Social networks are hot, and Nielsen's measurement of how Americans use them offers dramatic new data about growth and the displacement factor. Last month, Americans spent 17% of their online time using social networks such as Facebook and Twitter, nearly triple the percentage spent a year ago, according to Nielsen data unveiled last week. The use of social networks and blogs "suggests a wholesale change in the way the Internet is used," said John Gibs, a Nielsen vice president. The greater appeal of social media sites is having an impact on where advertisers are putting their online ad dollars, and what they are replacing. Overall social sites devoted to hardware and electronics saw a 56% jump in the amount of advertising from August 2008 to August 2009. At the same time, overall sites in the hardware/electronics category lost 47% of ad revenue compared to a year ago. The most dramatic change came in the Entertainment category (movies, music and similar) where social network sites saw an 812% annual jump while conventional Entertainment sites only had a 40% increase. By comparison, "software" social media sites had a 128% year over year ad increase and a 29% decline in overall software site advertising.
Although the jury is still out on the "faddish" factor in social networking, the directional shift is impressive. Still to be determined: Is the amount of time Americans are spending on social networks adding value to their Internet access devices (desktop or mobile) and/or taking away from their media consumption time with TV, music or other conventional media? The answer to that question will affect the future of electronics retailing.