Was it only two and a half years ago that MySpace seemed completely unbeatable? The combination of inexpensive content development and a huge audience seemed like the path to riches, or a least a new content development format. According to the numbers, MySpace is clearly still the dominant player in the space:

Why all the buzz about Facebook then? There is not a single stat in the chart above that would suggest Facebook is a market leader. However, when you look at Facebook’s growth over the past year, there does seem to be solid audience growth:

Now, let’s focus in on the last couple of months. Since April, when Facebook basically opened up the doors to everyone, their traffic has grown from 22 million unique visitors to almost 35 million unique visitors. During this time, MySpace has stayed relatively flat. This is interesting, but not altogether shocking. We all know Facebook is hot - heck, my mom is on Facebook. The growth of audience isn’t what I find interesting, what’s interesting is the Time Per Person:

Facebook is a living demonstration of the Network Effect; as the audience has increased, so has the usage on a per person basis. This is a remarkably difficult thing for a site to do. As most sites pick up more traffic, they sacrifice engagement by watering down their audience with casual visitors.

How strong is the Network Effect? If you start looking at the time per person and audience starting in April, Facebook data correlates at .95 and MySpace correlates at -.39. This means, roughly, that each additional person added to Facebook increases the incremental time spent (read: value) by any individual person. That, my friends, is the Network Effect in action.

The funny thing is, websites don’t normally act this way - communication outlets, such as email, fax machines and telephones do. Here’s where things get interesting, advertising via communication mechanisms doesn’t work all that well. We all hate spam, cold calls and even those little ads you sometimes get with Yahoo! Mail and Gmail. But Facebook needs to make money, right? So, it would appear that they have a problem.

This leads to the $100 million question (literally in this case) - how do you use the Network Effect to your advantage in an advertising model? Facebook has some new ad formats out there that are interesting attempts; I guess we’ll just have to wait and see.

Tags: engagement, facebook, myspace, network effect

The first “online” Olympics are upon us and the games are breaking records in the pool and in the media. Online traffic to Olympics coverage has reached all-time highs, with U.S. traffic to NBCOlympics.com reaching 2.6 million visitors on August 8^th when the Beijing Olympics opened, compared to 330,000 unique visitors on the opening day of the 2004 Athens games. A rising tide appears to be lifting all boats: even traffic to other top sports-related Web sites, those not officially affiliated with the Olympics, grew in the week leading up to the games, growing an average of 12% between Friday August 1^st and Friday, August 8^th.

Much of this growth is explained by three relatively straightforward facts. First, the historic Chinese venue, combined with the global fascination with athlete celebrities, has led to remarkably high interest in these Olympic games, reflected positively in all media usage. Second, the 12- to 15-hour time difference between Beijing and the U.S. is making it difficult for Americans to watch the events live, and therefore many are turning to the Internet to supplement viewing. And third, NBC’s impressive array of video content - including more than 2,000 hours of live coverage - is attracting viewers to live events streamed during the work day.

Several key trends during the first week shed additional light on the in-roads online media is making during the games, including:

• The conversation around swimming is specific, but gymnastics just grows: Social Media has come a long way since the Athens games, and fans are buzzing online about the athletes. Online buzz around swimming seems to be very specifically centered on Michael Phelps: it spikes when he wins (basically, when he gets into the water) and declines on nights that he does not swim. Gymnastics however, has seen a slow, steady build in interest since the beginning of the games. While swimming had almost three times the buzz volume of gymnastics on August 11^th, by August 13^th, the decrease in buzz around swimming and the steady increase of conversation around gymnastics has brought the two events to a tie in buzz volume.
• Work week viewing of short-form content is driving video consumption: On the first Monday of the Olympics, the U.S. unique audience to the video section of NBCOlympics.com more than doubled, growing from slightly less than 860,000 to slightly more than 2 million. Because of the length of any given individual performance, many Olympic events, such as swimming, track & field and gymnastics are ideal for the short-form video consumption that most online viewers are used to. As events shift to soccer and basketball, we may see longer time spent viewing, but with smaller audiences, reflecting similar consumption patterns seen during the NCAA tournament or viewing of full-length TV programming online.
• The Internet is not replacing TV viewing: According to a Nielsen Online survey of 2,000 Internet users, 88% of people who are visiting NBCOlympics.com are also viewing the Olympics on TV and 80% of people using other Web properties to follow the Olympics are also viewing the games on TV. These numbers suggest even though NBC is streaming a significant amount of live Olympics content, fans continue to tune into the TV when it is available and convenient. Additionally, individuals who watch the Olympics both on TV and online are significantly more likely to remember seeing advertisements for key brands such as Coke, Lenovo and Visa.
• Speaking of advertising, there sure is a lot of it online: During the days leading up to the games and through the opening weekend (August 4 - 10), nearly 900 million ad impressions were served on NBCOlympics.com. The vast majority of the advertisers were brand advertisers including Unilever (98 million impressions) and U.S. Olympic team sponsors Bank of America (80 million), Coke (68 million) and Nissan (68 million). These large online campaigns illustrate trends seen elsewhere on the Internet where large brand advertisers extend advertising campaigns across media with significant investments. Advertisers making this level of investment also tend to put money toward advanced creatives, with 70% of the ads flash-based and 17% rich media. This differs greatly from the average where 56% of non-text based online ads are flash-based and 6% are rich media.

With week-one of the 2008 games in the history books, the Olympics have been exciting to follow on both TV and online - and we are looking forward to this week. With the games shifting to coverage of soccer, basketball and track & field, and an emphasis on longer events, we expect to see some changing usage trends along with buzz about new heroes.

Tags: nbc, olympics, online video

I’m not much one to link to other’s research, but there was a very nice piece of work done by a British SEO firm. Their concept is basically that inbound and outbound links are a karmic boomerang. I really like this piece of work, and plan to do some follow on research in the next couple of months to verify the concept and add more depth about the type of audience that follows this return path. Kudos guys, nice work.

Tags: search links, seo, virality

At 8 am this morning I fired up the laptop to watch the impressive US showing in the men’s 4 x 100 freestyle relay. The video quality and the player were both very impressive, and I didn’t really even mind downloading the SilverLight player to make the whole thing work. As I was surfing around the site, I started watching the preliminaries of women’s badminton. I am not per se a Badminton fan; I was just trying to get a sense of the content depth NBC was posting.

This is where a thought occurred to me, we spend a lot of time in this industry talking about The Long-Tail of Media. I even hosted a panel on the subject last week at Ad-Tech in Chicago. What we don’t normally think about though is that large Web sites have their own internal long tail. They have deep, highly niche content that is rarely viewed. When this content is viewed, however, it tends to be by highly engaged users.

Therefore, do large Web publishers have the same problem as small ones - the ability to monetize small trafficked content? Not really - they can sell the inventory as ROS or even to an ad network or some other type of remnant inventory clearance. But this inventory does tend to be valued much lower that other, more prominent sections. It seems to me, that these sites could do a better job here. They just have to find the niche that pulls these low traffic sections together and sell it appropriately.

Here at Nielsen Online, I’ve been working on a technique to do just this. Using SiteCensus Demographics we can optimize large publisher long-tail URLs into targeted ad products. It’s pretty neat, and it seems to be working well so far.

Tags: long tail, nbc, olympics

The volatility in the real estate market is concerning, nay alarming, across the board from home-buyers, to lenders, to builders. Moreover, the recent upward trend in home foreclosures has compelled President Bush and the Congress to pass the Housing Bill, which comes as a huge respite to hundreds of thousands of homeowners on the brink of foreclosures and to mortgage lenders who bet heavily on sub-prime mortgages, especially two giants in the game - Fannie Mae and Freddie Mac, now with books full of bad mortgages.

We looked at the trend in visitation across all Web sites within the Real Estate category and mapped it with the movement of the Case-Schiller Home Price Composite-20 Index. While the average price/value of a home in the US has been decreasing since the summer of 2006 (down more than 36 points), we see a significant growth in unique visitors (>11 million) to sites within this category during the same period. With the downward turn in home sales, it is likely that current homeowners may be visiting real estate sites to check their home’s value, keep tabs on interest rates, and keep abreast of other relevant information. Moreover, it is also possible that potential home buyers may be increasingly on the lookout for affordable homes.

The most traffic has been across a few key sites. Realtor.com has historically had the highest number of visitors and continues to do so. Yahoo! Real Estate and MSN Real Estate sites have seen some steady growth in visitors since 2005, while Yahoo! Real Estate has had a sharp rise in visitors since early 2007. Overall, AOL Real Estate has seen a decline in visitors.

While the number of visitors to real estate portals is on the rise, there has been a steep decline in advertising in the “Financial Services, Lender and Home Equity” category since December 2007, as reported by AdRelevance. For instance, in January of 2008, Countrywide Loans was the top advertiser delivering close to 6 billion impressions online, but since February it has maintained fewer than one billion impressions online. Other top contenders in the category (Citi Mortgage, GMAC Mortgage, Bank of America, Wachovia, etc.) have either completely withdrawn or drastically reduced their online advertising in this category, though the category experienced a slight up-tick in July.

It seems like online research content and news sites are drawing a steadily growing audience, but the advertisers are taking a step back with their investments in online advertising. Stay tuned for how the year winds up!

Tags: loan, online advertising, real estate