 

Meanwhile, 47% report reducing out-of-home entertainment, 40% say they’ll delay upgrading to new PCs and mobile phones, and 39% will cut down on take-away meals from restaurants. 

Even necessities, like groceries, are on the chopping block — 36% of global consumers report switching to cheaper grocery brands in order to reduce their expenses.

Overall, consumers in Australia, New Zealand, Germany, the U.K., Turkey, the U.S., Colombia, and Argentina plan to make the most changes in their spending habits, as they search for ways to weather the current economic turmoil.

View the full press release.

Read a related press release on consumer confidence in Hong Kong and Great Britain.

Read coverage of Nielsen’s findings by Sky News and in the Shanghai Daily, the Business Standard (India), Forbes, the Financial Times, The China Post, the Thanh Nien Daily, and the Malaysia Star.

Learn more about global consumer confidence levels in the December 2008 issue of Nielsen’s “Consumer Insight” online newsletter.

Strong advertising growth in the Asia-Pacific region (+7.6% over Q2 2007) drove the increase, according to data released in Nielsen’s latest Global AdView Pulse report.

Ad spending trends worldwide showed significant variations — with overall advertising declines recorded in North America (-1%) and Europe (-3%).

In North America, U.S. ad spending was down by approximately 6%, compared with the same period last year, while ad spending in Canada grew slightly (+1.7%).

In Europe, the drop in ad spending affected all industry sectors and all media — except radio, which rose by almost 1% during the second quarter of this year.

In Asia Pacific, all four major media types (TV, magazines, newspapers, and radio) grew over Q2 2007, despite the detrimental effects of the May 2008 earthquake in China’s Sichuan Province, the Japanese recession, and general softening of the economy.  Of the twelve Asia-Pacific countries Nielsen tracks, only Japan, South Korea, and Taiwan showed declines in second quarter ad spending.

Globally, most industry sectors showed increased ad spending in Q2 2008, as compared with Q2 2007 spending.  The Automotive, Telecommunications, Financial, and Durables categories, which recorded decreased advertising investment in the second quarter of this year, were the only exceptions to that trend.

Among the mediums tracked by Nielsen – television, print, radio, outdoor, cinema, and Internet (where available) — TV showed growth (+3.8%), while all other media recorded ad spending declines.

Nielsen’s report is based on advertising data from 28 markets in Africa, Asia Pacific, Europe, and North America.

View the full press release.

The 51-country survey polled 28,253 online consumers in May 2008, providing the first global overview on consumer attitudes towards company ethics and corporate responsibility.

“From human rights to poverty and war, and most significantly, the environment – global consumers are collectively speaking out and demanding that corporations make a positive contribution to society,” Amilcar Perez, Vice President, Marketing, Latin America, Nielsen, noted.

Globally, the report indicates that marketing ‘ethical’ products could lead to economic benefit. Two in three global consumers said they would be interested in buying ethical products to support environmental and social causes. More than 75 percent of Greeks, Chinese, Portuguese and Filipinos indicated their support for such products.  While still showing a majority, North American consumers exhibited the least interest in buying ethical products at 57%.

Learn More: Nielsen Corporate Ethics & Fair Trade Presentation.

Read Reuters’ coverage of Nielsen’s findings.