How Digital Media Changed Our Lives

Sometimes we need to look back before we can look forward. 2008 is now 5 weeks history and I know in my life, the digital changes were intergratred in my life without much fanfare. The Presidential Election, and the Economy got more of my attention.

So, take a look at this brief, or download the more complete report:

The comScore 2008 Digital Year in Review

The following are excerpts. The complete report is available at http://www.comscore.com/downloads/2008-digital-year-in-review.pdf.

Online Spending Growth Slows Amid Economic Slowdown
Total U.S. e-commerce spending reached $214.4 billion in 2008, a 7 percent increase versus the previous year. Travel e-commerce spending grew 9 percent to $84.3 billion, while retail (non-travel) e-commerce spending grew 6 percent to $130.1 billion.

Following several years of growth rates of 20 percent and higher, 2008 ranked as the softest year for retail e-commerce spending growth since comScore began tracking it in 2001. January showed the first signs of softness, as growth rates declined to 12 percent after growing at a 20 percent rate in 2007. Growth rates reached a peak in April at 15 percent, followed by eight successive months of declining growth rates in the remainder of the year. The important holiday shopping months of November and December saw negative growth rates, representing the first months on record to have lower online sales than the same month the prior year.

Economy and Politics Drive Online Activity in 2008
Online activity in 2008 largely reflected the biggest news events of the year, including the economic crisis and the U.S. presidential election. Job Search ranked as the top-gaining site category for 2008, growing 51 percent to nearly 19 million visitors in December, as Americans turned to the Internet to seek new career opportunities after significant job losses were incurred during the second half of the year. Category leader, CareerBuilder.com Job Search, jumped 78 percent to 9.1 million visitors.

As signs of an economic recession continued to manifest themselves in the form of collapsing banks, rising home foreclosures, and increasing job layoffs, consumers became increasingly cost-conscious and sought ways online to curb their spending. Coupon sites witnessed a 46 percent increase during the year, reaching more than 31.5 million Americans in December. Classifieds also saw a sharp increase in traffic, growing 27 percent to 52.8 million visitors, as Americans attempted to save and make money through the purchase and sale of used items. Category leader Craigslist grew 51 percent during the year.

The U.S. presidential race gripped the nation and media in 2008 as Barack Obama triumphed in November's election, making the Politics category one of the fastest growing categories in 2008, up 43 percent to nearly 12 million visitors. BarackObama.com attracted an average of three times as many visitors as JohnMcCain.com during the course of the year on the road to victory. Both candidate sites peaked in October, with BarackObama.com reaching 8.5 million visitors and JohnMcCain.com with 3.8 million visitors during the final month leading up to the election.

Google Sites Captures #1 Spot in 2008
According to comScore Media Metrix, the U.S. Internet population grew 4 percent in 2008 to 190.7 million visitors in December. Google Sites captured the top U.S. property ranking in April and reigned in that position for the balance of the year. For the year, Google Sites grew 12 percent to 149 million visitors on continued growth from each of its largest channels, Google.com, YouTube.com and Blogger.com. Yahoo! Sites ranked No. 2 to end the year, followed by Microsoft Sites, AOL LLC and Fox Interactive Media.

Social Media Continues to Soar
Underscoring the growing importance of social media, Facebook.com continued its strong momentum by growing its visitor base 57 percent to 54.6 million visitors, while Wordpress, the largest blog publishing platform, surged 64 percent to 24.2 million visitors. Updates to the Firefox Internet browser, along with continued growth in its user base, resulted in a 40 percent increase for the Mozilla Organization.

Americans Continue to Search More Often in 2008
Nearly 137 billion searches were conducted at the five U.S. core search engines in 2008, representing an increase of 21 percent versus the previous year. Search query growth was driven largely by an increase in searches per searcher, which rose 16 percent from the previous year, while number of unique searchers grew 6 percent. Google Sites, which generated nearly 85 billion searches in 2008, accounted for nearly 90 percent of the total growth in search query volume during the year.

Signs of Softness in Display Advertising
U.S. Internet users viewed a total of 4.5 trillion display ads (standard and non-standard IAB ads, includes both static and rich media, but not video) during the past twelve months, with the average person viewing more than 2,000 ads per month. Despite the staggering total volume of display ad views, the number has declined somewhat over the course of 2008. However, it is believed that this largely reflects a shift in strategy among some display ad publishers. For example, several major publishers have actively reconfigured their advertising inventory to reduce ad clutter in order to drive up CPMs. In addition, some advertisers are shifting from static and rich display ads to using video ads.

The list of top display advertisers continued to be dominated by phone service providers. In November 2008, AT&T was the top advertiser with 6.6 billion ad views, while Sprint Nextel (3.3 billion), Vonage (2.6 billion) and Verizon (2.6 billion) also made the top ten list. On the publisher side, Yahoo! Sites served the most display ads in November with 37.1 billion, followed by Fox Interactive Media with 34.9 billion and AOL LLC with 18.2 billion.

Long Form Video Content Emerges as Video Viewing Soars
Online video viewing continued its rapid ascent in 2008, with 6 percent more people in the U.S. viewing 34 percent more videos versus a year ago, according to comScore Video Metrix. By November 2008, online video viewing accounted for 12.5 percent of Americans' total time spent on the Internet, up from 8.5 percent in November 2007.

YouTube, with 40 percent market share in November 2008, continues to be a significant driver in the U.S. video market, accounting for approximately two-thirds of the growth in online video views during the past year. The site generated 5.1 billion U.S. video views during the month, representing a 74 percent increase versus year ago.

Another developing trend in online video is the move from primarily short-form, user-generated content to more long form, professionally-created content, including full-length movies and TV shows. Hulu, the joint video venture of Fox and NBC, stormed onto the scene in 2008, generating a 57 percent increase in videos viewed during the past six months and currently ranking as the No. 6 video site by both unique viewers and videos viewed. Hulu also had an average viewing time of nearly 12 minutes per video in November, substantially higher than any other top video site and a major contributing factor to the increase in online video duration from 2.8 minutes per video to 3.1 minutes per video.

The Year of the Smartphone
By any measure, 2008 was the year of the Smartphone. The launch of the Apple iPhone in mid-2007 inspired handset makers to make consumer-friendly mobile media devices, as consumers demanded a phone that could do more than just make calls. No longer restricted to business users, who wanted access to e-mail and stock quotes, Smartphones became part of popular culture. They took on fashionable form and slimmed down in bulk and price, most notably with the launch of the Palm Centro, the first Smartphone priced below $100.

The rise in Smartphones -- with full HTML browsers that offer a true Internet browsing experience, and increasingly, with Wi-Fi connectivity to boost network speeds -- contributed to the rise in browsing, which grew 34 percent during the year. Another critical factor was the 43 percent increase in 3G (wireless broadband) penetration from November 2007 to November 2008, which dramatically improves the mobile browsing experience, and data pricing plans that took the mystery out of data usage and encouraged "all you can eat" mobile content consumption.

Challenging Environment Presents Opportunities for Digital Marketers
2009 is shaping up to be another challenging year for digital media, but it will also be a year of major opportunity for businesses to gain ground on their competitors with effective digital marketing strategies. The silver lining to be found in a tough market environment is that it can spur innovation and growth in operational efficiency, and the digital landscape offers fertile ground to capitalize in this manner.

As we look ahead to the upcoming year in digital media, the following are some of the key trends to consider:

-- Viewing of TV and movie content online continues to become a more mainstream behavior, offering advertisers a new opportunity to capitalize on this highly engaged -- and often difficult to reach -- audience. Effective monetization of online video will depend on demonstrating to advertisers the impact of video related ad exposures.
-- The recession is causing major advertisers to re-evaluate their advertising expenditures, with several industries -- including auto manufacturers and consumer packaged goods companies -- already indicating shifts in spending to the online channel to take advantage of bargain CPMs, ad-targeting capabilities, and more measurable advertising ROI. Publishers will need to demonstrate that the view-through impact (as opposed to click-through) is a critical component of this ROI equation if they hope to obtain fair value for their ad inventory.
-- Distributed content (i.e. widgets and applications) continues to become more prevalent and offers publishers ways to reach incremental audiences online. It is time for both publishers and advertisers to begin thinking seriously about how they intend to monetize this valuable content.
-- As Smartphones (including the iPhone) continue to drop in price, and new entrants dazzle consumers, such as the new Android devices, Palm's anticipated Pre and RIM's Storm and Bold, 2009 is expected to be another record-breaking year for the mobile Internet. Mobile Internet penetration and engagement will continue to soar, making the mobile channel a more viable opportunity for advertisers and marketers.
-- Though the consumer retail economy is clearly suffering during the downturn, online retail spending growth was still positive in 2008 and the channel continues to attract new buyers. The online channel is generally more cost-effective than offline for retailers and those looking to weather the economic storm will find ways to draw more shoppers to their online storefronts through discounts, promotions and incentives.

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