Despite increased optimism about the economy, the social media landscape indicates that we are in a similar place to where we were this time last year when it comes to spending; buzz about Christmas and holiday shopping is down 3% year-over-year. This activity is in line with other research at Nielsen relative to retail expectations and consumers’ personal finances that indicate modest spending from a cautious consumer base.

However, consumers are still buzzing about the gifts they’ve already purchased or are planning to buy in the coming weeks. Notably, online discussion focuses largely on offline shopping.

While online shopping has been rising over the last few years, we’re also finding that consumers are using the internet to find the best deals at retail outlets, toy stores and more. So what happens online, doesn’t always stay online in the new economy where deal hunting is driving buzz.

As consumers count down the days to the holiday season, we see two key trends emerging:

1. Parents are actively buzzing about the must-haves of the season within online communities
2. Buzz about gift cards is on the rise, largely in response to retailers’ use of gift cards as purchase incentives

Games that buzz
When analyzing the product categories shoppers most frequently discuss online, Nielsen found that kid-friendly video games generated more buzz than even the most buzzed-about toys, largely driven by highly engaged gamers. The November 15 release date for New Super Mario Bros is highly anticipated, catapulting this video game to the head of the pack in terms of buzz. Additional buzz in the gaming world has come from price drop and new model announcements for Playstation 3 and XBOX.

Zhu Zhu the next Tickle Me Elmo?
Buzz supports Toys “R” Us’ “Fabulous 15″ predictions for the 2009 holiday season, with Zhu Zhu Pets, Bakugan Brawlers and Transformers Revenge of the Fallen figurines topping the list of the most frequently buzzed about toys.

Shoppers deem Zhu Zhu Pets the hot toy of the season as parents swap stories of empty shelves and elevated prices at retailers. An emerging Zhu Zhu market has also sprung up on eBay. Strong buzz on LeapFrog’s educational toys are a holdover from the 2008 holiday season; parents are especially interested in the Leapster and Tag Reader product lines this season.

Gift Cards buzz is on the rise, buoyed by incentive programs
A growing proportion of online conversation focuses on gift cards—including gift cards awarded as purchase incentives (15% growth in buzz year-over-year, September 2008 vs. September 09). Amazon.com and Toys “R” Us have experienced the largest year-over-year growth in buzz about gift cards of the retailers and brands measured.

This increased interest in gift cards is largely driven by retailers bundling gift cards with purchase incentives. Gift card bundles essentially provide shoppers with two sets of gifts: the original purchase and the gift card which can either be given as a gift or used to buy more holiday presents. These incentives tend to generate a sizable amount of discussion online—especially when tied to the gaming category. For example, Amazon.com recently coupled a price break on Wii with a $25 gift card, generating a surge in online conversation about Amazon.

Retailers who do not currently use gift cards to encourage purchases may want to consider taking advantage of this growing opportunity during the holiday season.

Related: Watch Nielsen’s Ken Cassar Discuss Online Holiday Sales CNBC

The alcoholic beverage category has proven to be resilient, but not recession proof. Sales were up slightly—at 2 percent, for the 52 weeks ended Sept. 5 compared to the year prior. Wine saw the biggest spike at 5.1 percent followed by spirits (2 percent) and beer (0.7 percent).

Not long ago consumers were looking to trade up and experiment with the hippest new product. This is not the trend anymore. Consumers are increasingly shopping based on price which has helped domestic brands since the price gap between imported and homegrown brands is significant. American vodka and gin, on average, is 50 percent less than imports. Domestic beer is 35 percent less and wine is 25 percent cheaper.

As a result, sales of domestic brands have surged. Domestic wine led the way, growing 5 percent for the 26-week period ended Aug. 22. During the same span, domestic vodka grew 8.1 percent. Domestic beer sales grew 3.2 percent for the 24-week period ended Aug. 22.

Overall, pricing has been flat across all of the categories with certain exceptions in beer category (notably among craft brews). This hasn’t stopped consumers from trading down to private label offerings which are a small, compared to consumer packaged goods, but growing segment within the category. Private label wine and spirits sales were up more than 20 percent and nearly 10 percent respectively, for the 52-week period that ended Aug. 22 compared to the year prior.

These changes in consumer preference have created pressure on retailers to optimize their space. Retailers are reducing their assortments of flavored malt beverages, imported wines and cordials. Instead they are giving craft beers, vodka and mid-range wines ($9 to $15) more attention.

Retailers are benefiting from a shift in consumption behaviors—namely more consumers are drinking at home versus at a bar or restaurant. In April, 68 percent of consumers said they were doing less fine dining. Fifty-nine percent also said they were going to bars than less before.

This shift became highly noticeable last year when share of on-premise dollars fell 3.3 percent for wine, 3 percent for spirits and 1.3 percent for beer, according to the Beverage Information Group (2009 Handbook).

This has prompted a significant increase in off-premise channels adding beer, wine or spirits. The total number locations selling alcoholic beverages grew by 2,392 stores in Aug. 2009 compared to the year prior. Drug (684 locations), convenience stores (637) and mass merchandisers (432) led the way.

On the flip side, the number of U.S. on-premise locations offering alcohol has slipped. There were 944 less bars and clubs and 769 less dining choices. Overall, the number of new locations offering alcohol (on- and off-premise) minus the number of closed locations was a 5,445.

“Without a doubt, consumers continue to turn to store brands in a down economy,” said Todd Hale, senior vice president, Consumer & Shopper Insights, The Nielsen Company. “What we see with Halloween candy sales, however, is a sign that consumers may be ‘splurging’ with brand name products for the holiday or simply taking advantage of brand name promotions and price reductions. Candy manufacturers invest a great deal of marketing dollars to build brand equity in candy and private label candy has not been able to overcome that investment and grab significant share.”

Halloween is the biggest season for chocolate candy, with nearly 90 million pounds of chocolate candy sold during Halloween week. By comparison, nearly 65 million pounds of chocolate candy is sold during the week leading up to Easter and only 48 million pounds of chocolate candy is sold during Valentine’s week.

Consumers tend to wait until the last minute to purchase Halloween candy, either procrastinating or hoping for a better deal. The biggest candy buying days of the Halloween season are the Sunday before the holiday and on Halloween day. In total, approximately $1.9 billion (or 598 million pounds) of candy is sold during the Halloween season.

It’s official now that we are in a recession, one that has been particularly tough on the retail sector because consumer spending is the lowest it has been in years. However, these past few weeks we have seen a surprising uptick in traffic across the sites we track in our Nielsen Online Holiday Shopping Index. The numbers indicate we have had 10% growth in traffic vs. last year on both Black Friday and Cyber Monday. Most retailers, analysts, pundits and economists are pleasantly surprised, which made me wonder if the retailers’ advertising strategy had anything to do with their success in driving Web traffic.

Retailers in particular must have been in a tough spot when deciding how to advertise. Given the economy, they definitely want to be extremely prudent with their marketing dollars, even erring on the side of significantly cutting down on online advertising around the holiday season (as we can see from the chart below). To give you an idea, online advertising across the retailers we track in our Index was down quite a bit in the weeks leading to Black Friday and Cyber Monday on a week by week basis compared to 2007. For example, image-based impressions were down by 51% versus 2007 two weeks prior to Black Friday week. It seems the strategy retailers adopted was to hold back on advertising during the weeks leading to Black Friday, and invest in a “surge” just a couple of weeks prior to Thanksgiving/Black Friday, the most crucial weeks (a gain of 17% in ad impressions two weeks prior to Black Friday 2008 vs. that in 2007). I looked to see if retailers moved their ad dollars to sponsored links instead, but those impressions are also dramatically lower this year versus last. Overall, there is evidence that retailers have cut back on their ad investments, understandably so.

While this might seem contrary to the objective all retailers were after this year – to drive sales in a difficult economic climate, one plausible explanation for this phenomenon is that retailers focused on an aggressive cost containment strategy and invested in promotional tactics such as low-cost emails, discounts, rebates, etc., without the advertising muscle behind these promos. This strategy seems to have paid off in the short-term, resulting in the 10% traffic increase this year on important shopping days.

But according to an analysis of the most effective holiday retail TV ads, released Tuesday by Nielsen IAG, retailers did not appear to increase the proportion of promotional ads in the mix this year. 

About half of all TV ads so far this holiday season (Nov. 17 – Dec. 14) have been brand-focused, while the other half have been devoted to sales/price-focused messages — as was the case during the 2007 holiday season.

What’s Hot
Instead of promoting sales events and low prices, the most effective TV ads from retailers this holiday season used strong narratives, nostalgia, and family-focused storylines to communicate a brand’s benefits to viewers. 

“Practical” messages for shoppers were also a successful theme.  Take this year’s most liked holiday retail ad — a Wal-Mart spot that shows lights atop all of the cash register lanes flashing on and off, in sync with a well-known holiday song.  The key message is clear: more open register lanes at Wal-Mart make shopping there more convenient.

What’s Not 
What didn’t work this year?  According to Nielsen, seven of the 10 least liked holiday TV ads were 15-seconds spots — an indication that shorter-length ads garnered less appeal, in this case. 

What’s more, the elements that helped enhance appeal levels in the best-liked ads were largely lacking in the less popular spots.  According to Nielsen, among the commercials at the bottom of the pack, promotional messaging generally accounted for a greater share of the creative, leaving proportionally less room for “entertainment value.”

10 Most-Liked Holiday Retail Ads (Nov. 17 – Dec. 14, 2008)

Likeability refers to the percentage of television viewers who report liking an ad “a lot” after viewing it, among those who are able to recall an ad’s brand.

An ad’s “likeability score” is the percentage of television viewers who report liking an ad “a lot” (among those who can recall an ad’s brand) after being exposed to it during the normal course of viewing primetime TV on the broadcast networks.

Likeability scores are indexed against the mean score for all ads during the time period to calculate a “likeability index.”  A likeability index of 100 indicates average recall. A likeability index of 171, for example, means that an ad was 71% better liked than the average new ad during the four-week time period.

Read the full report.

Visitors to Apple’s site logged the longest average stay-times.

A lot of folks have seen the Black Friday and Cyber Monday releases that we’ve put out, but we’ve also been tracking Web traffic on a daily basis – in total, by category, and by retailer since the Monday before Thanksgiving. Let me share a little bit more data:

Traffic was up by 10 percent on both of the high profile days, where consumers expected that they would be able to find deals. This is certainly better than some might have feared given the state of the economy. When we look at the other days of the week, however, the story is a bit more mixed. Traffic was down a bit on the Saturday and Sunday following Thanksgiving, was down three percent the Tuesday following Cyber Monday, and was up five percent the following Wednesday (December 3rd). If we took a simple average of the year over year growth rates for the Monday before Thanksgiving through Wednesday, December 3rd, the average daily growth rate, relative to 2007 is four percent.

Where it gets interesting, in case you’re not sitting on the edges of your seats already, is when we dig in by category. The chart below looks at average daily growth, by category.

As you can see, category Web traffic is all over the place. Beauty, Computer Hardware/Software, Books/Music/Video, General Retail (companies like Wal-Mart.com, Amazon, eBay, etc…) and Apparel are all up, while Toys/Videogames, Comparison Shopping, Jewelry, Flowers & Gifts, and Consumer Electronics are down. It is important to note that this is a retailer-based classification, not a product based classification, so book traffic to Amazon falls under ‘general retail’ rather than under ‘books/music/video’.

The early prediction: My instinct is that we will see online sales growth this holiday season, but it will be modest. If I were forced to hazard a guess, it would probably be in the low single digits (2-4 percent) relative to last year. I fear that because traffic is up on ‘promotional days,’ it might be an indication of a poor margin holiday season. The next week and a half are going to be important, but the push by retailers between December 15 and 17th is going to be key. Those are the days that will likely be the biggest of the year, despite the fact that there’s no catchy name.

Retailers might want to think about a catchy name.

In 2007, ad spending for stuffing mixes increased 10,800% from the late summer months (Q3 2007: $45,180) to the fall (Q4 2007: $4.9 million).

During the same time frame, ad spending on products within the Pie Crust category grew from literally nothing (Q3 2007: $0) to $3.3 million.

Meanwhile, ad spending within the Gravy Mix category grew from nothing (Q3 2007: $0) to $920,358 in the fourth quarter, and ad spending within the Cranberry Sauce category grew from nothing (Q3 2007: $0) to $939,112.

What about the turkey?

Surprisingly, poultry ad spending declined by 24% from Q3 2007 ($15 million) to Q4 2007 (almost $11.4 million).

According to a survey conducted by Nielsen, six in 10 Chinese plan to travel between September 29 and October 5 for Golden Week, while just 42% of Chinese reported making plans to travel this past February for Chinese New Year celebrations. 

More than half of those surveyed by Nielsen said they plan to travel within China, while about 10% were considering an overseas trip.  One-third of the respondents, surveyed between September 22 and 23, had not yet decided how to spend the holiday week.

Among those planning to travel internationally, Hong Kong was the most popular destination — with half of those traveling abroad claimed to be visiting the city.  Singapore (29%) and Macau (26%) were the second and third most popular destinations.  France (16%) and Taiwan (14%) also made Nielsen’s list of top holiday travel destinations.  

Within China, Dalian (20%) and Beijing were the most popular destinations, according to Nielsen.

Nielsen’s survey interviewed 2,000 Chinese Internet users nationwide.

View the full press release.