Ever since leading comedian Louis CK announced the release of his new stand-up comedy special for $5 over his website louisck.net, the media has been abuzz about the potential for this sort of digital distribution model to be successful and shift the paradigm for the way content is marketed and distributed. The results appear to show that CK’s effort was a fairly unmitigated success, generating more than $1 million in revenue against $250,000 in production costs. After covering his costs, CK generously donated a significant portion of the proceeds to several charities, paid his staff handsomely, and kept the remainder for himself – truly a win-win-win effort.

I remember the last digital content distribution experiment generating this much discussion back in October 2007 when world-renowned band Radiohead decided to launch its new album, In Rainbows, over the web using the highly experimental pay-what-you-want model. Offering its fans free access to its new album under a digital honor system, it was hoped, would generate enough goodwill that people would gladly pay a reasonable amount to download the album. But if a consumer wanted to download it for free they were allowed to do that. At the time, comScore data showed mixed results. Approximately 3 out of 5 downloaders did so while paying nothing, and the average downloader paid just $2.26. The average among those who paid something was around $6.

What was interesting about the Radiohead model is that despite the fact that it created goodwill with its fans, some music enthusiasts at the time were used to illegally downloading music for free and perhaps felt entitled to download the album without paying for it. The Louis CK experiment did not offer consumers such an option and set a simple and reasonable price of $5, while understanding that some particularly motivated freeloaders could probably find a way to get a copy of the download for nothing. Nevertheless, enough fans clearly found the $5 price point reasonable and made the purchase without a second thought, delivering value to the audience and content producers without as much need for other players in the traditional distribution chain.

I also found interesting CK’s comments about why the economics of this model were so favorable. He noted that his site and that of a major studio have the same bandwidth, which levels the playing field from a distribution standpoint. All of the economies of scale with traditional marketing and distribution channels go away when content gets distributed over the web and the individual content owner/publisher can compete with traditional media companies. Now there is certainly some truth to that, though I would also argue that not every content owner/publisher is able to get the free media exposure that a top comic like Louis CK can attract. In the weeks surrounding its release, you couldn’t help but see him all the late night talk shows or the slew of articles talking about his experiment.

Putting the pure economics of the model aside for a moment, another fascinating aspect of the CK experiment is exactly who paid to download the content. We took a look at the demographic composition of these downloaders for the month of December and found particularly heavy skews towards audiences that are often not easily reached via traditional media channels. In particular, the downloading audience was overwhelmingly male (94%) and between the ages of 18-34 (82%). In addition, most came from middle-income households with the majority (51%) making between $40,000 and $74,999 per year. There was also a very notable skew towards people in the South, which accounted for a majority (55%) of downloaders.

Combine all these demographic characteristics, and you get the profile of a working class 18-34 year old male in Middle America, a segment of the population critically important to advertisers because of the expected future growth in their spending power.

So we have a segment of consumers that is both willing to pay, but also valuable to advertisers, which begs the question of which is more appropriate: a pay model or ad-supported model. I’d argue that if you can get consumers to pay for content that is almost always the better choice, since you would need to reach an audience many times larger to derive anywhere near the same amount of revenue via a pay-for-content model.

Is there an opportunity to maximize revenue using a hybrid model, where you charge consumers but still include some advertising or sponsorship of the content? It’s certainly possible, but in CK’s case I think part of the willingness of consumers to buy was the authenticity with which he presented the choice to buy to consumers. In a message posted to those who might “torrent” the video, he wrote, “Please bear in mind that I am not a company or a corporation. I’m just some guy. I paid for the production and posting of this video with my own money.” Would people heed his message had he also taken corporate advertising money? Perhaps not.

So the economics of this direct-to-consumer model are very interesting, and I would argue, context-specific. What works for the goose may not work for the gander. Because Louie CK comes across as a genuine guy who has worked hard and paid his dues for his success, many of his constituents identify with that fact and are willing to chip in the $5. But clearly not every content producer would engender the same sort of loyalty from his / her fans, so there’s a legitimate question as to how far out this model might extend.

And ultimately, I don’t think we’ll know any better until more entertainers across a wider spectrum of talent continue to experiment and give us more data to analyze. I enjoy seeing entertainers like Louis CK succeed in these efforts, but I suspect many others would not be so lucky. Not every one of them would be able to generate enough free media to make up for the marketing muscle big corporations can provide.

So until we know more, I will just say that in the right instances these models show promise. But, I suspect, they lack the ability to scale in a way that would truly prove disruptive to the current economic model for professionally produced content.

But that doesn’t mean the artists should stop trying…

comScore recently released our global social networking report, “It’s a Social World: Top 10 Need-to-Knows about Social Networking and Where it’s Headed,” which we certainly encourage you to download if you haven’t already. And while the report offers a comprehensive global view of what’s happening in social media, I thought it might also be interesting to drill down into the latest snapshot of the U.S. social networking market.

In light of recent IPO activity in this market, and rumors of more to come in 2012, it is worth understanding why the U.S. market is stronger than it has ever been before and how it’s managing to accommodate the emergence of several upstarts.

The data shown here for the leading social networking sites focuses on visitation to the primary web pages for the selected sites via home and work computers, and excludes any activity from mobile phones & tablets. While these mobile channels contribute to incremental audience and engagement – in some cases, significantly so – it is important to recognize that this data looks at each site through a similarly defined universe of computer-based web usage. Many of the social networking sites covered are household names by now, while others have gained prominence in the past year.

Facebook is still the undisputed leader the U.S. social networking market with 166 million unique visitors in November. The average user spent 6.6 hours per person engaged on the site during the month, an increase of 37% in the past year. These outsized audience and engagement numbers should not be a surprise to anyone at this point. Meanwhile, Twitter.com and Linkedin.com have been jockeying over the past several months for the #2 spot in audience size. In November, Twitter eked out the second position with 35.4 million unique visitors, just slightly ahead of Linkedin with 35 million. Myspace currently owns the #4 position with 25 million visitors, but it has seen a steady decline in audience over the past two years.

Outside of these established players, there are three upstarts worth mentioning. One of the most consistent growth stories over the past year has been Tumblr.com, which now boasts 15.9 million U.S. visitors – an increase of 131% since November 2010, with the majority of that surge happening since April 2011. What is significant about Tumblr is not just its growing audience but how highly engaged its users are, with the average one spending 2.4 hours on the site per month. Its engagement numbers are now second only to Facebook.

Just behind Tumblr is Google Plus, which has received a great deal of attention this year, with 15.2 million U.S. visitors in November. While Google Plus nearly matches Tumblr from an audience standpoint in the U.S., it does not yet attract similar levels of user engagement on its primary web pages. Importantly, these figures account for activity on plus.google.com and do not include engagement with the Google Plus toolbar or other distributed content throughout the Google network of sites. Given Google’s strategy of integrating Google Plus throughout its network, including Google Search and YouTube, it will be interesting to see if increased exposure to this extended social functionality exerts any gravitational pull towards the primary Google Plus experience.

One final social network that deserves some attention is online pinboard Pinterest.com. The site, which first came onto the comScore radar in May 2011 with 418,000 unique visitors, has surged over the past six months to nearly 4.9 million visitors. Also significant is that, like Tumblr, Pinterest is exceptionally sticky and keeps it users engaged for long periods of time. In November, the average visitor spent nearly an hour and a half on the site over the course of the month and more than 15 minutes per visit, ranking it third on consumer engagement.

The U.S. social networking market has never been stronger, and the current dynamics suggest that while Facebook clearly remains the leader, there is room for some other players in the market to emerge and become successful in their own rights. We’ll be keeping an eye on how their audiences and engagement continue to grow as we head into 2012.

Each year it seems that discussion of holiday e-commerce shopping revolves around Cyber Monday, the most significant marketing event of the season. The first Monday after Thanksgiving earned its moniker in 2005 as retailers in general – and Shop.org specifically – brought to light the fact that online holiday shopping saw a huge spike in activity on this day. The ostensible explanation for this phenomenon was that as people made their way back into the office after the long holiday weekend, they continued their Black Friday shopping online, but from their work computers with high speed connections. In fact, comScore has observed over the years that approximately half of all online spending occurring on Cyber Monday occurs via work computers.

As the Cyber Monday phenomenon was brought to light, however, there was a common misconception that it was the heaviest online spending day of the year. While comScore always observed a significant increase in spending on this day, online spending typically continued to climb into mid-December with several individual spending days surpassing the Cyber Monday totals.

Since its inception, we have witnessed an extremely strong growth in Cyber Monday spending with sales more than doubling from 2005-2010, with a compound annual growth rate of 16% during that timeframe. 2010 was an especially important year in the history of Cyber Monday as online spending reached $1.028 billion, the first time on record that a single day had eclipsed the $1 billion spending threshold. It also achieved another landmark by finishing as the heaviest online spending day of the year for the first time in history!

We at comScore have spent a lot of time in past holiday seasons dispelling the notion that Cyber Monday was the heaviest online spending day of the year, and just when it seemed that message finally began to sink in, Cyber Monday has a banner year and jumps to the top of the ranking.

Interestingly, from 2005-2007 Cyber Monday wasn’t even close to the top of the ranking, going from the 8th heaviest spending day to 12th to 9th. But in 2008, Cyber Monday’s overall importance in the context of the holiday shopping season began to change as it surged up the ranking to #3. The following year it ranked as the second heaviest spending day, and finally culminated in 2010 assuming the top position for the year.

Many might be wondering what dynamics shifted Cyber Monday’s relative importance to the holiday season, and I suspect that there is a combination of factors at play. The first such factor was the recession that began with the 2008 financial crisis. That year saw retail spending pull back considerably and it was the first and only time in history that online spending growth was actually negative for the holiday season. Retailers resorted to significant discounting during the holiday season to induce consumer spending, and timed much of it to begin on Cyber Monday. The heightened importance of discounts raised overall consumer awareness of Cyber Monday, which I believe has spilled into subsequent years.

The second factor is the number of calendar days between Thanksgiving and Christmas. In 2008, Thanksgiving fell five days later than the previous year, creating pent-up consumer demand (since most spending picks up post-Thanksgiving) that likely gave Cyber Monday an additional boost that year. In 2009 and 2010 the number of days between holidays has expanded by one day each year, but the prime shopping season has remained somewhat shorter than average which has likely bolstered Cyber Monday spending.

Finally, I believe that consistent media coverage of Cyber Monday has helped to solidify consumer awareness of the day as an online marketing event over the years. In 2005-2007, the average consumer may only have had a vague understanding of Cyber Monday, whereas today the majority of consumers know what it is and the attractive types of deals they can anticipate. With increased awareness comes increased participation on the part of both retailers and consumers.

For Cyber Monday 2011, I think we will see another big spending day that will fall within the top 3 days of the year. Due to the relatively high number of shopping days between Christmas and New Year’s this year, it is likely that some of the early demand is smoothed out and that several of the days later in the season will contend with Cyber Monday. But I would not be surprised to see it reach a level of $1.2 billion as it once again kicks off the heavy part of the season of online holiday shopping.

Following years of speculation and anticipation, European social music application Spotify recently touched ground here in the U.S. to a great deal of fanfare. Despite some difficulty in tangling with the record labels on royalties and fees, Spotify was finally able to come to terms and launch in the U.S. In its first three months since entering the market, Spotify has already amassed more than 2.4 million monthly U.S. visitors – a very strong start for a service that was initially invitation-only. While such exclusivity may have curbed some early adoption, it can also potentially drive benefits in terms of long-term engagement as consumers must put forth a concerted effort to be included in the network.

Following its first couple of months of live service in the U.S., I thought it would be worth understanding a bit more about Spotify’s early user base and what its entry into the market could mean for similar or competing music services. From a demographic standpoint, Spotify is currently drawing an audience that resembles the traditional early adopter. Nearly 3 in 5 visitors are male, 50% are between the ages of 18-34, and 24% are from households making at least $100,000 annually. Each of these demographic segments index significantly higher than average. That Spotify is attracting early adopters could be significant in the long run, as these opinion-leaders have a way of influencing the behaviors of those around them.

*Composition Index = % of Spotify visitors / % of U.S. Internet users x 100. Index of 100 indicates average representation.

Despite Spotify’s rapid emergence, it still trails the computer-based (i.e. excluding mobile) online audiences of other music services like iTunes and Pandora by a sizeable margin. If it is to catch up with these other services, it will likely be due in large part to the company’s social strategy, which leverages Facebook for social music sharing. Spotify was prominently featured during Facebook’s f8 developer’s conference to highlight its social utility, which may have raised its profile and helped to introduce the brand to a broader base of U.S. consumers.

One point of contention with regards to Spotify’s Facebook integration strategy is the new requirement for newly registered users to log-in via their Facebook account. comScore data suggest, however, that this requirement does not appear likely to shut out many potential users. In fact, 96% of all Spotify visitors in September also visited Facebook, significantly higher than the 75% of the total U.S. internet population that visited Facebook.

While it is still very early in the life of Spotify here in the U.S., the service seems to be off to a fairly auspicious start. Its social strategy will be an important determinant of adoption and it will be interesting to see how quickly it manages to grab hold in a competitive marketplace.

A couple weeks ago, Linkedin CEO Jeff Weiner offered an interesting viewpoint on some new ways of solving the current U.S. unemployment situation. Weiner argues that the current dislocation in the job market is not merely an unfortunate byproduct of the housing and financial crises, but that the rapid pace of change in our economy is resulting in difficulty matching job-seekers to the right opportunities. He points to the potential of an “economic graph” – analogous to the social graph or interest graph – to help efficiently allocate our economic resources (i.e. human capital) to opportunities.

One can certainly envision the potential for such a valuable market mechanism, but until we get to that point I would argue that Weiner’s own company might already be helping to reduce that void. Weiner’s article reminded me of an analysis I conducted on Linkedin usage at the height of the unemployment situation in 2009, in which I investigated how this emerging Internet utility might be playing a role in people’s search for new employment. At the time it was clear that Linkedin was used much more readily by those searching for jobs, indicating its importance as a networking tool.

An updated version of the analysis today shows this behavior continuing to hold true. In fact, 23.6% of Linkedin visitors also visited Job Search sites in July, compared to just 11.2% of the total U.S. Internet audience. Heavy Job Searchers accounted for 9.8% of Linkedin visitors, compared to 5.6% of the total Internet audience. While the correlation between these two behaviors does not necessarily imply causation, it does suggest that those who are actively pursuing new job opportunities online and significantly more likely to use Linkedin as a resource.

In addition, we can see that not only are job searchers more likely to visit Linkedin, but they also use the site for considerably longer periods of time. The Heavy Job Searcher, in fact, spent an average of 30.3 minutes on Linkedin.com in July, nearly double that of the average visitor to Linkedin (16.1 minutes per visitor). Moderate (25.7 minutes per visitor) and Light (20.9 minutes per visitor) Job Searchers also visited Linkedin for a significantly longer amount of time over the course of the month.

Social media enables us to reach and influence our friends and colleagues and leverage their respective social graphs to make useful connections with the very people who might place us into the right jobs. Because it is often unfairly pigeon-holed as a purely leisure activity, or even more derisively labeled a “time-waster,” it can be easy to overlook the cases where social media has truly revolutionized the way we leverage real-life networks for meaningful interactions. And for those currently searching for jobs, those interactions can mean the difference between being employed or unemployed. Linkedin, along with other career services sites, just might make the process of searching for jobs more efficient, representing perhaps the first phase in the formulation of a true economic graph. Knowing how many industries are currently being disrupted by the emergence of digital technologies, it is nice to know that the Internet may also represent part of the solution.

With so much attention given to social networking goliath Facebook, along with strong secondary players in the market like Twitter and Linkedin (and now Google+), it’s no wonder that scrappy upstart Tumblr often gets overlooked. But recent comScore data suggest that maybe it’s about time to start paying closer attention. Tumblr, a multimedia-focused microblogging platform, has emerged as one of the fastest growing consumer-oriented Internet sites over the past year, with its audience surging from 4.2 million visitors in July 2010 to 13.4 million visitors in July 2011 (up 218%!).

As I’ve mentioned in previous blog posts, with social media sites a critical component of success is realizing the benefits of the network effect. The network effect is predicated on the idea that the more users that are part of the system, the more valuable the system becomes to users, which creates a virtuous cycle that pulls more users into the system and gives existing users more incentive to participate. This concept is an important reason why we often see that once social networks achieve critical mass, the network effect takes hold and adoption tends to accelerate.

If we look at the past few months, we are seeing evidence of the network effect occurring at Tumblr, with the number of visitors accelerating from April through July. In just three months, the number of visitors has jumped 5 million for a gain of 61%.

These statistics are certainly impressive, but some of you may still be wondering what Tumblr is and why you haven’t heard of it. If that’s the case, you are not alone – and there is an explanation. To date, Tumblr’s popularity has been strongest among the teen and college-aged user segments. In fact, 50% of Tumblr’s visitor base is under the age of 25. Teenagers age 12-17 are about twice as likely as the average Internet user to visit Tumblr, while 18-24 year olds are nearly 2.5x as likely.

Of course we often see that younger users tend to be early adopters, particularly with social media technologies. So it’s not surprising that the under 25 crowd is currently driving a lot of the site’s popularity. The question now is whether Tumblr can emerge beyond its core demographics and enter into the internet mainstream. If the past few months are indication, it won’t be long before Tumblr is a household name.

Google’s new social product Google+ launched to great fanfare a few weeks ago, and since then many have been speculating about how quickly the site has grown and whether or not it’s the fastest growing site in history. It’s fair to say the initial market response has been very positive overall, with accolades going to its design, usability and approach to group networking with Circles.

To get a better understanding of how Google+ is performing to date and who is using it, comScore pulled together some figures based on the first 21 days of its public existence (June 29, 2011 – July 19, 2011). Importantly, these data are based on unique visitors (which is different than “users” in that people who never sign up may visit Google+ pages) from home and work computers (which excludes usage via mobile devices). In addition, comScore is measuring behavior from people who visit plus.google.com pages, which may not include usage that occurs through the Google+ bar at the top of most Google pages.

With those parameters in mind, let’s take a look at the tape…

As of July 19, comScore showed Google+ at just about 20 million visitors worldwide, an extraordinary number in just its first three weeks. That number represents an increase of 82% from the previous week and 561% vs. two weeks prior. The U.S. audience recently surpassed 5 million visitors, up 81% from the previous week and 723% from two weeks earlier.

It would be difficult to think of many sites that reached such a large number in such a short period of time. That said, Google does have a built-in visitor base of more than 1 billion to work with, so there is clearly potential to convert a high number of users to its new social tool – even if it is still invite-only.

What is also interesting about the rapid growth of Google+ is its proliferation on a global basis. While the U.S. leads in Google+ audience, it currently accounts for 27% of the total worldwide audience. Interestingly, India holds a strong #2 position with 2.8 million visitors. The UK (867,000 visitors), Canada (859,000 visitors) and Germany (706,000 visitors) round out the top five.

U.S. Demographic Analysis Reveals Strong Early Adopter Profile
Though Google+ is already a global phenomenon, there are some interesting user dynamics within the U.S. that help us understand the profile of early adoprter. Some initial reports speculated that 9 out of 10 Google+ users were male, and while this sort of skew might have been possible in the first couple of days we are seeing a much less pronounced gender gap after three weeks, with males accounting for 63% of visitors to 37% females. In addition, 58% of the total Google+ audience is between the ages of 18-34, with 25-34 year olds representing more than 1/3rd of the total.

One final usage dynamic underscoring the early adopter profile of Google+ is how usage skews by local market. Two of the most tech-savvy markets in the U.S. – Austin, TX and San Francisco-Oakland-San Jose, CA – are approximately three times as likely to be represented (i.e. Index of 300) among the population of Google+ visitors as might be expected given their percentage of the total Internet population. Other markets that index on the higher side include Minneapolis-St. Paul, MN, Pittsburgh, PA and Washington, DC.

Strong Network Effect Spells Future Success
The evidence shows that Google+ is off to a strong start in its first few weeks with a global audience of 20 million visitors. It has clearly captured the attention of the technorati and as usage incubates among this crowd it will likely continue to proliferate to a more general audience.

As we’ve seen in the social networking market before, success often hinges on a strong network effect, which says that the more people in the network the more useful it becomes to others and the more incentive there is to participate. Early interest in Google+ is certainly important, but it will also need to attract regular participation among users to cultivate such an effect. In the past week, we have seen the number of average usage days via home and work computers increase by more than 30%, an early indication that the network effect just might be beginning taking hold.

Time will ultimately tell if Google+ can leverage its early momentum to reach critical mass among users and capture a firm foothold in the well-established social networking market.

During a recent conversation with our friends at NPD (the company, incidentally, where I began my career), they shared with us an interesting bit of Internet history. Many of you may not be aware that back in the mid 90’s, NPD measured Internet audiences through a business unit known as PC Meter. PC Meter would eventually become Media Metrix, whose U.S. business was acquired by comScore in 2001.

That brief history lesson aside, we all got a kick out of looking at the very first data collection from PC Meter, which dates back to early 1996, showing the list of the 20 most visited websites among U.S. Internet users. Remember that in 1996 most people in the U.S. population were still not able to access the Internet, and Commercial Online Proprietary Services dominated the phone lines. NPD’s launch sample for collection was based on only 287 U.S. Internet users. (Today, comScore’s sample covers approximately 1 million U.S. users.)

The list of top domains in 1996 includes a few names that are very much still around and among the biggest Internet companies, while many others have long since been acquired or forgotten. Ranking at the top of the 1996 list was AOL.com with a penetration of U.S. Internet users of 41%. Webcrawler.com ranked second at 33%, followed by Netscape.com (31%), Yahoo.com (29%), and Infoseek.com (21%).

Several Internet Service Providers also featured prominently on the list, such as Prodigy.com, Compuserve.com and Primenet.com, as did a handful of university web domains such as UMich.edu, CMU.edu, MIT.edu and UIUC.edu (at least one of which was apparently a pioneer in file-sharing of adult content!).

Interestingly, AOL and Yahoo! have withstood the test of time and continue to rank among the top 5 U.S. web properties. Yahoo! Sites is currently the #2 U.S. web property with a penetration of 83%, while AOL, inc. is #5 with a penetration of 52%. While many large businesses would expect to last 15 years, the speed and pace of change in the digital world tells us that survival is significantly less predictable than in more traditional and established industries.

Anyway, thanks again to the good folks at NPD for sharing this tidbit of Internet lore, which serves as a wonderful reminder of how far we’ve come in the past fifteen years and, possibly, how much more change might be in store as the digital world continues to evolve.

With each passing month it seems that social networking becomes more deeply ingrained into our digital lives. If we take a look back at the past few years we can see just how pervasive it has become. Back in 2007, social networking represented about 1 out of every 12 minutes spent online, while today it accounts for 1 out of every 6 minutes spent online.

While it is perhaps not surprising that social networking continues to gain market share, what is interesting is the rapidly changing dynamics of the market today. For a long time, the social networking story was almost exclusively the horserace between Facebook and Myspace. In mid-2009 Facebook finally darted out ahead of Myspace and hasn’t looked back.

Today Facebook is the 4th largest U.S. web property in audience size with 157.2 million visitors in May, representing its all-time high and a gain of 3.2 million visitors vs. the previous month. While other reports have been circulating that Facebook witnessed a pronounced user decline this month, comScore data shows quite a different story. Given that Facebook now reaches 73% of the total U.S. Internet population each month, one thing we should anticipate is that the site’s audience cannot grow forever. The law of large numbers says that once a site has penetrated the majority of a market, each incremental user becomes that much more difficult to attract. So given its size, Facebook’s future U.S. growth is likely to come more from increasing usage per visitor than its ability to attract new users in perpetuity. One impressive stat to note is that Facebook’s average U.S. visitor engagement has grown from 4.6 hours to 6.3 hours per month over the past year, so it appears to be succeeding in that regard.

The picture is not so rosy for Myspace, which continues to see attrition in its U.S. user base. While it is currently holding onto its #2 position among social networking sites with 34.9 million visitors in May, its audience has declined by nearly 50% in the past year while average user engagement has dropped 85%.

So perhaps it’s time to turn our focus away from the Facebook-Myspace horserace for a moment and focus some attention on other players in the market deserving of mention. Upon the release of comScore’s May U.S. data, I immediately noticed that it was not just a banner month for Facebook but also for several other leading players in the social networking category who also reached all-time U.S. audience highs: Linkedin.com (33.4 million visitors), Twitter.com (27.0 million) and Tumblr.com (10.7 million).

Beginning with Linkedin, the popular business networking site’s success should not come as a complete shock following its blistering May 19th IPO. Others can debate the merits of the company’s current valuation, but I will simply point out that there is definite underlying strength in Linkedin’s user adoption curve at the moment. In fact, it has reached all-time U.S. audience highs in 7 of the past 12 months and has grown 58 overall percent in the past year. As Linkedin continues its evolution from being an online business rolodex to a more social and interactive content experience, it will be interesting to see if its rapid visitor growth is accompanied by a surge in user engagement.

Twitter.com also had a particularly strong month in May with 27 million U.S. visitors, representing an increase of 13 percent in the past year. (Note: while much of Twitter’s usage occurs away from the Twitter.com site, past comScore research has indicated that approximately 85-90% of Twitter users visit the website each month). Twitter’s success in May can likely be attributed in part to the exceptionally buzzworthy news story of Osama Bin Laden’s death, as well as ongoing discussion of the Royal Wedding.

Also not to be overlooked is social blogging site Tumblr, which has made some noise this year and become a serious player in the social networking category. The site has grown an impressive 166% in the past year, reaching 10.7 million visitors in May, its first month ever surpassing the 10 million visitor mark. Tumblr is clearly experiencing a viral adoption curve right now and may be nearing that point at which other social media sites have reached that critical mass threshold that propels it to more widespread adoption. It still has a ways to go before we can mention it in the same breath as Linkedin or Twitter, but it just might get there if it maintains its current trajectory.

So even as we look back at about 8 years of social networking mania here in the U.S., we can see there are still a lot of new wrinkles emerging in the storyline as established players reach new highs (or lows) and emerging players raise their profile. Only time will eventually tell which stories are still yet to be told…

When the news broke late Sunday evening that U.S. armed forces had managed to hunt down and kill Osama bin Laden, a range of emotions washed over me, including relief, elation, pride and so many others. But soon after the initial “pinch-myself, is this really finally happening?” moment subsided, I was immediately consumed with a voracious appetite to read anything and everything covering the details of the capture and the geopolitical analysis. I had the news on the TV and about 15 tabs open in my web browser as I flipped back and forth between my favorite news sites to see what other details of the operation were beginning to leak out. I am sure I was not alone in feeding this news addiction.

Here at comScore, we were curious to understand how others may have experienced this news, so we decided to do a little digging. Our analysis looks at the 24-hour period beginning at 7:00 PM ET on Sunday, May 1, and ending at 7:00 PM ET Monday, May 2. To understand Americans’ news consumption patterns in the aftermath of the news, we’re going to begin by gaining some overall perspective into how Osama Bin Laden (OBL) news coverage was consumed across various media, then we’ll examine some of the consumption patterns in relative terms.

Consumption of #OBL News Coverage Across Platforms
The illustration below shows us that, not surprisingly, computers accounted for the vast majority of OBL-related news consumption throughout the 24-hour period. However, during a few segments of the day, tablet and mobile traffic accounted for notable percentages of the total.

Next, we decided to see how this news story affected the composition of all news traffic to understand just how pervasive the coverage and resulting reader interest was. We specifically looked at OBL-related news consumption as a percentage of total news consumption. OBL-related news coverage was estimated by analyzing the traffic patterns for all news sites with URLs including broad matches of the terms “Osama” or “Bin Laden,” as the majority of related news stories included these terms in their URLs. News coverage spiked dramatically around 10pm ET Sunday night with about 10 percent of all computer traffic to news sites being Osama-related – a fairly sizeable percentage given how expansive and diverse news reporting can be. This percentage spiked substantially higher among tablet users – between 20-25 percent – and was highest at around 30 percent among mobile Internet users. These figures are pretty staggering, especially when considering that these figures only account for articles that were obviously OBL-related (per their URL structure).

We also wanted to understand how consumer behavioral patterns might shift by medium throughout the day. We looked at the share of each medium’s OBL traffic for each of the 24 hours as a percentage of overall OBL traffic for that medium. Interestingly, we see that tablet readership saw the highest relative percentage of its activity occur in the immediate aftermath of the news on Sunday night. Mobile news consumption was also relatively high during that period, while PC consumption that time was more modest in comparison to other dayparts. Notice that there is another spike in mobile activity between 7:00-9:00 AM on Monday, most likely as people glued themselves to their phones during their commutes to work. PC traffic saw its highest relative consumption during this 24-hour period in the late morning and early afternoon, as people checked out news during the workday from their computers.

The Future of News Consumption?
The quest for news about Osama bin Laden exhibited in these charts illustrates how increasingly dependent on technology we’ve become to keep informed of developments especially as they pertain to important breaking news. Mobile and tablet devices are becoming a more significant part of the digital media landscape, as it’s becoming clearer how they help fill in the gaps when consumers may not always be right by a computer. From our analysis of news consumption in recent days, we’ve shown that many people opted for these devices – myself included – to feed our need for news in the wake of this historic event. This behavior is only going to grow more prevalent with time with the plethora of devices coming out to support growing information needs. And in this real-time environment where we can always be plugged in, one can expect news consumers will only become savvier in consuming a constant stream of news from multiple platforms. The capture and killing of Osama bin Laden may have just given us an important glimpse into the future of news consumption.

Much has been made of late about rising gas prices, with recent national averages surging from about $3.00 per gallon to $3.60 per gallon in just the past 3 or 4 months. Price at the pump has always been a particular sensitivity for the American consumer because it’s a price many pay every week or two that can account for a significant portion of people’s discretionary spending.

We have seen evidence in recent years of the negative impact rising gas prices appear to have on e-commerce spending, which is mostly discretionary in nature. If we look at year-over-year retail e-commerce spending growth rates, we can see that the exceptionally strong growth we had been seeing up until mid-2007 began to drop off considerably over the next year, coinciding with a run-up in retail gas prices from about $3.00 per gallon to over $4.00 per gallon.

With the worst of the economic downturn seemingly behind us (although the unemployment rate remains stubbornly high), we have begun to see a consistently improving outlook for the retail e-commerce sector with growth rates back into the double-digits and sustained over the past four months. However, with gas prices similarly on the rise, there is a legitimate question as to whether these growth rates will continue.

How Do Gas Prices Correspond to E-Commerce Growth Rates?
There has been debate over the years about the effect of rising gas prices on e-commerce spending. One theory says that as gas prices rise, consumers will be more likely to forgo car trips to the mall and opt instead to shop online. While this effect might exist to some small degree, the more prevalent effect of rising gas prices is the constraint on total discretionary spending. Put another way, the $30 or $40 a month more the average American is spending on gas plays a much larger role in their retail spending habits than the fact that they can save a dollar or two in gas by forgoing a trip to the mall.

To get a better understanding of just how important gas prices might be in determining the levels of retail e-commerce spending, I wanted to see how much of a correlation existed between those two variables. I began my analysis by running a scatter plot of Retail Gas Prices vs. E-Commerce Spending Growth Rates (for the months of January 2005 through February 2011) expecting to see a visible inverse relationship between the variables. In other words, when gas prices went up, I expected to see growth rates decline. The data instead showed that the correlation overall was very low(r-squared = 0.0083), meaning there was no immediately apparent relationship between the variables. What could explain this?

On examining the graph, I realized that many of the data points that seemed to influence the regression were the ones on the lower left hand side – when low gas prices coincided with low and negative e-commerce growth rates. These data points all occurred during the recent recession when consumer demand plummeted, bringing both consumer spending and gas prices down with it. It became clear that other variables beyond gas prices would need to be considered in this analysis to help isolate the effect of gas prices on e-commerce.

So I introduced a couple of new variables into the analysis to help account for the effects of the recession: Unemployment Rate and S&P 500 Index. Unemployment Rate would help account for the most tangible and immediate effects of a recession, while the S&P 500 Index would provide a reasonable approximation for household wealth and its effect on consumer willingness to spend.

Regression Results
I conducted the regression using monthly data from January 2005 through February 2011 with (Y) U.S. E-Commerce Growth Rates as the dependent variable and (A) U.S. Unemployment Rate, (B) S&P 500 Index and (C) U.S. Retail Gas Prices as the independent variables. Below is a sample of the data used in the analysis:

The results of the regression, which generated a reasonably strong r-squared value of .64, provided the following model for prediction:

Y = 0.05522 - 0.01881*A + 0.00032*B - 0.06351*C

This regression indicates, as one might expect, that there is a positive relationship between the S&P 500 Index and E-Commerce Growth Rate, and an inverse relationship between Unemployment Rate and E-Commerce Growth Rate.

But most important – and the reason for conducting this investigation in the first place – is that it clearly illustrates the strong inverse relationship between Gas Prices and E-Commerce Growth Rate. For every 10 cents gas prices rise, one would expect e-commerce growth rates to decline about 0.6 percentage points.

Putting these findings into the context of the current economic environment, with February 2011 data showing a U.S. unemployment rate of 8.9, a closing S&P Index of 1327, and U.S. Retail Gas Prices of $3.21, our model predicts an E-Commerce Growth Rate of the following:

Y = 0.05522 - 0.01881(8.9) + 0.00032(1327) - 0.06351($3.21) = 10.7%

The prediction of 10.7% is not too far off from the actual February growth rate of 12.0%. But the point isn’t to have a perfectly predictive model; rather, it is to gain a reasonable understanding of what to expect with e-commerce spending as gas prices rise.

With March now in our rear view mirror, we have seen average gas prices accelerate to around $3.60 per gallon, nearly $0.40 higher than the February average. If we hold the other variables constant and raise the gas price in our model to $3.60, we get a predicted E-Commerce Growth Rate for March of 8.2% – or 2.5 percentage points lower than February. Now, that might be an extreme view, as average monthly gas prices for March will probably be in the ballpark of $3.55. But even with that input into the model, we get a predicted E-Commerce Growth Rate of 8.6%, still more than 2 percentage points lower than February.

Cautious Outlook for Retail E-Commerce?
In summary, I think it’s fair to say that rapidly rising retail gas prices are cause for concern for the retail e-commerce sector. As disposable income shrinks, so too does discretionary spending as manifested in online retail. All other factors being equal, we should anticipate a 2-percentage point decline in e-commerce spending growth rates vs. what we would have otherwise seen. Hopefully this effect is offset slightly by a healthy stock market and a declining unemployment rate in March, but it still means there’s potential to return to single-digit e-commerce growth rates following four consecutive months of healthy double-digit growth rates.

We’ll have a better sense of how these dynamics play out when we release our Q1 2011 online spending figures in a couple weeks. For now, we can only hope that spiking gas prices is a temporary effect of the conflicts in the Middle East. But with summer just around the corner, chances are gas prices will remain high in the near term and may continue to climb even higher. Online retailers must keep a close eye on these factors because they will likely play a significant role in the ongoing health of the retail e-commerce sector.

Earlier this week comScore released our inaugural Mobile Year in Review report, a comprehensive 30-page report full of data, charts and graphs highlighting the key mobile media trends of the year in the U.S. EU5 (UK, France, Germany, Spain and Italy), and Japan. 2010 was a landmark year for the mobile marketplace, as we saw companies push the envelope in product innovation and consumers begin to widely adopt new behaviors in the mobile environment.

Below is a summary of what we see as the top ten overarching mobile trends of 2010:

1. Phones Keep Getting ‘Smarter’: Smartphone adoption continues to increase across the U.S. and Europe, with most markets surpassing 25-30% market penetration for smartphones. The proliferation of new devices hitting the market in 2010 – including the iPhone 4, Blackberry Storm 2, and Motorola Droid X – has given consumers strong smartphone options across wireless carriers that is helping this segment of the market gain traction.
2. iPhone Dominates Device Sales: The top two devices sold in 2010 in both the U.S. and EU5 were the iPhone 3GS and iPhone4, respectively. The #3 device in the U.S. was the Blackberry Curve, while the #3 device in the EU5 was the Nokia 5800 – XpressMusic.
3. Android Storms Smartphone Market: 2010 saw Google’s Android platform grab hold in the mobile marketplace in a big way. In the U.S. alone, Android’s share of the smartphone market jumped from 5% to 29% in just one year, and it leapfrogged Apple to become the #2 smartphone platform after RIM. The number of different smartphones running Android certainly helped accelerate this trend, as did the desire for many consumers on Verizon to opt for a smartphone with a strong app economy.
4. The App Ecosystem Blossoms: iPhone paved the way for the app ecosystem to emerge as developers create new and interesting apps for consumers every day. While most early apps were developed primarily for the iPhone, we are now seeing vibrant app ecosystems for Android, Blackberry and others.
5. Email Shifts to the Mobile Phone: 2010 saw usage of PC-based email decline, particularly among teenagers, and it appears that much of that email activity is moving to people’s mobile devices. While Blackberry was once in a league of its own in terms of email functionality, many other devices have since caught up, and consumers are responding. Email now exists across media and mobile devices will continue to be a growing part of that trend.
6. Location is Everything: Location-based check-in services like Foursquare, Gowalla and Facebook Places all entered the digital lexicon in 2010 and have begun to gain consumer adoption. Other GPS-enabled apps like Google Maps and Garmin have also proved to be among the most popular and widely downloaded.
7. Social Owns Mobile: Social media is one of the most prevalent and fastest-growing activities on the mobile phone. In the U.S. the number of mobile social media users grew 56% to lead all content categories, and in the UK Facebook accounts for 40% of all time spent on mobile sites.
8. Mobile Commerce Readies for Lift-off: Mobile commerce, or m-commerce, has yet to gain traction in a significant way, but as smartphone adoption accelerates, technology has begun to facilitate mobile transactions. The next phase in m-commerce will be the emergence of the “mobile wallet” with direct payments coming from the mobile device, with Starbucks leading the way among merchants in installing the technology for such payments.
9. iPad Redefines the Mobile Landscape: Apple’s blockbuster launch of the iPad in early 2010 set the stage for a completely new category of device to emerge, as several other tablets and e-readers hit the market by the end of the year. As a reasonably sophisticated computing device that is also mobile, the iPad has given new definition to the types of behaviors in which consumers will engage in the mobile environment. The iPad is also causing time-shifting in how and when consumers engage with content, with the iPad showing a high percentage of activity late at night as people wind down for the evening.
10. Mobile Advertising Market Takes Shape: As mobile media consumption increases, it was only a matter of time before the mobile advertising boom began to take shape. Apple got into the act with the introduction of the iAd, which has already attracted many of the top brand advertisers like AT&T, Citi and Disney. Expect to see more and better quality ad units alongside mobile media content in 2011.

You can see from this selection of highlights that 2010 was another outstanding year, and this year promises to shine even brighter. If you haven’t already downloaded the 2010 Mobile Year in Review, you can do so here. We hope you enjoy and that it gives you a few things to think about on your way to success in 2011…

Ever since the announcement that the iPhone would be joining the Verizon network, ending Apple’s carrier exclusivity with AT&T, the industry has been awash in speculation over how this change would affect the mobile landscape. Mobile users tend to have a certain degree of carrier loyalty, which may either come from satisfaction with the service or switching costs (both real and perceived). Of the major carriers, Verizon has the highest loyalty with 85% of its customers indicating a satisfaction level of at least 7 on a 10-point scale. It is therefore not particularly surprising that even the allure of the popular iPhone was not able to pull many happy Verizon customers away from their network.

Due to Verizon’s high customer loyalty, the iPhone’s share of the smartphone market had largely stagnated in 2010, remaining right around 25% of the market for most of the year. (Of course, the total number of iPhone users increased as the smartphone market grew, but it was not able to extend its share of the market.) Meanwhile, Android took the smartphone market by storm, jumping from 5% market share in December 2009 to 29% in December 2010, as it captured many of Verizon’s customers looking for a touchscreen phone with app market capabilities.

On January 11, Verizon made the official announcement that it would finally offer the iPhone, and the consumer interest was immediate. The number of unique visitors to verizonwireless.com jumped 28% from the beginning of the year, and was 9% higher than the same week a year earlier when Verizon was heavily promoting its new Android phones. But it wasn’t just that more people were visiting verizonwireless.com, it was what they did when they got there that stood out…

comScore conducted an analysis of visitor behavior to verizonwireless.com during the two-week period from January 9-23, which showed an exceptionally high level of visitors both seeking information about the Verizon iPhone and ultimately completing pre-orders (on February 3) for the devices.

During this two-week period, comScore measured more than 3 million total visitors to the Verizon iPhone landing page on verizonwireless.com. Among these visitors, 37% requested more information about the Verizon iPhone, a strong indication of interest. (A similar analysis of visitors to the Verizon iPhone landing page on Apple.com showed 60% requesting more information.)

On February 3, 2011, Verizon and Apple began accepting pre-orders at 3am, resulting in a rush from interested customers to secure their new devices. The Verizon landing page stated simply “iPhone 4. It’s here.” and promoted the 8GB version at $199 with a 2-year Verizon contract and the 16GB version at $299 with the same contract.

That day alone, millions of people visited verizonwireless.com, with 38% visiting the Verizon iPhone pre-order page. Of those visiting the pre-order page, 39% actually completed a pre-order transaction – an astounding conversion rate that doesn’t account for the number of visitors who tried to complete their order but had technical errors due to Verizon’s systems.

It will be interesting to watch Verizon’s success with Apple devices progress, especially as the new iPad is released with both AT&T and Verizon, and as Apple unveils the newest version of the iPhone this summer. Clearly 2010 was the year Android surpassed Apple; however, 2011 is shaping up to be the year Apple re-ignites its market share growth.

With the 2011 Super Bowl just around the corner, we thought now would be a good time to take a step back and think about what actually makes a Super Bowl ad – or any ad for that matter – successful.

Super Bowl ads are known as the pinnacle of creativity and entertainment in advertising. Given their vast reach among an audience eager to see and hear what advertisers have to say, the Super Bowl provides a unique and valuable opportunity for marketers, something certainly reflected in the cost of advertising slots (a 30-second slot this year will cost about $3 million). These high-cost spots mean high stakes for advertisers, making it essential that they deliver a strong, compelling and memorable ad. To take full advantage of the opportunity the Super Bowl presents, marketers must do more than just ensure their advertising gets a few laughs from the audience. After all, truly breakthrough creative does more than entertain – it informs, elicits feelings and influences thoughts in a way that connects a message to the brand. This connection is what ultimately drives long term branding and increased sales for the advertised product or service.

While there are many paths to great creative, years of research on the drivers of strong advertising have enabled comScore ARS to identify a battery of content elements – such as the inclusion of brand differentiating key messages, demonstration of product/service convenience and claims of superiority – that have been proven to have a strong relationship to in-market sales outcomes. Using these insights, comScore ARS has created a tool that combines and weights these creative elements to produce a technical score, which essentially quantifies the extent to which an ad includes the right mix of elements necessary to increase the likelihood of driving sales. Our clients use this tool as a quick and simple pre-launch assessment of an ad’s overall quality or to rank a variety of ads to help them decide which they should use and when. On the post-campaign side of the equation, they also use it to understand at a high-level why the ad might not have performed as well as planned.

For the purposes of this analysis, we used the tool to evaluate one of the most talked about ads from the 2010 Super Bowl: Google’s “Parisian Love”. This ad was coded for the presence of the relevant content elements and then assigned a technical score. It received a score of 51, which places it among the top quintile of ads we’ve observed over the years.

So what does this score actually mean? Simply put, the higher the score, the higher the likelihood for that ad to drive increased brand sales. And, as a point of reference, based on a comScore ARS benchmark, a score of 30 or higher indicates an average to above-average ad where anything with a less than 30 score is considered below average. Below is the historical breakdown of how more than 8,000 ads we’ve tested over the years have scored against these benchmarks.

To understand why Google’s tug-at-your-heart-strings ad was almost universally lauded as an evocative ad that layered up to higher level benefits of the world’s most popular search engine, let’s dive into a little deeper analysis…

The score for “Parisian Love” benefitted from the existence of several elements – or key ingredients – traditionally predictive of advertising effectiveness. One such element was the effective use of music to convey mood and emotion. Another effective element was the demonstration of product convenience (i.e. the use of the search engine shown throughout the 60-second spot). But perhaps the most significant reason behind this ad’s strong score was the existence of certain structural elements, including the prominence and heavy use of the Google logo, and the prominence and demonstration of the actual product. As a result, it is unmistakable to the viewer that the benefits conveyed in the ad are linked to Google search.

From a strategic standpoint, “Parisian Love” also appears to hit the mark. Google is already a clear leader in the search market and is a tool that the vast majority of the American public uses on a daily basis. It therefore makes sense that Google might want to communicate higher order emotional benefits rather than communicate the functional benefits of search, with which everyone is already familiar. This ad effectively communicates how essential a role search plays in helping people make the important decisions in their lives, which ladders up to the emotional benefit of enjoying life and positions Google as a trusted advisor and friend. This ad also serves as an effective defense against Bing’s competitive positioning as a “decision engine” by showing how Google enables and facilitates consequential life decisions. And perhaps most importantly, this ad did an exceptional job of connecting the message back to the brand, so that people weren’t left saying afterwards: “I loved that commercial with the search results. Who was that for again?”

Effective ads don’t just entertain, they link the benefits to the brand. For the 2010 Super Bowl, it’s clear that Google got the message. Now it’s time to see which brands will experience the same Super Bowl advertising success in 2011…

A couple weeks ago, I discussed the overall significance of free shipping to holiday e-commerce purchasing, indicating that we expected it to once again play a major role in how consumers transacted online. We recently crunched some numbers to look at just how significant it has been to the 2010 holiday season, and the results were pretty staggering.

We found that, in the first three weeks of the season, the percentage of transactions including free shipping closely resembled last year’s pattern, where it began at around 45% and climbed to 50% by November 21. However, in the two weeks since, the patterns have looked very different. In 2009, the percentage of transactions using free shipping declined to around 45% again, while this year the number surged to 55% in the week ending November 28 and came in at a still very high rate of 51% in week ending December 5.

Perhaps these numbers should not be such a surprise, with e-commerce leaders Amazon and Walmart offering free shipping in a big way this year, and other retailers being compelled to follow suit.

Such a prevalence of this incentive might cause concern for retailers over its tendency to compress margins; however, as I mentioned in my previous post, consumers are spending a lot more on transactions with free shipping than they do on those transactions with paid shipping. This increase in basket value can certainly help offset some of the negative impact of free shipping on retailers’ margins.

For the week ending Dec. 5, 2010, transactions using free shipping were $125.20 on average, 45% higher than those with paid shipping. So any retailers worried about the costs of offering free shipping should remember that consumers will be more willing to open their wallets when they can take advantage of this important incentive.

Earlier this morning, comScore chairman Gian Fulgoni announced our Cyber Monday 2010 spending total with the news that people spent to the tune of $1.028 billion dollars on U.S. websites, making it the heaviest online spending day on record and the first to eclipse the one billion dollar threshold.

This spending bonanza marked a 16-percent increase vs. Cyber Monday 2009, and more than double the spending we observed just five years ago. It’s pretty amazing to see how far this day has grown over the years.

Importantly, Cyber Monday is not – nor has it ever been – the heaviest online spending day of the season. That notion is a misconception that seems to have been perpetuated over the years. Cyber Monday is actually the first significant increase in online spending we see each season, far heavier than Black Friday, but it is then followed by several days of continued heavy spending into the middle of December.

So what will be the heaviest online spending day of the season this year? Most likely it will occur either Monday, December 13 (sometimes known as “Green Monday”) or Tuesday, December 14. Last year’s heaviest spending day occurred on Tuesday, December 15 when we reached $913 million, the first time we had surpassed $900 million in spending. This year, it seems likely we’ll reach the billion-dollar spending threshold at least a couple of more times.

This online holiday shopping season is clearly off to a great start – let’s hope this momentum continues.

Each year for the past few years, leading online retailers Amazon and Walmart have competed for e-commerce supremacy during the holiday season. Though Amazon remains the undisputed leader in the space, Walmart has improved its position in the market through aggressive holiday promotions and pricing strategies. In 2009, Walmart announced significant online discounts for books, a move that was interpreted by many as ratcheting up the competition with Amazon. Amazon responded to the strategy with price cuts of its own on books. This year, Walmart announced to a great deal of fanfare that it would be offering free shipping on more than 60,000 products with no minimum purchase price. Once again, Amazon responded in kind.

So why all the recent fuss over free shipping? As it turns out, it’s a pretty important driver of e-commerce activity, a trend that has been growing over the past several years. Free shipping really began to emerge as an important incentive around Cyber Monday promotions, but it has increasingly become an everyday promotion in the online retail environment.

comScore data highlights the emerging importance of this trend. In Q3 2010, 41% of all online retail transactions included free shipping, up 6 percentage points from two years prior. During a recent survey, we asked consumers how important free shipping was to them when making a purchase and 55% of respondents indicated that they would be at least somewhat likely to abandon their shopping cart without that promotion.

While there’s a tendency to think that having to offer free shipping is a margin-eater for retailers, it can actually be to the retailer’s benefit if utilized effectively. For example, during the third quarter, the average order value for transactions involving free shipping was 41% higher than transactions without free shipping.

There’s no reason to think the free shipping trend will be going away anytime soon. With free shipping becoming more prevalent every year, consumers have become conditioned to expect it when shopping online. In a recent comScore survey, 84% of consumers indicated that free shipping was somewhat or very important when making a purchase this holiday season. Interestingly, 31% of consumers said they decide what gift to purchase based on the availability of discounts or coupons. In other words, the existence of a coupon actually determines where an online purchase will be made. Another 42% of consumers concurrently browse coupons while comparing potential purchases to help them reach a buying decision.

So retailers should be aware of the importance of free shipping, because it could make or break their holiday season. Consumers have come to expect it and in many cases require it to purchase online, so retailers would be wise to accept this reality and figure out creative ways to maximize average order values and loyalty. Ultimately these factors, more than simply offering attractive discounts and free shipping, will help determine which retailers walk away winners this season.

At comScore, we are constantly mining our vast mountain of data and surfacing interesting new findings that we don’t always get the opportunity to share publicly. So today we are introducing a new website, the comScore Data Mine. This site is our way of bringing more insights to you by regularly publishing new “data gems,” which are colorful, bite-sized graphical representations of the best discoveries we unearth from our data.

Whether you’re a journalist, blogger, client, or just someone who loves data, we encourage you to use and share these data gems with others. Add a beautiful color chart to your story, spruce up your presentation, or share the findings with colleagues. We simply ask that you give comScore full attribution when you use the data gems. Please feel free to come back and browse the comScore Data Mine anytime, and if you’d like to see new data gems as soon as they’re published to the site, please subscribe to our RSS feed or follow comScore Data Gems on Twitter.

We hope you enjoy!

In August, Groupon surged ahead with its 11th straight month of gains to reach 6.5 million U.S. unique visitors, capturing the title of the web’s most visited coupon site. To look at Groupon’s current growth curve shows a site whose audience is expanding exponentially, up 1,000% in just the past year. And these numbers don’t even account for Groupon subscribers who receive the daily email offer but don’t respond by visiting the site over the course of the month.

Groupon has clearly emerged in the online coupons sector in a major way, bringing even more innovation into this category. Online coupons had been growing their audience strongly over the past two years due to the impact of the recession (and consumers’ resulting need to save money wherever they can) and the new coupon services that offer consumers the ability to redeem “paperless” coupons at retail that are tied electronically into their loyalty cards. But given how many well established sites there were in the category, it is a pretty remarkable accomplishment to grab the #1 position in just a few years, pulling ahead of longtime category leader Coupons.com. Other top sites in the category include RetailMeNot.com (4.6 million visitors) and Eversave.com (3 million visitors). (Note: Groupon competitor LivingSocial, which comScore does not technically include in the Coupons category, attracted 3.7 million visitors in August.)

I think Groupon’s success thus far can be attributed to the fact that it created a market for transactions to occur between consumers and local businesses that did not previously exist in a digital, print or mail delivery format. Because consumers like to try new things (and receive discounts) and local businesses love to get new customers (but struggle with upfront costs without a “guarantee” that they will be able to expand their base of consumers) there was a market need for an online service that would facilitate these transactions. The closest approximation of this service in the print world would be coupon mailers, but they require payment upfront for the cost of distribution and they lack digital’s social, collective buying format that seems to make the consumer experience more engaging. There is perhaps also a perceived aura of exclusivity in receiving daily deals that consumers find compelling.

Ultimately, without an efficient digital marketplace for these transactions to occur in high volume, local businesses were left to spend a lot of marketing and advertising dollars just to get the offer in front of consumers. These are budgets that local businesses don’t always have, especially when there is a very real risk that the marketing effort doesn’t pay off. With Groupon, businesses don’t pay for the distribution of the offer. They only pay if the offer is redeemed. This virtually guarantees that a business is paying for some new customers to come through the door. (Sure, it may also attract some existing customers who may have already been willing to pay full price, but I think that is part of the built-in cost of attracting new customers.) Another brilliant aspect of the Groupon business model is that Groupon receives payment upfront for the purchase directly from the consumer and receives a “piece of the action,” i.e. a portion of the discount offered. In traditional coupon models, the distributor of the coupon gets paid by the business customer for the distribution effort but receives no part the discount.

One of the questions I’m asked most often about Groupon is whether or not it’s just another fad. The short answer is: no, I don’t think that’s the case. Fads are usually dependent on a temporary shift in consumer tastes and preferences, while legitimate long term trends occur when new models take root and consumers adopt and see value in that model. I think the latter is the clear case with Groupon.

And despite its fairly impressive ascent in a short period of time, there remains ample opportunity for continued growth. As Groupon establishes a presence across most local markets around the U.S., it still has significant room for continued penetration of existing markets. Consider that in a given month, just 3.1% of the U.S. Internet population visited Groupon.com. That still adds up to a lot of people – 6.5 million to be exact – but it also means that the other 97% are still potential customers.

Most web companies are more or less limited to growth within their target market, which means that even if they do an excellent job of penetrating that market, there is a natural saturation point. However, Groupon’s appeal spans age and gender, indicating that it has a lot of upside before reaching that point. For that reason, Groupon appears poised to continue to grow its customer base, though it should also be noted that dozens of new competitors (BuyWithMe, DealOn, Gilt City, Tippr, HomeRun, just to name a few) are swarming into the market every day trying to claim a piece of the pie.

Only time will tell how this market develops, and it will be an interesting market to watch. But clearly Groupon has tapped into a new behavior to which consumers are responding in a powerful way. And it’s great to see continued innovation happening in the online world.

While we tend to focus much of our attention on retail e-commerce spending trends as a gauge of the U.S. consumer economy, it can be easy to overlook another important sector of e-commerce: online travel. Though it no longer drives the majority of online spending, it still amounts to $80 billion annually, or about 40% of total e-commerce.

comScore’s estimate of U.S. online travel spending – which primarily accounts for consumer and small business travel spending – reached $8.2 billion in July 2010, representing the second highest month on record. (July 2008 still holds the record at $8.3 billion.) July was also the fifth consecutive month where online travel spending eclipsed $7 billion, indicating sustained strength in the sector.

This strength is also evidenced in the Y/Y growth rates, where online travel spending growth reached 9% in July, representing the seventh consecutive month of gains. This is quite an achievement, considering this streak comes on the heels of eleven consecutive months of negative growth rates in 2009. At its nadir, which came in September 2009, growth rates had fallen to -11%.

As demand in travel picks up, so has online advertising for the sector. In fact, the number of display ads among airline advertisers reached 3 billion in Q2 2010, up 67% vs. year ago. Southwest remains the top display advertiser among all airlines, accounting for 20% share of voice in the category in the second quarter, followed by American Airlines (13.0%) and Continental Airlines (12.4%).

After a pretty tumultuous 2009 for many industries, it is nice to see some begin to bounce back from the recession. The online travel industry appears to be one such industry, and as online consumer spending in the sector increases, travel advertisers are allocating greater marketing expenditure to the digital channel.

But as the economy remains in a tenuous position, we can only hope that these trends will continue going forward.

Last week, comScore announced our acquisition of Nedstat, a leading provider of global analytics and online optimization based in Amsterdam, the Netherlands. It was great to welcome the Nedstat folks as part of the comScore team, and we have already begun the process of integrating our companies.

In working with a handful of people from Nedstat, I noticed that I’ve begun receiving several invitations to connect with them via LinkedIn. The diligence with which my Dutch counterparts appeared to be using the popular business networking tool got me wondering if there were any cultural dynamics at play.

So I decided to investigate the usage of LinkedIn across countries to see what sort of differences in behavior might be evident. When I looked at the Internet markets with the highest penetration of visitors to LinkedIn in July, I was surprised to find that my hypothesis was indeed founded in reality: The Netherlands ranked #1 among all Internet markets in terms of LinkedIn penetration (i.e. the percent of Internet users visiting the site) at 15.2%. Interestingly, this popularity was also evident in a handful of surrounding countries in Europe including Ireland (14.7%), Denmark (12.1%), Belgium (10.0%) and the U.K. (9.4%).

The Dutch are not just the most likely to visit LinkedIn but they are also among the most highly engaged. They rank #1 among all markets in terms of the average number of pages of content viewed (64 page views per visitor) and #2 after the U.K. in average time spent (21 minutes per visitor).

It was only a matter of time before online social networking fused with real-world business networking in a meaningful way, and LinkedIn is a testament to the emergence of this trend. It should not come as much of a surprise then that LinkedIn attracted 50 million visitors worldwide in July, up 16% in just the past six months. Perhaps more importantly, the site is beginning to surpass 10% penetration, an important critical mass threshold at which many networks begin to expand virally.

In this increasingly global economy, utilities like LinkedIn will only grow in importance in helping connect people and cross borders. In this case, it is helping me get to know more about my new colleagues, and that is a very good thing.

Well, the 2010 World Cup is finally upon us as people across the globe eagerly anticipate the kick-off for the opening games. And while excitement will soon reach a fever pitch, the anticipation has clearly been mounting for the past few months. One illustration of this building excitement has been the global traffic to FIFA.com during May, which can be seen below. In just one month, global Internet penetration of FIFA.com doubled from 0.11% to 0.21%. It is sure to jump substantially higher as the official event gets underway.

What’s also interesting is which regions of the world appear to be demonstrating their excitement for the event, if we use visitation to FIFA.com as a proxy. While every global region will have representation and millions upon millions of fans following, Latin America and Middle East-Africa showed the highest relative visitation to FIFA.com in the month leading up to the event. While Latin America accounted for just 9% of the total global Internet audience in May, it contributed an astounding 39% of the audience to FIFA.com. Middle East-Africa, just 6 percent of the global Internet audience, represented 12% of the FIFA.com audience.

comScore will be following these and other global Internet trends for the 2010 World Cup, so come visit the comScore Voices blog or @comscore for additional updates!

If you’ve been paying attention to the blogs over the past month, you’ve probably started noticing an increasing focus on (and maybe even an obsession with?) Chatroulette. For those who don’t already know, it’s a new video chat service that randomly assigns users video chat partners anywhere around the globe, an experience that can, in theory, be educational, enlightening and eye-opening. But users should be warned that what might at first glance be eye-opening can on second glance become – shall we say -- blinding (as in, burn-a-hole-in-your-eyes blinding). Sometimes you just don’t know who or what will be waiting for you on the opposite end of that camera and it’s probably not advised for the faint of heart. I suppose this unpredictability is also part of what makes the experience intriguing and even addictive for some participants. It’s a spin of the digital roulette wheel and there’s a natural curiosity to see what will happen next – even if it can leave you cringing.

All value judgments aside for the moment, Chatroulette has clearly tapped into some sort of primal digital instinct that has piqued the curiosity of droves of Internet users right now. The trend is beginning to catch on like wildfire with a recent growth trajectory far surpassing what we usually see with hot new sites. Chatroulette actually first registered on our radar in the month of January with 109,000 U.S. unique visitors, so this is a very recent phenomenon. When we released our February data last week, I was somewhat taken aback to see that the number of U.S. visitors to Chatroulette had exploded to 960,000 in a single month.

After witnessing this jump in activity, I began to wonder who exactly are the people visiting Chatroulette? So I took a look at their demographic profile, which revealed some interesting characteristics. (The user skews I’m going to reference are indexed to the average Internet user, with an index of 100 indicating average representation of a particular user segment and an index over 100 indicating above average representation.) To begin, there is an overwhelming skew towards people between the ages of 18-24, i.e. the college crowd. In fact, this narrow age segment accounts for 45% of the entire Chatroulette audience. There is also a very strong skew towards males, who comprised 72% of the audience. Put those two demographic segments together and you get 18-24 year old males, who by far showed the strongest propensity to visit Chatroulette. They account for three out of every ten users and are four times more likely than the average Internet user to visit. Males 25-34 and females 18-24 were also significantly more likely than average to frequent the site.

I also took a look at the site categories with which visitors to Chatroulette have the highest index relative to the average Internet user. The profile was pretty consistent with the demographic trends. Chatroulette users were nearly four times as likely to use Instant Messengers and nearly three times as likely to use discussion/chat sites, which is not surprising given that Chatroulette is similar in medium. Users are also significantly more likely to visit Career Training & Education sites, suggesting perhaps they are also more likely to be unemployed, at an early stage of their careers or that they are students. They also had a high affinity for music, humor, gaming and tickets sites, which is also very typical among college-aged Internet users.

It will be interesting to see how this user profile shifts as the site gains in popularity. While much of the content currently on this site can be objectionable, if Chatroulette begins to implement tighter security and terms of service policies, it could potentially gain more mainstream acceptance and we might see the user dynamics change very quickly. Only time will tell and it’s something we’ll keep an eye on …but not too closely, lest we get blinded.

Last week comScore released our December 2009 U.S. Media Metrix data, which means of course that we can now look back at 2009 and take stock of what happened in the digital world during the past year. We’re in the process of summarizing these key stories right now and we’ll be releasing The 2009 U.S. Digital Year in Review report in the coming weeks. Stay tuned for more on that…

As we’ve been poring over the data for the year, the one story that continues to stand out is that of Facebook. Ever since it opened registration to the general public back in the fall of 2006, Facebook has seen considerable growth, so it’s not like this story is new by any stretch of the imagination.

And yet, even in its native market, Facebook continues to add to its audience at an incredible rate. In the past year alone, Facebook more than doubled its U.S. audience from 54.5 million visitors in December 2008 to 111.9 million visitors in December 2009. It went from being the #11 ranked property to the #4 ranked property. It now accounts for 7% of all time spent online in the U.S.

These numbers alone are enough to impress, but it’s when you dig deeper into the other metrics that Facebook’s performance really becomes illuminated. This past year saw Facebook grow substantially across nearly every performance metric reported by comScore. Unique visitors, page views, and total time spent all increased by at least double. Frequency metrics such as average minutes per usage day (up 6 percent) and average usage days per visitors (up 37 percent) also saw gains. In other words, more people are using Facebook more frequently to the point that the site accounts for three times as much total time spent online as it did last year. In fact, the only metric by which Facebook decreased was the average minutes per visit (down 11%), which makes sense when you consider the increasing frequency with which people are visiting the site.

To what can this success be attributed? I think there are a few prevailing factors at play. First, I think that Facebook reached critical mass in the U.S. a couple years ago at which point its growth began to feed on itself, allowing its momentum to vault it continually higher. Its growth also reflects in part the so-called “Zuckerberg’s Law.” At the Web 2.0 Summit in November 2008, Facebook founder & CEO Mark Zuckerberg famously remarked “I would expect that next year, people will share twice as much information as they share this year, and next year, they will be sharing twice as much as they did the year before. That means that people are using Facebook, and the applications and the ecosystem, more and more.” In other words, once the network is in place and people are active and engaged, the dynamics of the social interaction taking place incentivize participants to share information about themselves more regularly, which in turn solicits more engagement from others, creating a virtuous cycle of interaction. With increased interaction comes newer and fresher content, which helps feeds the addiction to consume information about what’s happening with the lives of people in one’s social network.

Anyway, Facebook’s continued ascent is just one of several big stories from 2009 in the U.S. digital media landscape. We hope you’ll check out the full report when we release it.

As this decade winds down to its conclusion, comScore would like to take a moment to reflect on what a decade it’s been. Founded in 1999 by our CEO Magid Abraham and Chairman Gian Fulgoni in the heyday of the dotcom bubble, comScore was one of only a few young Internet companies to survive the dotcom bubble burst in 2001-02. Here the company stands today, a full decade after its founding stronger than ever, as the leading global provider of digital market intelligence. From its humble beginnings, comScore now serves more than 1,200 clients and employs 500 talented individuals in offices around the globe.

As we look back fondly on reaching this milestone in our company history, we invited a few of our friends in digital media to share a look back to the early days of the Internet industry, reflect on where we’re at now, and ultimately what tomorrow will bring us. Please enjoy the video below, which includes the thoughts, reflections and insights from some of the brightest minds in our industry: John Battelle, Andrew Braccia, Mark Cuban, Esther Dyson, Wenda Harris Millard, John Markoff, Dave Moore, Tina Sharkey and Fred Wilson. We hope you enjoy it.

From all of us at comScore, we wish you a wonderful holiday season and a happy new year!

comScore just released its November 2009 Media Metrix data, which shows an important milestone being reached by a very popular social networking site. For the first time in its history, Facebook.com surpassed 100 million monthly U.S. visitors joining a very select list of web properties reaching such a threshold (the others are Google Sites, Yahoo! Sites and Microsoft Sites). Facebook also ascended one position in our monthly Top 50 web property rankings to become the 4th largest property this month, the highest position it has ever reached.

Below you can see a chart of Facebook’s amazing growth trajectory over the past five years. In November 2004 it had a U.S. audience of about 2 million visitors and today it stands approximately 50 times that number. Perhaps even more impressive is that clear acceleration in growth we’ve seen over the past year along, in which Facebook has more than doubled its U.S. audience.

Facebook also accounts for 5.5% of all time spent online in the U.S. (up from 2.5% a year ago) consuming a significant percentage of the average U.S. Internet user’s attention online. Only time will tell if Facebook is able to continue to grow like this through 2010…

We just tabulated the holiday spending totals for the Saturday and Sunday of Thanksgiving Weekend (Nov. 28-29) and saw continued growth in online consumer spending after the double-digit gains of Thanksgiving Day (+10% vs. year ago to $318 million) and Black Friday (+11% vs. year ago to $595 million). Saturday and Sunday combined to show a growth rate of 5% tracking above the 3% growth rate for the holiday season to date.

For the full week ending Sunday, holiday spending reached $3.17 billion, representing a 6% gain versus the corresponding week last year. The strength of this particular week can be attributed to the significant discounting and promotional activity from retailers. But, lest we get carried away, we also have to remember how bad November of last year was for retail in general, which makes the comparisons to year ago somewhat easier.

As we await the completion of our spending estimates for Cyber Monday, we anticipate growth rates for the first big spending day of the season to continue to track above the season-to-date average. We are hoping to see enough strength to clear the $900 million daily spending threshold for the first time in history. That would certainly be a notable achievement in the history of e-commerce!

comScore chairman Gian Fulgoni will announce Cyber Monday spending totals live on CNBC tomorrow morning at 9:15 AM EST, which will be followed by our press release detailing the activity of the day.

Each year it seems that free shipping deals become more and more prevalent as we enter the holiday season. Perhaps stoked by the furious competition of Cyber Monday, it seems that for many retailers offering free shipping is essentially the price of entry if they have any hopes of converting consumers during the heaviest part of the online buying period.

comScore reported data during our recent webinar State of the U.S. Online Retail Economy showing just how important free shipping had become over the past few years. During Q3 2009, 42 percent of all e-commerce transactions completed in the U.S. included free shipping, up from 31 percent in Q1 2008.

Why has this phenomenon taken hold so strongly? First, I think that consumers are getting wise to the types of offers they receive online. And if one retailer doesn’t offer them free shipping, another one will. Secondly, I think the effects of the recession have accelerated this movement towards free shipping. Consumers need to feel that they’re “getting a deal” with their financial resources increasingly scarce and it seems that fewer are willing to simply pay full price.

We recently conducted a survey of Internet users regarding their online holiday shopping behaviors, and one question we asked was: When making a purchase online this holiday season, which of the following statements best describes how important free shipping is to you?

Nearly three quarters of all respondents indicated that free shipping was somewhat important or very important. In other words, three out of every four online shoppers are going to have free shipping on their mind when deciding whether or not to make a purchase. More than one-third indicated it was very important and that they wouldn’t make a purchase without it!

So retailers are in a position where they really have to figure out a way to offer free shipping, because it is clearly a primary determinant in most consumers’ online purchase behavior. Of course, this reality could be cause for some concern to retailers, as free shipping offers have a way of eating into margins. It’s certainly a valid concern.

But it is also a potential opportunity for retailers. One important aspect of free shipping we found is that orders that included free shipping were an average of 15-20% higher than orders without free shipping. Now that may seem counterintuitive at first. One might expect that consumers would prefer to spread out their shipping costs over more items and that average order values would be higher for transactions including paid shipping.

What’s really going on here? Actually, the higher average order values are due to the fact that many free shipping deals are tied to minimum spending thresholds (e.g. “Free Shipping when you spend $100”). When put in this context, the free shipping deals make a lot of sense. They can be positioned in a way that adds value for the retailer, by generating more sales, and adds value for the consumer, who is satisfied knowing that he or she “got a deal” on their transaction.

So my advice to retailers this holiday season: think of free shipping as an opportunity to give your consumers what they want – peace of mind. When everyone is watching their pennies, consumers have a much stronger psychological need to be sure they’re getting a deal on anything they purchase. It’s something you can deliver to them in a way that can certainly benefit your topline results and maybe even your bottom line.

Last night comScore was a proud recipient of the Chicago Innovation Awards, which celebrates the creative spirit of the Chicago region by recognizing and honoring the city’s most innovative new products and services. comScore was selected as a winner of the prestigious award, along with nine other companies from a pool of more than 250 submissions, for Ad Effx, an innovative tool for measuring the offline and online sales impact of online advertising – even if there are no clicks on the ads themselves. This solution is helping prove the sales ROI of online advertising campaigns and helping attract brand-building advertising dollars over to the digital medium.

The award ceremony was held at Chicago’s historic Goodman Theater and was hosted by the very entertaining duo and co-founders of the Chicago Innovation Awards Tom Kuczmarski, president of Kuczmarski & Associates, and Dan Miller, executive vice president of the Heartland Association. The two kicked off the festivities joining in a hip-hop dance routine with local dance group Stick & Move which met with raucous applause. Chicago Mayor Richard Daley also addressed the audience underscoring the importance of innovation in building a vibrant city and business community that creates opportunities and jobs for so many. With today’s economic headwinds and an unemployment rate of almost 10%, the jobs created by innovators and entrepreneurs are vital to the rebuilding of the U.S. economy.

The main program consisted of the awards presentation to the ten honorees, which included innovative companies across industries and disciplines: Groupon.com, EveryBlock.com, AirCell, RescueVac, Suncast, Tripp-Lite, Robotic Assisted Surgery @ UIC Med Center, Visible Vote and the Modern Wing of the Art Institute of Chicago. The winners of the award were also recently featured in BusinessWeek.

The evening concluded with an illuminating keynote address by Leo Melamed, known as the founder of financial futures and Chairman Emeritus of the Chicago Mercantile Exchange Group, which highlighted Chicago’s unique history of innovation and global leadership.

The Chicago Innovation Awards was a terrific event that showed the creativity, brilliance and spirit of innovation that makes Chicago such a special city, and comScore was honored to be a part of it.

This morning, comScore CEO and co-founder Dr. Magid Abraham accepted the AMA’s 64th annual Charles Coolidge Parlin Marketing Research Award. The Parlin Award is a preeminent national honor awarded to those who have demonstrated “outstanding leadership and sustained impact on advancing the evolving profession of marketing research over an extended period of time.” Past honorees have included such marketing industry luminaries as Peter Drucker, David Ogilvy and Philip Kotler.

Below is the full text of Dr. Abraham’s acceptance speech.

Good Morning!

Thank you!

Last week’s report that the U.S. unemployment rate jumped to 9.7% in August is another stark reminder of the tough economic environment. With unemployment climbing 4 percentage points in the past year alone, it is no surprise that one of the fastest gaining online categories during that time has been Job Search, which is up 33% vs. year ago to 23.1 million visitors in July.

Despite the gloom of the current job market, every cloud has a silver lining, and in this case I think it is how the Internet is giving those affected by the job situation the critical resources to help navigate this treacherous environment. There is one online resource (not even included in the Job Search site category) that particularly stands out to me: LinkedIn.com. The business-oriented social networking site has become more important than ever for those looking for job opportunities and it has the growth to show for it. The U.S. audience at LinkedIn neared its all-time high in July with about 8 million visitors, a 66% increase vs. year ago.

I decided to investigate how LinkedIn might be playing a role as a critical networking resource for those on the job hunt. To do so, I compared the share of visitors to LinkedIn who were heavy, medium and light visitors to the Job Search category to that of the U.S. Internet population as a whole. (“Heavy” is defined as top 20% of visitors by time spent, “medium” is next 30%, and “light” is the bottom 50%). By looking at the relative representation of these sub-segments, we can get a better idea of whether or not these people are in the job market and how intensively they might be looking.

As it turns out, LinkedIn showed a significantly higher percentage of its visitors from each of the three sub-segments of Job Search category visitors. In fact, 28.5% of its total audience was comprised of job-seekers, compared to just 11.8% of the total U.S. Internet population. Perhaps even more compelling is that 8.2% of LinkedIn.com visitors were heavy visitors to the Job Search category, compared to just 2.4% of the total Internet audience. In fact, LinkedIn had at least twice as high a percentage of visitors from each HML sub-segment than those of the total Internet population.

These data indicate that LinkedIn is substantially more likely to be used by those actively job-hunting than by those who are not, which suggests that online job-seekers are actually turning to LinkedIn as a resource to help them network. If that’s the case, then it is a terrific illustration of how social media is changing the way we’re able to leverage of respective social networks to initiate positive action.

We know that social media enable us all to exert a certain degree of influence with our friends and colleagues through the digital medium, and what better way to use this influence than to get after a new job if we’ve lost one in this tough environment. Amidst the constant debate over whether or not social media is actually valuable, sometimes the obvious is overlooked. And I think this is just one example among many where social media is fundamentally changing the way the real world functions.

Recently comScore reached the noteworthy milestone of having surpassed 10,000 followers on Twitter! It is perhaps fitting that we reached this number nearly ten years to the day that comScore was founded back in 1999.

To celebrate these important landmarks, comScore is kicking off the #comScore10 campaign on Twitter where we will pose a variety of questions to our community of followers about the past, present, and future of the digital medium. The questions will range from being nostalgic, probing, irreverent, introspective or humorous as we take a look back at how we’ve gotten to this point in the information age and where it promises to take us in the future.

And who better to weigh in on this topic than YOU? We’d love to hear what you have to say and hope you’ll participate!

Lately there’s been quite a bit of discussion about whether or not Twitter is being widely adopted by younger users. Several months back we posted on our blog about the surprising older skew among visitors to Twitter.com, which perhaps originally set the stage for this debate.

Last week, Claire Cain Miller of the New York Times also weighed in on the subject in her article, “Who’s Driving Twitter’s Popularity? Not Teens.” While I found the article to be an interesting read that explores the very real reasons behind some teens’ apparent aversion to Twitter, I thought it only captured half the story. What it accurately depicted is the notion that teens were indeed slow to jump on board and that Twitter definitely defied the early adopter model in attracting primarily users age 35 and older in the beginning.

But as the Twitter audience has mushroomed in recent months – to 21 million U.S. visitors in July 2009 (note: this number represents visitors to the Twitter.com website and does not include API or mobile Twitter usage) – the younger age groups are the ones flooding in the fastest. Here is a depiction of Twitter’s growth by age segment over the past year.

U.S. Unique Visitor (000) Trend (Source: comScore Media Metrix)

Clearly we can see that the number of visitors from every age segment is growing, which is not surprising considering that the total audience has grown 27-fold in the past year.

But if we visualize the demographic changes another way, the shifting composition becomes more apparent. Here we see that the share of visitors to Twitter under the age of 35 is increasing at a breakneck pace. The most notable positive shifts are evident among the 12-17 and 18-24 year old segments, which are coming at the expense of the 35+ segments.

Share of Audience Trend (Source: comScore Media Metrix)

We can clearly see how the demographic composition is shifting, but what this graph still doesn’t tell us is whether or not these age segments are visiting Twitter in higher or lower proportion relative to their use of the Internet as a whole. The way to demonstrate these changes is by looking at the composition index over time. The composition index tells us how a group is represented relative to what you would expect given their total Internet composition, with an index of 100 indicating average representation.

In this depiction, it’s evident that 12-17 and 18-24 year olds had mostly under-indexed during most of the course of the past year, but in recent months they had begun to over-index. In fact, it is now the youngest segments that have the highest average representation on Twitter, while the 35-54 and 55+ year olds now under-index where they had previously over-indexed. Quite an interesting turn of events.

Composition Index Trend (Source: comScore Media Metrix)

So what explains this phenomenon? After all, it is pretty rare to see demographic shifts this pronounced occur over such a short period of time. I think that during the early adopter period back in 2008, Twitter was first gaining notoriety in business settings and via news outlets (particularly on CNN), which resulted in an older-skewing early adopter profile. But as Twitter began to filter more into the mainstream, along with it came a culture of celebrity as Shaq, Britney Spears and Ashton Kutcher joined the ranks of the Twitterati.

In April, there was a well-chronicled race between Ashton Kutcher and CNN to see who would be the first to reach 1 million followers. Despite trailing for much of the race, Kutcher pulled ahead in the final hours to grab the illustrious crown pulling off what once seemed like an unlikely upset. But maybe this event was subtly hinting at something more significant brewing at Twitter. Perhaps it was a sign of the impending youth invasion.

I don’t think it’s a coincidence that around the time of Kutcher’s improbable victory, we first saw signs of younger users beginning to make their move onto Twitter. This event raised Twitter’s profile even further, which attracted more and more celebrities to the phenomenon, which, in turn, attracted even more young users, creating a virtuous cycle. Very quickly, younger users had gone from being the clear minority to the challenging for the majority.

So that’s where we’re at today: Twitter is most definitely popular among younger users and I don’t see that changing anytime soon. They are fueling its continued growth and pushing it ever closer to achieving critical mass. If that happens, it will be the first example I can think of where the younger demographics were not the critical early adopters of a new Internet technology yet still played a vital role in its adoption curve.

But it won’t be the last.

With the release of our June search data to clients today, I have gotten many media questions focused on the Bing results since its launch in early June. With one full month of metrics available, we can now shed more light on its performance, which can be summarized as follows: It generated significant trial, was successful at increasing Microsoft’s share of search page results, and, to a lesser degree, Microsoft’s share of search sessions and search queries. Here is the comparison of June metrics compared to May:

There was a significant increase of 14.7% in penetration (shown above), driven by new trial which continued to build throughout the month. However, it is important to understand how much of this incremental trial resulted in repeat business. To answer this question, we looked at users who came back for at least another day after their first day of trial during the month of June. We found that 53% of incremental trial users repeated during the month of June. A more important repeat metric is what percent of trial users come back within a 30-day period, which will be available when comScore’s July data are released. Bearing in mind that marketing campaigns are never able to convert all trial users to repeat users, the July data will give us a much clearer understanding of repeat usage.

Despite the strong trial and respectable repeat rate, Microsoft’s share of queries increased by only 4.5% in June. Why? One reason is that while Bing has built a larger base of repeat searchers, it only benefited from their queries after their first trial. And since many of the new trial users came in throughout June, Bing’s share benefited from only a portion of monthly activity from trial users. One would expect the queries from those users to be higher in July, with a full month of usage. Another contributing factor is that, while the share of search sessions increased by 8.9%, repeat users are now conducting fewer search queries per session (down from 2.33 to 2.18). While this adversely affects query share, it may be a reflection of a better search user experience with Bing compared to Live. This would be the case if users were able to get to their ultimate result faster, with fewer queries in a session. We will only know for sure once the dust settles after this initial trial activity.

Bottom line, Bing has had an initial positive impact on Microsoft’s search position. However, one thing is clear: Closing the gap with its competitors won’t happen overnight. Marketing will certainly help generate more trial, but ultimately the product’s biggest opportunity is to capture a higher share of usage among the 41%+ of searchers that are now using Microsoft but only for a portion of their monthly searches. This will ultimately depend on improved user experience, particularly relative to competitors.

Not surprisingly, it all comes back to sustained product performance. Only time will tell if the search experience provided by Bing is compelling enough to increase adoption and change searcher behavior over the long term.

In the run-up to the 2008 presidential election, mainstream America first became acquainted with Huffington Post (aka Huff Post), the popular news aggregator and commentary site. The site featured a swirl of real-time news and analysis that fed the addiction of news junkies (like myself) interested in reading anything and everything about the election.

comScore reported that the site had reached new highs in October 2008 when it drew 5 million visitors, which was not altogether surprising with the election reaching a fever pitch. But, like many in the news media, I expected that Huff Post’s audience would come back down to earth after the election.

Only that didn’t happen…

The peak coverage of the election season was reached in October 2008, and as anticipated the two subsequent months saw traffic pull back to around 4 million visitors a month. However, defying the expectations, traffic soon picked back up beginning in January as the number of visitors soared past its previous high to 5.4 million. And the site managed to sustain this growth, with three out of the first four months of 2009 attracting more visitors than the October peak. April 2009 represented an all-time high for Huff Post with 5.6 million visitors.

This clear undercurrent of growth at the site suggests that there may be an emerging trend in how Americans consume news. With so many disparate news sources available online, it can be difficult to keep up with the best of what’s available and news aggregators like Huff Post offer links to the day’s most interesting stories.

With print readership of newspapers declining, a concern among the industry is whether or not these news aggregators will cannibalize newspapers’ digital business. While it may be difficult to know conclusively whether or not this is the case, I found one piece of evidence suggesting that Huffington Post might in fact encourage online newspaper consumption. comScore data revealed that the average online newspaper reader spends an average of 26.2 minutes consuming online newspaper content each month, but the average reader of Huff Post spends 55.5 minutes doing so. So there is significantly heavier online newspaper consumption among those who visit Huffington Post.

Of course, it would be unfair to assume that this correlation necessarily implied causation (after all, Huff Post readers might be inherently heavier online newspaper readers than the average category visitor), but the stark difference does at least suggest that the site just might play some role in driving more consumption of online newspapers. If that’s the case, then newspapers ought to be devising strategies to get their content front and center on news aggregators, because in all likelihood they are only going to get bigger with time.

The downside risk of such a strategy is that if people become more dependent on news aggregators, they could stop visiting online newspapers as a primary source of news. Will the once-loyal New York Times reader begin visiting a site like Huffington Post for his first glance at today’s news in lieu of the NYTimes.com homepage? So as these news aggregators gain prominence, it will be interesting to monitor whether or not they have an effect on existing online news consumption habits.

This of course forces newspapers to walk a fine line: how to get content distributed as widely as possible without losing the eyeballs of your regular readers? Ultimately, I suspect the newspapers will have to strike a healthy balance with the aggregators, enabling them to feature content while policing how much of that content can be repurposed before linking to the full story. I also believe that as this new digital news paradigm emerges, there will be a renewed emphasis on writing talent, content quality, in-depth analysis and investigative journalism – the real differentiators for news today. The news brands that choose to focus on these elements will not only be able to survive the current landscape but will find their way to new and valuable audiences across geographies that they never before would have reached. With the right strategy, the newspapers just might find a useful ally in the news aggregators.

Well, Twitter has done it again. Within a few short months this relative newbie on the social media scene has gone from having a modest following to being a decidedly mainstream Web attraction. Of course, this rush of new followers probably would not have occurred without rampant media exposure and an army of high-profile celebrity users. And getting featured by Oprah doesn’t hurt…

The result of all this attention, according to just-released April 2009 U.S. comScore Media Metrix data, was another huge jump in visitors to Twitter.com during the month. Its 17 million U.S. visitors in April represents an 83% gain vs. March and a 3,000% gain vs. year ago. In fact, the past two months have seen such a flood of traffic to Twitter.com that it has more than quadrupled its audience during that brief period of time, literally unprecedented growth for a site whose audience already numbers in the millions.

See Twitter’s incredible growth curve over the past year below - the textbook version of a “hockey stick”:

What remains to be seen is whether or not this inundation of new users will remain loyal to the technology once they’ve tried it. Much like a new product on the supermarket shelves, people are willing to give Twitter a taste to see if the experience matches the advertising (or in this case, the media buzz). The question, of course, is how many of these trial Tweeters will convert into regular, long-term users. Some will do so after their first experience, while others will probably take awhile to acclimate. Some probably won’t jump in head first right away, but will eventually give in as people in their existing social networks adopt the technology. And, some will try but will not become repeat users. Ultimately, only time will tell what Twitter’s loyal user adoption curve looks like and comScore will be here to report what transpires…

Last week, Sarah Radwanick posted to the comScore blog about Twitter’s exponential growth curve during the past twelve months, and that the growth appeared to be driven by older Internet users. The post set off a firestorm of commentary to say the least, generating dozens of comments on our blog, pages upon pages of retweets on Twitter, and several stories in the media.

Well, we might be about to do that again with the March U.S. comScore Media Metrix data released today, which shows that the number of visitors to Twitter.com jumped 131% in March to 9.3 million visitors! That’s 5 million more visitors than in February – a pretty astounding figure if you think about it. The chart below illustrates just how dramatic a jump it was:

Unique U.S. Visitors (000)

One interesting theory alluded to by several people in last week’s discussion was that the mainstream media attention on Twitter is really helping fuel its growth. And there may certainly be some merit to that. It seems you can’t get through a typical newscast anymore without some mention of Twitter.

If you watched the news this past week, you might’ve heard that Newt Gingrich levied criticism of President Obama’s response to the Somali Pirate stand-off over Twitter. I mean, we’re talking about the highest levels of government here, and a microblogging site is being used as a top politician’s primary media outlet?

It just goes to show you how much social media, and specifically a site like Twitter, has become woven into the fabric of our daily media lives. News broadcasters like CNN’s Rick Sanchez have actually incorporated Twitter into their live broadcasts, and it seems like just about every other journo these days has a presence on Twitter. We have also seen Twitter turn more average citizens into journalists, such as when when news and pictures of Flight 1549 landing in the Hudson broke on Twitter. Like it or not, Twitter is quickly revolutionizing the way our entire news ecosystem operates, from journalist to consumer, and blurring the lines in between.

Given the natural synergies between Twittering and news consumption, I wondered if comScore data might confirm any overlap in behavior. (It might also go a long way towards explaining why we’re seeing so many older users on Twitter.) When I looked at the percentage of visitors to Twitter.com who also visited the websites of some of the top online news brands and compared it to that of the total U.S. Internet audience, I found a particularly strong level of overlap. The average Twitter user was often 2 and 3 times as likely to visit the top online news brands as the average person. For example, while 17 percent of the total U.S. Internet audience visited CNN.com in March, more than double that percentage (38 percent) of Twitter.com visitors did so.

Cross Visiting Report of Twitter.com Visitors and Selected Leading Online News Sites

So these data firmly establish that there’s a strong relationship between Twitter users and news consumption. But the chicken-and-egg question continues to gnaw at me: Is it that the real-time "newsiness"of Twitter inherently attracts news junkies, or is it that the mainstream news attention on the site is pushing more and more news consumers to get on Twitter for the first time?

I tend to think it’s probably a little from Column A and a little from Column B. There’s some sort of virtuous cycle occurring between “breaking news” and “making news” that is feeding on itself, and it is only under such conditions that we can realistically see the sort of growth that we’ve seen at Twitter over the past few months. At least that’s the best explanation I can come up with for now.

What do you think?

I occasionally get asked this question, and I usually answer that different methodologies may produce different estimates. But I know that doesn’t really get at the heart of the matter. After all, given how many searches are conducted across the U.S. each month, shouldn’t the search share number from the various measurement services be pretty close to each other?

Let’s examine the Google search share figures in November 2008 for the three largest online measurement services, in order: comScore, Nielsen and Hitwise.

comScore and Nielsen are within about half a percentage point of each other, while Hitwise shows Google at a substantially higher 72%. Now, why is it that Hitwise consistently shows a search share about 8 percentage points higher than comScore and Nielsen? A behavior as ubiquitous as Internet search yields extremely robust sample sizes, which means that there should be little variation between the services if each was sufficiently representative of the U.S. Internet audience.

Let’s investigate why that may not be the case…

Both comScore and Nielsen build their Internet panels by recruiting consumers directly and then installing patented software on the panelists’ computers to collect their online behavioral data. comScore is the only service to also include complete AOL proprietary activity. This ensures that all Internet Service Providers (ISPs) are correctly represented in the comScore database. However, Hitwise obtains its clickstream data by purchasing it directly from those ISPs that are willing to sell it to third parties. It’s unclear exactly which ISPs or how many provide their data to Hitwise, since the company does not disclose that information. However, what is publicly known is that, mainly because of privacy concerns, the vast majority of ISPs are, today, unwilling to sell their data to third parties. The most prominent one – and likely only one of the major ISPs – that is willing to sell its data is United Online/NetZero. Interestingly, an analysis of Google’s market share across ISPs (using comScore’s data which represents all ISPs) suggests that the Hitwise data may be mainly reflecting Google’s performance at United Online/NetZero, an ISP composed primarily of dial-up users.

The analysis below shows how Google search share varies across ISPs in the comScore panel:

Here, we can see that Google’s search share peaks among United Online/NetZero users at about 73% – a number that is strikingly similar to what Hitwise reported as Google’s overall U.S. share in November. The other ISPs shown above are all major broadband providers, who do not sell their data to third parties. Google’s market share in each of them is significantly lower than within United Online/NetZero. Note, especially, that Google’s share is lowest among AOL ISP users, an ISP that Hitwise does not measure.

So, is it possible that Google’s high share as reported by Hitwise overstates reality and is simply a result of the fact that Hitwise’s estimates are predominately based on ISP data from United Online/NetZero, the ISP where Google’s market share happens to be highest?

What do you think?

Even into the final days of the U.S. Presidential campaign, the Internet played a significant role, as it has throughout most of the season. Both presidential candidates made use of the channel to advance their respective messages, whether by outlining their positions on their websites, distributing campaign messages via video, or using online ads. Perhaps most important was the way the Internet changed the candidates' ability to fundraise in smaller increments from a much larger donor base.

In the waning days of the campaign, both candidates inundated their email lists with last minute pleas to contribute money for advertising to be used in the remaining days. It should not be much of a surprise, then, to find that the number of visitors to the candidate websites spiked in the last week. In particular, BarackObama.com peaked at 730,000 visitors in a single day on Tuesday, October 28 -- 125% higher than an average day over the preceding two months.

This was truly an historic election for reasons that are too many to count. One of the stories that is certain to go down in the annals of history was how this was the first national election where the Internet was truly front and center in determining the landscape and eventual outcome of the election. The Internet has forever changed the game of politics and I can only wonder what 2012 will have in store for us...

The online advertising industry has been buzzing over the recent introduction of a couple of new media planning tools and whether or not they had the potential to shake up the industry. Now that advertisers and media planners have had the opportunity to examine the tools, the reviews are beginning to roll in. Here are two interesting articles examining ad industry reaction: David Smith’s take in Mediapost’s Metrics Insider and Mike Shields’ article in MediaWeek.

Many of the readers of this blog will probably remember comScore’s report on Radiohead’s “pay what you want” distribution model for their 2007 album “In Rainbows” back in November. The results of this study precipitated a lively debate in the blogosphere on the merits of this groundbreaking approach to music sales.

It was clear that this “pay what you want” model represented a fascinating case study in both economic theory and human nature. Harvard Business School evidently agreed that it warranted further academic exploration in formulating a new case study entitled “Radiohead: Music at Your Own Price,” based on the comScore data. The two parts of the HBS case study can be found here and here.

The publication of this case study comes on the heels of comScore’s recently published article by our CEO Magid Abraham in the Harvard Business Review on the offline impact of online advertising.

I’m delighted to tell you that if you are an academic interested in using comScore data for a B-School case study or other academic research purposes, please feel free to contact us online.

Many investors are breathing a sigh of relief after Google announced earnings on Thursday beating the consensus street estimates. In recent months, investors have become understandably concerned that the decline in U.S. consumers’ spending could translate into a cutback in online advertising, an industry many thought would be immune from an economic downturn. And with the dearth of public information available on Google’s key revenue drivers, the market turned much of its attention to comScore’s paid click report to help understand what might be going on with one of the key determinants of Google’s revenue.

comScore reported that Google’s U.S. paid clicks in Q1 were up 2% vs. year ago, and down 9% vs. Q4 ’07. During the earnings call, Google noted a 20% increase in aggregate paid clicks vs. year ago and a 4% sequential gain.

Why the discrepancy, you may ask?

As is always the case, we need an apples-to-apple comparison. comScore’s paid click report refers to domestic paid search clicks only, while Google’s “aggregate paid clicks” refers to global search and also includes affiliate site ads (i.e. AdSense). Two fundamental components of Google’s reported number – international clicks and AdSense clicks – are not currently included in the comScore report.

Google reported Q1 ‘08 revenue growth of 7% vs. Q4 ’07, with international revenue up approximately 14% and domestic growth (excluding the DoubleClick acquisition) essentially flat. If we take Google’s overall revenue growth of 7% and their reported 4% increase in aggregate paid clicks, we can estimate that the average cost-per-click (CPC) increase during the quarter was approximately 3%.

Now, if domestic paid click revenue was flat while CPC was up 3%, we can conclude that aggregate domestic paid clicks declined about 3% during the quarter. This brings us a lot closer to our estimated 9% decline in paid clicks. The remaining delta can likely be partially explained by strong revenue growth from Google’s YouTube and the Adsense network. In fact, comScore’s U.S. Video Metrix numbers show YouTube is up ~20% vs. Q4 in terms of video views.

comScore has always cautioned that there are multiple factors that needed to be considered when projecting Google’s earnings this quarter. In a February blog post on the subject, comScore CEO Dr. Magid Abraham and SVP James Lamberti concluded “There is no obvious reason why the economy would negatively impact" Google’s paid clicks, based on our analysis of the paid click activity at other search engines.

Moreover, when asked by the Wall Street Journal’s Kevin Delaney on Wednesday – one day before Google reported -- what our paid click data might indicate for Google, Dr. Abraham said he believed that comScore’s paid click data were consistent with 5-10% revenue growth. In retrospect, the prediction proved to be quite accurate.

In summary, a closer analysis of the Google results confirms that: 1) U.S. paid clicks have indeed softened, 2) that the softening is not due to the economy, and 3) Google’s overall revenue performance was driven by strong international growth and CPC increases. comScore has been consistent in its assessment that U.S. paid clicks alone would not tell the full story without considering CPC increases, that macroeconomic factors did not appear to be weighing on Google, and that Google might well have solid revenue growth in Q1.

I caught an interesting article by Matthew Mosk in the Washington Post today discussing Barack Obama’s success at fundraising online during this Presidential primary season. His campaign’s success at attracting online donations is likely a function of several factors, including the general enthusiasm for his candidacy and the demographics of his supporters, many of whom are younger and more tech-savvy. But the article focuses on another key factor, which is that his campaign has been very adept at understanding and using the online channel in a way that hasn’t really been done in the past.

In a lot of ways, political campaigns are like traditional advertisers. They have an inherent aversion to risk and are therefore reluctant to try out new tactics, relying – perhaps too heavily – on strategies that they’re comfortable with. The irony of this approach, however, is that the campaigns that challenge the status quo and understand the dynamics of the changing landscape are usually the ones that perform better than expected. Before anyone had any idea that the Internet could be used effectively as a political tool, Howard Dean rode it to his unlikely frontrunner status for a good portion of the 2004 Democratic primary campaign. And we see similar examples in the business world of companies who start doing things differently, in ways everyone said couldn’t be done, that suddenly emerge as top dogs. Google, of course, comes to mind.

Perhaps because of these similarities, Barack Obama has drawn comparisons to companies like Google and Apple – a reflection of his brand and a newer, more cutting-edge approach to politics and campaigning. Both anecdotally and empirically, I’ve seen abundant evidence that this is the case with respect to his campaign’s online efforts.

The Post article said that the Obama campaign spent $2.6 million in online advertising in February, more than Hillary Clinton by a factor of 10. In January, he spent about $768,000, still outpacing Clinton by a factor of 4. I decided to do a little digging in our Ad Metrix advertiser data to see what it showed, and not surprisingly the Obama campaign was way out front in his online advertising efforts, serving about 58 million display ads in January.

And Clinton? Her display advertising efforts didn’t even register above our minimum reporting threshold, indicating display ads are an immaterial part of her advertising strategy. What a lost opportunity for her campaign!

We’ve conducted several studies that have demonstrated the powerful brand-building impact of online display ads, and the Obama campaign seems to understand that. Here’s a look at their most-served ads in January.

What’s interesting is that each of the top ads being delivered includes an invitation to “Join Us,” which has probably been a very effective tool in building a broad email and potential donor base. That the vast majority of his ads (nearly 80%) ran on Yahoo! Sites and Microsoft Sites, both of which skew towards older than average age segments, is an indication that his campaign is using the Internet as a vehicle to reach out to new voter segments rather than going after the low-hanging fruit of young voters.

So it’s no wonder that Obama has been able to raise nearly $100 million during the first two months of 2008 alone tapping a large base of small dollar donors online rather than the more traditional model of prying large donations from a small base of wealthy donors. It’s also why the Obama campaign will serve as the model for how all future political fundraising efforts are conducted and why the Internet will be central to those strategies.

Like many of you, I’ve been following the 2008 presidential primary season with great interest. And while the first non-incumbent election in decades has made the early races even more intriguing than usual, it’s especially exciting for me to see the very important role the Internet has played in shaping the course of the primaries.

Back in 2004, former Vermont Governor Howard Dean’s campaign really woke everyone up to the power of the Internet in politics. The Washington establishment had become accustomed to the way elections had been won over the course of the past several decades –TV ads, newspaper media coverage, direct mail, and good old fashioned machine politics. But Dean, the firebrand Washington outsider who was never supposed to stand a shot at the nomination, managed to stir up a strong grassroots movement using the Internet and raised enormous sums of money online, propelling him to his unlikely status as the Democratic frontrunner. Though Dean’s campaign ultimately fizzled, it left an indelible imprint on American politics. The Internet was quickly changing the political landscape and candidates realized that they ignored it at their own peril.

Fast forward to the 2008 primaries. Every political candidate learned the lessons of Howard Dean and now has a well-organized Internet strategy, including high-powered, multimedia websites, personal profiles on MySpace and Facebook, and their own YouTube channels, as a starting point. But it’s not just about having a presence online -- the real significance of the Internet lies in its ability to cultivate a movement.

I’ve heard a few people call it “the Facebook election” in reference to the way this election -- and Barack Obama’s candidacy, in particular -- has excited young voters in a way that hasn’t been seen since the 1960s. The primaries have seen younger voters turn out in record numbers and take an active role in contributing their time, energy, and even money. The Internet is lowering barriers to entry and making it easier for many people to get involved and stay informed. It is also making it much easier for average folks to open their wallets and contribute with a few clicks of the mouse.

Money has played a more significant role than ever before, as candidates continue to set records for fundraising. In the past, raising money meant sending out mailers and making thousands of phone calls, which required a considerable investment in resources which typically yielded a slow trickle of contributions. Not anymore. Now the candidates can blast an email to the millions of people on their email list for a fundraising drive, and get them to contribute online in a matter of seconds. In the hours and days after Super Tuesday, both the Obama campaign and Clinton campaign parlayed their respective victories into massive online donor drives. Obama raised more than $7 million in just one day after Super Tuesday, while Clinton reportedly raised $10 million within just a few days. To date, both campaigns have raised well in excess of $100 million since the beginning of 2007.

Though the fundraising on behalf of both campaigns has been unprecedented, Obama has had a distinct advantage in online fundraising. This was apparent in the comScore data, which showed Obama with a 3:2 advantage versus Clinton in the number of visitors to his donation page in January (256,000 vs. 171,000). Interestingly though, if we assume that each visitor to the donation page was indeed a donor, Hillary’s website had a higher conversion rate (15% vs. 12%).

Looking at the traffic trends to the two candidates’ websites, there are a few interesting things to note. For most of 2007, visitation to their websites ran pretty much neck-and-neck even though Hillary was generally running much higher in the national polls and was considered by many the presumptive Democratic nominee. But as Obama’s campaign has seen a momentum surge in January and into February, we’ve actually seen visitation to his website display separation from Hillary’s, nearly doubling the number of visitors in January (2.2 million vs. 1.1 million).

The relative surge in activity at Obama’s site may be a function of a couple factors. In part, it reflects the overwhelming enthusiasm among his base of supporters. However, it probably also reflects the fact that he’s a newcomer to the national political scene, and many primary voters are seeking to find out more information on him. These lurkers are almost certainly less likely to contribute money right away.

With money of increasing importance at the latter stages of a campaign – especially to compete in the remaining big states like Texas, Ohio and Pennsylvania -- it will be interesting to see if Obama’s campaign can succeed in converting a large number of the newer visitors to his website into a significant fundraising advantage in February. If he’s able to out-raise Hillary by a wide margin, it just may be enough to put him over the top and pull off what once seemed like a highly unlikely upset. And while the pundits will pontificate about race and gender and low-income voter segments, it will be hard to ignore that the Internet will have played a substantial role in determining the outcome of this race.

But no matter who wins in the end, it’s clear we are witnessing a new paradigm quickly take shape. The Internet just may be giving television a run for its money as the most powerful medium in American politics.

Many of the readers of this blog will probably remember the firestorm caused by comScore’s release of statistics regarding Radiohead’s unique online offer to “pay what you want” to download their new album, “In Rainbows.” comScore’s data showed that about 62% of the people who had initiated a download of the album did so without being willing to pay anything. Radiohead claimed that our data were “wholly inaccurate,” but refused to provide any of their own statistics.

Recently, in an interview Radiohead’s Thom Yorke let slip that the free download percentage they were seeing was actually “about 50%,” which is, in fact, not very different from comScore’s estimate of 62%.

Rather than leading to the band’s conclusion that the comScore data are wrong, I think Thom Yorke’s acknowledgment that the free download percentage was “about 50%” confirms that comScore’s statistics were probably very much in the ballpark. In fact, when taking into consideration the fact that Radiohead is probably counting the percent of completed downloads that were free, whereas comScore counted the percent of initiated downloads that were free, I believe the numbers are very consistent. I say that because we need to bear in mind that when Radiohead’s offer was announced, traffic to the download site was too heavy for the site’s server to handle and it wasn’t unusual to be put into a downloading queue. No doubt, a greater proportion of the people who didn’t pay anything were likely to abandon the download attempt if they had to wait in the queue than were people who had already used their credit card to pay something. This would lead to the band seeing a slightly lower percentage of completed downloads being free (~50%) than comScore’s 62% estimate of initiated free downloads.

That said, the inescapable conclusion – from comScore data as well as from Radiohead’s own comments – is that anywhere from 50 to 62% of the people who initiated a download of the “In Rainbow’s” album did so without being willing to pay anything.

While that may sound like a disappointing result, it’s certainly better than the experience of hip-hop artist Saul Williams, whose album “The Inevitable Rise and Liberation of Niggy Tardust” was released online in two versions (with the help of Nine Inch Nails frontman Trent Reznor, who financed and produced the album). One version could be downloaded free, while another higher-quality digital version could be downloaded for $5. CNET news.com reported recently that 82% of the people who downloaded the album chose to do so for free.

I think these results confirm that the majority of consumers – when offered the choice to download music free or to pay for it – will choose the free option. However, this doesn’t mean that this distribution method is economically a failure for the musicians. The fact that they get to pocket most of the cash could well mean that they end up making more profit than if they had distributed through a record label. Of course, we’ll never know for certain until someone discloses some detailed financial data, including profits. I wonder who will be first to do that?

Now that the 2007 holiday shopping season has finally come to a close, it’s worth taking a look back at what transpired. Depending on how you look at it, there’s a strong argument to be made that the glass was both half-full and half-empty.

The optimist will look at the fact that online holiday spending during the months of November and December came in at more than $29 billion, representing a 19% gain versus 2006. Certainly it would be very difficult for anyone to complain about that level of growth, especially when considering that comScore’s forecast made at the beginning of the season was for a 20% growth rate.

However, when you look at the 19% growth rate in relation to previous years for online holiday retail, the picture isn’t quite as rosy. Each of the prior 4 years has seen holiday spending increase between 24%-30%, with last year’s growth rate a robust 26%. Clearly 2007 marked a substantial drop-off compared to prior years, despite the fact that 19% is still a very healthy growth rate.

So what caused this nearly 7 percentage point decline versus 2006? We believe there might be three primary factors.

The first factor is that the economic uncertainty in the U.S. (i.e. declining house prices, rising gas prices, a jittery stock market, etc.) had a clear negative impact on consumer behavior this holiday season, and online retail was certainly not immune from these effects. In fact, when we examined the differences in spending growth among different income segments, the results were stark:

While households making at least $100,000 showed strong growth in spending, with a 28% gain versus year ago, the middle and lower income segments showed much softer spending growth. Households making between $50,000-$100,000 increased their online holiday spending 17%, while households earning less than $50,000 increased their online spending by just 10%. It’s pretty clear which households are feeling the pinch.

The second factor is that the total seasonal growth rate was dampened by a particularly soft start to the season. Unseasonably warm weather in early November saw sales of apparel & accessories – one of the largest online retail categories – really flat, leading to a very low growth rate to start the season, from which it never fully recovered. (I should note that the period between Thanksgiving and Christmas did see 21% growth – a solid number in its own right) A look at the cumulative growth rate shows how the early season softness prevented us from ever breaking through the 20% threshold during the season.

The third factor is that – as with most aggressively growing markets – very high growth rates are difficult to sustain as the base gets bigger. (Even Google isn’t growing its revenues over 100% annually like it was a few years ago, but you’d be hard-pressed to find an analyst that would tell you that Google’s momentum has slowed.)

So what’s the outlook for online retail this year? Based on what happened in 2007, it’s likely to depend on the economic realities that present themselves in 2008. An AP Poll in late December found a 26% gain in credit card delinquencies. While this segment only represented 4% of the total outstanding debt, it’s clear that these consumers – with maxed out credit cards and likely no home equity to borrow against – will have virtually no recourse but to curtail spending. But, I think the bigger concern raised by this AP research is that it does suggest that consumers may be increasing their level of debt to maintain their spending power, which clearly doesn’t bode well for the consumer economy in 2008.

Radiohead released a statement today calling into question the validity of our recent report. Since we released our report on Monday, November 5, there has been a great deal of media coverage, and while much of the reporting has been excellent, there have been instances in both news media and blog postings that indicate not everyone understands how comScore arrives at its market projections.

comScore reports are derived from a representative sample of 2 million Internet users, who opt in to our panel and allow us to observe their actual online behavior, including e-commerce transactions. Because the data are based on passively observed consumer behavior, as opposed to polls or survey responses, there is no potential for recall error. When we observe an e-commerce transaction in our panel, the value we observe represents the actual price paid by that consumer.

As an affirmation of the validity and representivity of our panel, we regularly release quarterly U.S. e-commerce spending estimates, several weeks in advance of the U.S. Department of Commerce releasing its own figures, and during the past 7 years our figures have rarely deviated from the official Commerce numbers by more than a few percent.

For the Radiohead study, we observed the activity of nearly one thousand people who visited the “In Rainbows” site, a significant percentage of whom downloaded the album. We ultimately observed several hundred paid transactions, all of which ranged between $0-$20, representing a very robust sample for estimating the average price paid per transaction. It’s true that any sample has natural variability, so these numbers are, in fact, estimates. However, when you have a relatively large sample falling within a narrow range of values (i.e. there’s a small standard deviation), the margin of error in the estimate is minimized.

If you’re not yet convinced that sampling can produce an accurate estimate, think of it this way....

Let’s say you work in an office with 500 people and you want to find out how much the average person in the office spent on lunch today. You decide to randomly select 50 people from the office to get an estimate. Now you could ask them to tell you how much they spent on lunch, and you might get a reasonable estimate if they can remember. Some people might have forgotten what they spent, others may round to the nearest dollar, etc. But if you averaged the response of 50 people, you’d probably be in the ballpark.

Now what if, instead of asking them how much they spent on lunch, you asked for their lunch receipt. You would have data based on their actual observed behavior, and you would be able to calculate a much more accurate average. With the lunch receipts of 50 people in hand, how close of an estimate do you think it would produce? Because most people probably spend between $5-$10 on lunch (with a lunch of more than $15 being a rarity), you would get a very accurate estimate. Probably within pennies of the actual average.

This is effectively what we did with the comScore study on Radiohead’s album sales. We observed the actual online spending behavior from a robust sample of hundreds of individuals in order to produce an accurate estimate. If we didn’t have a reasonable sample from which to extrapolate, we wouldn’t have released the data. But we did, and we’re confident in what the data showed.

I hope this helps clarify any confusion on the study.

There’s been a lot of recent media buzz about Radiohead’s decision to sell their new album “In Rainbows” directly through their website on a “pay what you want” basis and what it would mean for the record industry if this new model were to prove effective. We decided to take a look at what comScore data was showing and issued the results in a press release today.

Some will probably jump to the quick conclusion that with an average price per download (including both free and paid downloads) of just $2.26, the business model is not viable—or at least that a band is better off letting a record label do the heavy lifting in generating album sales. But, I don’t think that would be taking all the important factors into account.

First, because Radiohead is bypassing many of the costs of record label representation, a higher percentage of sales go back into their pockets. So, all other things being equal, even a substantially lower average sale price could still mean more money going into the band’s coffers.

Now if you look at the average price per paid download, it was actually $6. You could argue that many of the consumers who paid zero would have pirated the album anyway, or may not have had enough interest to try and obtain the album in the first place were it not available free of charge. So this number may actually be a better gauge of price. If you accept this premise, then the $6 in sales per album sounds like a decent sum when you consider that the record labels aren’t getting their standard cut.

Another argument in favor of the Radiohead model is that it actually encourages a higher number of consumers to download the album, potentially increasing a band’s overall fan base, which could generate incremental album (and concert ticket) sales down the road.

But perhaps what I found most interesting in the research was this fact: for every $1 in sales coming from album downloads, sales of their Discbox generated $2. Now obviously not as many people were willing to shell out $80 for the Discbox, but enough of them did to generate a very healthy stream of additional revenue. (Every 1 person willing to buy the Discbox represents the revenue equivalent of roughly 35 album downloaders.) So if this new distribution method drives incremental traffic to their website that is successfully converted into Discbox sales, it could prove to be a major boost to total album sales.

So let’s take a final look at the economics of the Radiohead model. The average e-commerce site converts about 5% of its visitors to buyers, so let’s take that as a lower-bound estimate for Radiohead sales (in reality, the conversion rates we saw on the site were significantly higher). If 5% of their 1.2 million visitors spend $6 per album, that’s $360,000 in revenue. When you factor in the additional sales generated by the Discbox, we’re looking at roughly $1 million in sales during the month. And again, this is based on the lower-bound conversion rate assumption. So I think it’s fair to say that this model, if executed effectively, can be a very legitimate sales driver. In Radiohead’s case, as the first band to venture into this uncharted territory they had the benefit of a media firestorm to help promote the album. If other artists decide to jump on this bandwagon, will they receive the same benefit?

Louise Story’s October 22nd article in the New York Times, entitled “How Many Site Hits? Depends Who’s Counting” highlights the challenges of getting up to speed on the continuing debate about the differences between the online unique visitor counts provided by publishers’ web server logs and the independently measured unique visitor counts from the panel-based audience measurement services of comScore and NetRatings. With a wide ranging set of interviews, the article reflects many of the myths that plague our industry today.

Ms. Story begins her article by underlining the contrasting figures between comScore and NetRatings panel-based data versus Style.com’s internal server log data. However, the comparison turns out to be apples to oranges. In this case, the apples are U.S. data while the oranges are worldwide data. The article later acknowledges that Style.com’s figures are worldwide while the comScore and NetRatings data were U.S. In fact, if you were to compare comScore’s worldwide figures for September (which we do publish, contrary to the statement that “Conde Nast counts international readers and ComScore and Neilsen (sic)/Netratings do not”), you would see that we reported 1.28 million visitors to Style.com, certainly much closer to their internally reported 1.8 million, a number which is undoubtedly inflated due to the impact of cookie deletion (which I will discuss further below).

One of the other key factors causing differences between server logs and panel data is people visiting the same sites using both home and work computers. Since site servers are counting computers and not people, servers double count such people while the panel services do not. As the article explains: “But online publishers say that their [comScore’s and NetRatings’] systems drastically undercount people who use the Web during work hours, particularly in offices where corporate software makes the wanderings invisible to the tracking systems.” While it is true that comScore’s work panel cannot be sourced from every company, it is important to point out that comScore applies different statistical weights and projection factors to different population segments. For every company that prohibits the download of software on employees’ machines, there are others that allow it. Employees from the latter companies are used to represent the others and the entire work population. This is similar to opinion polls that use people who agree to answer a survey to represent the attitudes and opinions of people who hang up on the caller. Further, one of the advantages of the comScore panel is that we have a segment of panelists that allow us to monitor both their home and work computers, thereby enabling us to understand overlapping usage between these locations and adjust for it. The ability to accurately filter out overlapping home and work usage is just one example of the advantages of panel data over server logs.

The article also gives scant attention given to the single most prominent source of discrepancy between panel-based data and server-based data: cookie deletion. This issue is mentioned at end of the piece, which is summarized thusly: “To make matters more complicated, consumers who delete cookies — small bits of computer code that track their online wanderings — are also over-counted by publishers’ servers, by most accounts.” comScore published a white paper in June that studied the degree to which cookie deletion inflated server-based data. The results showed that 30% of U.S. Internet users delete their cookies at least once per month and that this group deletes their cookies, on average, 5 times in the month, thereby leading to an overstatement in server-based counts of unique visitors of as much as 2.5x.

Now, this isn’t the first time an article on web metrics has failed to point to this key issue more prominently. An August 2007 article in Fortune, entitled “The Online Numbers Game” drummed up similar controversy, using Digg.com as an example:

“A number of web entrepreneurs believe the two companies shortchange them. Consider Digg.com, a site that lets users submit and rank news stories. Its own server logs recorded 10.8 million unique U.S. visitors in July. ComScore reported 4.6 million, and Nielsen//NetRatings 4.7 million.”

So let’s examine this example for a moment. What we have is both comScore and NetRatings in general agreement over the audience size for Digg, but both differing dramatically from Digg’s own server logs. If you divide Digg’s reported 10.8 million by comScore’s 4.6 million, you get an overstatement factor of 2.3x. If you read our cookie deletion white paper, the obvious conclusion is that this is completely consistent with our findings that the overstatement factor caused by cookie deletion can be as high as 2.5x. Unfortunately, the article never even mentions cookie deletion as a likely source of discrepancy.

There is no shortage of publishers with a vested interest in claiming our data are inaccurate, because as one publisher noted in the Times article, “Everyone likes bigger numbers.” comScore’s only vested interest, on the other hand, is in being as accurate as possible. True media accountability cannot exist without a high degree of accuracy, and accurate media measurement is at the core of comScore’s business.

Ultimately, the disparities often cited between panels and server logs cannot be explained by simple methodological flaws. When numbers diverge by a factor of 2 or 3, there are larger forces at play, with cookie deletion and cookie rejection clearly being the most prominent. If the industry wants to put this issue to rest, there needs to be an acknowledgement on the part of the media world that cookie deletion is one of the root causes of this controversy and that its impact is significant.

Obviously this controversy will live on for awhile. However, we are making progress. The IAB is sponsoring an educational conference on Audience Measurement on November 29, where there will be an attempt to explain what the numbers mean and why they could be different. One of these days, as part of this education, hopefully one of these vocal publishers will agree to share their detailed data publicly for closer scrutiny. It would be interesting to see what happens under the spotlight!

Hi, my name is Andrew Lipsman, a senior analyst at comScore. I’ll be blogging about topics in a variety of Internet industries.

I found it ironic last week when I read the headline in Monday’s New York Times, “Young Adults are Giving Newspapers Scant Notice,” because there I was, a young adult, reading this newspaper article. Well, sort of. I actually caught the article online, so maybe it was technically true that I was giving the newspaper scant notice.

I guess the real question for me was: “Are young people not reading the news at all?” That is a more frightening proposition, of course, if young people today are simply not getting informed on the issues of the day (Paris Hilton news notwithstanding). Like many young adults today, I get my news primarily online. The Internet allows me to choose multiple sources, get varying points of view, and consume large quantities of news in short periods of time. So I decided to test the premise that young people weren’t getting their news at all by analyzing some comScore data. I compared young people’s Internet news consumption habits with other age groups, and this is what I found:

As you can see, nearly the same percentage of 18-34 year olds (59%) are reading news online each month as 35-54 year olds (61%). Not only that, but they are also going online to get their news nearly as many times each month (12 visits) as 35-54 year olds (13 visits).

So it’s not that young adults aren’t reading the news, they’re just doing it online instead of in newspapers. Maybe they prefer the Internet because it provides a quicker, easier and more comprehensive news experience. Or maybe, like me, they just don’t like to get ink on their fingers.