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Web 2.0: The Global Impact
Study by Universal McCann Dec 2006

A welcome note

Universal McCann's global research into the impact of Web 2.0 on frequent Internet users is the largest exploration of its kind. Interviews from more than 16,000 online users worldwide has for the first time allowed a true world-wide perspective into to key trends associated with the changing Internet. This research focuses on levels of penetration, the differences by market and the potential universe sizes of Web 2.0 technologies, platforms and applications; exploring 3 key areas: Creation: Blogging, social networks, photo sharing, Wiki's, social news sites and writing comments, reviews and feedback have all fundamentally changed the web, providing consumers with the tools to drive the content agenda. Connection: Social networking, personal blogging, instant messenger and VOIP are all playing a role to revolutionise and globalise the way we interact, stay in touch and meet new people. Entertainment: Thanks to the unstoppable rise of broadband - video, audio, live TV and radio are all central to the way we use the web today. The results are staggering. From a global perspective Web 2.0 applications and technology are being adopted in immense numbers with hundreds of millions creating and sharing their own content, socialising and communicating regardless of local culture, demographic, economic development or local Internet penetration. There are 40m+ active bloggers, 100m+ blog readers in the markets surveyed.

Asia is at the forefront of many aspects of Web 2.0 adoption; in particular user generated content where personal blogging is an obsession for millions across the region. China leads the world, where despite decades of media oppression, millions of Chinese consumers are using blogging platforms to express themselves in ways unthinkable in years gone by. This research confirms what marketers, advertisers and media owners should already know. The changing internet is radically altering user's media habits the world over; irreversibly altering the media and communications environment by driving globalisation of media consumption, mega fragmentation of media channels and creating a truly international social network. These are real challenges that brands and media companies regardless of country must face up to now not in ten years time. This research is an ongoing commitment, tracking the adoption of Web 2.0 platforms and technologies from a global perspective, understanding the evolving impact of the changing internet. To contact me regarding this and future research please email: theresa.houlihan@universalmccann.com

Global Web 2.0 Research
Introduction

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Over the last 18 months the term “Web 2.0” has firmly entered the mainstream consciousness of the online world; however the definition and even its existence as a concept have been hotly disputed. We like to define it in the simplest of terms: “an evolution of the internet to become a network of interconnected web pages and applications that encourage consumer participation, creativity and interaction”. The really important point behind Web 2.0, particularly for advertisers, marketers and media owners is not the name or the definition, but the impact. It is clear that these recent online developments have the potential to transform the media landscape quicker than at any other time in history. The technologies commonly associated with Web 2.0 such as social networking, RSS, tagging, blogging, aggregators, and Wiki's, coupled with the explosion of broadband enabled services like Instant Messenger, IPTV, Podcasting and VOIP (see glossary for more information) mean it has never been easier to create and share content, meet people and enjoy a personalised multimedia experience. The tools and channels to create and share video, images and the written word have never before been as accessible or democratic - never before has there been a completely open media and communication platform available for everyone to contribute to. Controlled media distribution channels, the need for funding, lack of access to production technology and the need for industry contacts have all been eroded as barriers to becoming a ‘media owner’. The only barrier today is a willingness to create. The potential is clear - if consumers want to they can be the lead creators of media content.

Of course the hype has been huge; Newspapers the world over proclaim the ‘Citizen Journalist’, investors push huge sums of money into online start ups, while established media companies desperately try to grab a piece of the action. It’s hard not get caught up in the hype; Technorati claim 52 million blogs in existence, with 75,000 added each day, Youtube stream in excess of 3 billion videos a month and MySpace recently breached the 100 million members mark. The media, advertising and communications environment shows all the signs of changing as quickly as hype. To understand the real impact, Universal McCann implemented a global study into the adoption of Web 2.0 tools, sites and services to assess the extent to which consumers are getting involved, establish how they are adopting and identify the country by country differences. The results form the basis for the exploration of Web 2.0 that follows, considering the impact for media owners, advertisers and marketers the world over.

Key findings

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• •

Web 2.0 technologies have made a global impact. o Internet users in every country are adopting Web 2.0 applications, platforms and media in vast numbers. o In some markets the numbers of users may be small, but on a global level all these technologies are huge. Adoption does not follow traditional economic lines online users in less developed markets are as involved as developed ones, in many cases more involved. o Asia leads the way - the top 5 markets in terms of adopting Web 2.0 services are China, South Korea, Malaysia, Hong Kong and the Philippines. o Spain, Italy and France are driving the Western world's usage, up there with Asia in adoption terms. o This is far from being just a US phenomenon as often assumed. The sheer size of the US market often masks lower than average adoption rates. o China is vying with the US as the largest volume market for the adoption of Web 2.0 technologies, platforms and applications. There are clear global trends in the adoption of different technologies. If you were to order technologies in terms of popularity it would be as follows: o 1 - Instant Messenger 2 - Reviewing products and services / leaving feedback 3 - Photo Sharing 4 Streaming live media 5 - Reading Blogs 6 Watching video clips on demand 7 Social Networking 8 - Creating a Blog 9 - VOIP 10 RSS 11 - Podcasting

o Generally speaking Asia is the most actively involved in content creation and sharing thanks to their passion for personal blogging while Europe and the US lead with entertainment and social networking. o The differences between the regions is magnified when looking at blogging: In Asia personal blogging is key, interacting with your social group, while in US and Europe its more about individuals making their opinion heard - often on a broad rang of topics. The large scale global adoption of Web 2.0 means the impact of these technologies is massive, not just for media, advertising and telecoms but for wider society and culture. Their role in the inter-connectedness of the world is huge and is helping to fuel a global culture of sharing. Technologies such as photo sharing, video platforms, instant messenger, VOIP and social networking are truly international and being used everywhere world-wide. Media distribution platforms and consumption of multimedia content is moving to become more global in outlook, or developing along language lines as opposed to market lines - marketing, advertising and branding will have to follow to stay relevant.

• •

Methodology

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The research was conducted amongst a representative sample of frequent internet users (Use the internet every day / every other day), who in general now make up the majority of the online universe particularly in developed markets (see Figure1). These users are best placed to demonstrate consumer uptake of Web 2.0 services. They are the vast majority of adopters of new products and services online and will be the majority of Web 2.0 adopters. The study took place between March and September 2006 in mix of 15 highly developed and emerging internet markets; France, Germany, Italy, Spain, Russia, UK, US, China, South Korea, Thailand, Malaysia, Hong Kong, Singapore, Philippines and Australia. Combined they make up 60% of the global Internet universe: In every market the sample is representative to the 16-44 frequent internet user population with the research conducted online. Respondents were provided by Ciao

European Media Panel, Insight Express in the US and local media partners in Asia. Unsurprisingly (Figure 1) relative numbers by market differ hugely both in size and overall penetration of online - however it is clear that frequent usage is becoming the norm. It also worth reflecting on these numbers for the results that follow and the relative sizes of the universes that the results indicate. All universe size estimates are based upon applying the percentages in the survey to the latest universe sizes that exist from industry surveys such as TGI and Simmons. As the research audience makes up 60% of frequent online world for 16-44's and as there are consistencies in technology adoption, it allows for robust estimations on the global reach of these technologies. It should also be considered that some Internet markets are less mature than others and so tend to have a younger, male skew, whereas markets such as the US, UK, France and South Korea are more established tend to have normalised profiles. This can be a factor in overall penetration of services.

South Korea USA China France, Germany, Italy, Spain, UK, Russia Thailand Malaysia Singapore
.

Hong Kong Philippines

Australia

60% of the world’s Internet Population
Figure 1: 16-44 Online Universe - Frequency users V Non Frequent
Source: TGI Europa / TGI Russia / Simmons / Media in Mind / Synovate Asia Pacific Media Handbook / Nielsen Media Index

Creating and sharing content
Blogging

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One of the most exciting outcomes of Web 2.0 is the possibility for web users to create and share their own content. It has never been easier to create the written word, photos, video and music; sharing with friends, family and the wider world. In the past it was possible, but it took technical knowledge and determination, preventing these activities from entering the mainstream. Today, thanks to blogging platforms like Typepad, Blogcn.com and Sky Blog; social network sites like Myspace, Bebo and Cyworld; video sharing sites such as Youtube.com, Guba and Revver and photo sharing sites like Flickr, Webpics and Picassa creating and sharing content has never been simpler. Web 2.0 has made media ownership possible for all propelling it to the mainstream.

Blogs “A regularly updated website in which items are posted in reverse chronological order, known as Blogs or Weblogs the act of posting stories is known as Blogging. Blogs usually focus on one subject - a typical Blog will contain stories in a diary format, pictures, links to other Blogs and web pages and will organise content by category and month of posting. The collective universe of blogs is often referred to as the blogosphere”

Blogging
Blogging has been at the epicentre of the Web 2.0 movement typifying the rise of the shift towards consumer content. Over the past couple of years there has been an explosion of blogs covering every topic imaginable. Companies and media organisations have begun to integrate blogging into their online activities; however it is consumer usage that is really exciting, and promises the biggest potential to shake up the media landscape. The ever expanding blogosphere has whipped up a fever of hype about the emergence of the ‘Citizen Journalist’ and the flipping of the media world from top down to bottom up, with consumers leading the news agenda. So is this hype justified?

Creating and sharing content
Blogging

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Figure 2: “Visiting / Reading any Blog” - Base = All Respondents

Australia, 0.34 US,27.64

The results from the study show that Blogging is making a big impact. The global average (figure 2) for reading and visiting blogs is an impressive 48%. It has entered the mainstream as an established online medium for browsing and reading. There are however large market differences, with Italy, Spain, France, Russia, South Korea and China leading the way. Interestingly the US, the perceived home of the blog lags in relative terms. Northern European markets and South East Asian markets also lag; in particular Germany and Australia are failing to embrace the blog as a media source. Looking at this in the context of universe sizes (figure 3) it is clear that despite the lower than average level of overall adoption, the US with its vast universe of 27m readers, has led the blogosphere in audience terms. The impact on China's is clear - its 26m readers, nearly matching the US.

China, 26.01

Russia, 3.48

UK, 4.16

South Korea, 6.18 Singapore, 0.17

Spain, 3.63 Italy, 7.48 Germany, 1.55 France, 5.9

Hong Kong, 0.18 Thailand, 0.35 Malaysia, 0.43 Philippines, 0.46

Figure 3: “Visiting / Reading any Blog universe sizes”. Base = All Respondents. Figures in Million

Creating and sharing content
Blogging

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Interestingly the content that is driving readership (see figure 4) is personal (e.g friends and family), with most people interacting with blogs as means of social contact. As the line between social networks (see figure 12) and blogging platforms narrows (e.g Live Spaces, Skyblog, Cyworld and Bokee) this is no surprise. The only markets where there are significant numbers only reading blogs which are not personal content are the US, France, Italy, Spain and Russia. Figure 5 shows the levels of interaction with bloggingboth leaving comments and creating your own blog. the global average for leaving comments is 31% and for writing a blog 26%. But again, as with reading, there are significant differences. Only in Europe is there a difference between leaving comments and creating a blog. In terms of writing blogs, Northern Asia clearly leads the world. South Korea is the world leader where a staggering 64% write a blog, however there are large numbers in most markets.

Figure 4: “Reading all blogs versus personal blogs”. Base = All Respondents

Figure 5: “Leaving Comments V Creating Blogs”. Base = All Respondents

Creating and sharing content
Blogging

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From a regional perspective Asia has by far the highest levels of active involvement, a fact that is particularly clear when looking at the impressive levels of blog readers who have their own blog as shown in figure 6. This suggests that web users from Northern Europe, the US and Australia are far more passive in their uptake of blogging as a media platform, using it more as a one way traditional media channel as opposed to a dialogue. China makes up just over half of our blogging internet universe, with a staggering 25 million bloggers, far exceeding the US, where 10.7m 16-44's have their own sites. This makes China the world's biggest active blogging market by some distance, a dramatic finding with interesting ramifications for China's restricted media market. In total there are massive 50 million people blogging across our research universe. The markets covered in the research make up 60% of the world's Internet population, which would suggest that there are at least 80 million 16-44 active bloggers worldwide.
China, 24.83

Figure 6: “Conversion of blog reader to blog creator % of blog visitors who have their own blog”. Base = All Respondents

Australia, 0.26

US, 10.7 South Korea, 5.46 Singapore, 0.14 Hong Kong, 0.17 Russia, 0.5 UK, 1.07 Spain, 1.29 Italy, 2.14 Germany, 0.47 Thailand, 0.25 Malaysia, 0.38 Philippines, 0.43 France, 1.38

Figure 7: “percentage of blog readers who are blog creators. Base = All Respondents. Figures in Millions

Creating and sharing content
Blogging

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These numbers are set to grow thanks to consumer interest translating into major future potential. Figure 8 below, shows the numbers of users who plan to create their own blog in the future and the results are surprisingly consistent across markets, demonstrating a uniform level of interest and future growth. All markets fall broadly around the 20% mark with only Italy, Spain and the South East Asian markets of Thailand, Malaysia and Philippines showing any significant upward deviation on the global average. When translated into numbers (figure 9) it is clear the blogging universe has potential to almost double with 33m planning to start their own blog. Interestingly potential adoption rates in Northern Chinese influenced Asia are lower than the average, suggesting some element of saturation. However is also worth considering the growth potential from the enlarging internet universe and the large number of under 16 bloggers moving into the 16+ category. Which ever way you look it; blogs are not going away and set to become the mainstream.

Figure 8: “I plan to start my own blog in future”. Base = All Respondents

Australia, 0.3 US, 9.3

China, 10.3

Russia, 0.9

UK, 1.5

South Korea, 1.4 Singapore, 0.1

Spain, 1.8 Italy, 2.9 Germany, 1.1 France, 1.8

Hong Kong, 0.1 Thailand, 0.6 Malaysia, 0.3 Philippines, 0.4

Figure 9: “I plan to start my own blog in future” universe figures. Base = All Respondents. Figures in Millions

Creating and sharing content
Implications

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From a global perspective the numbers of blog owners and readers shown in this report are huge for a media platform that is little more than a couple of years old. Sure some of the markets are small, but combined it is a large platform. Blogging is living up to some of its hype and it looks set to grow into a mainstream media platform. The differences between Asia and the rest of the world are interesting with the conversion of readers to active users in Asia particularly impressive. Compare this to Europe and the US where the blog readership universe is substantial, but conversions to creating content are relatively low - it is clear that Asia is driving blogging in terms of creating content. There are a number of factors that could explain this difference

• • • • • • •

The emphasis on personal content is reflected by the success of platforms such as Cyworld, Bokee and BlogCN shows that blogging has become an essential social tool. Blogs in Asia tend to be populated by very short posts and photos making them easier to maintain and more accessible. The concepts of Confucianism (which manifests itself as a strong respect for others and authority) that govern social conduct in Chinese influenced culture affect blogging in two ways. Firstly bloggers have strong ideas of responsibility for what they write, which makes blogging more community focused, and secondly there is an unwritten code of conduct - that it is basic manners to comment on friend's blogs - developing the community aspect. (APAC UM) In China blogging is the first time many have had the chance for self expression. Blogging in Western Europe and US is more associated with individualism and sharing your opinion. This is likely to have channeled social interaction into established social networking sites. (see figure 13) This explains the rise of personality blogs in the US and Europe, something less evident in Asia Blogging in China is popular due to a generation of only children.

• • • •

Asian use of blogging is orientated around personal content its use is closer to social networking. The barriers to entry here are lower and growth is viral thanks to this social aspect. The huge uptake in China can be linked to the lack of uncensored media and a thirst for independent information and fresh opinions. The blog run by Chinese actress Xu Jinglei

is now the world's most popular blog. (Technorati August 2006)
Due to the heavy governmental controls in China, personal blogging is a safe subject matter. Chinese blogs tend to avoid political topics and so have little impact on political discourse, unlike in Western Europe and the US. This strengthens the associations of blogging as a social medium and fuels adoption. (International Herald Tribune “Battle of the blogs in China” August 2005) Asian markets like China, South Korea tend to be more closed to the outside world for cultural, social and political reasons that help build the internal focus that drives person blogging.

Creating and sharing content
Implications

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• • • •

Reading blogs as a media platform is higher in Europe and there are huge numbers in the US due to the rise of the professional blog. Blogs are integrated into existing media organisations’ output, used by corporations as a consumer communication tool and run as full time blog sites such as Engadget and Cool Hunting. In the US and Europe there is a wider universe of non personal blog content to tap into - this is a bigger threat to media owners than the personal blogging of Asia. It also means the perceived barriers to entry are higher. The huge usage of blogs as a media platform in Spain, France, Italy and Russia is influenced by language. The huge amount of English language content on the web means US and UK readers are already overwhelmed with choice and there is less of a personal urge to create. Some of these markets have a younger profile than others - Spain, Italy and China have a younger and more male profile than the more established markets of the US, UK and South Korea. This will be a factor in higher levels of usage. South Korea has an exceptionally well developed broadband market. Hong Kong and Singapore are also very developed internet markets that have led to strong adoption of online as a core social medium.

Despite this variance by market there is clearly global take up and growth potential. This suggests that there may be truth in some of the hype around the consumer as the lead content creators. Two facts are clear; online users read blogs and increasing numbers are writing them. Although most of this will cover personal subjects there is clearly a threat. If just 5% of our 50m bloggers blog about non personal topics, that is 2.5m new media sources - obviously not all of these will be able to maintain an audience or have compelling content, but when amplified through blog search engines and aggregators like Technorati and Google Blog search, it is clearly a potential threat.

Creating and sharing content
Sharing photos

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The way we take and share photos has transformed thanks to the combination of broadband, the availability of digital cameras and camera enabled mobile phones. When photos are in a digital format there is clearly a demand to share them. Thanks to the rise of simple online photo management and sharing tools such as Flickr.com, Ringo.com and Photobucket.com it has never been easier. These new services have changed photo sharing by making your photos publicly searchable through the introduction of tagging (labelling a photo with a searchable keyword) and social networking aspects. Also as users have become more sophisticated, photos have also become an integral part of social networking profiles and personal blog pages.

Figure 10 below demonstrates the impact of these changes - photo sharing is clearly a mainstream form of content creation and sharing in all markets. The global average is 68% but the variation is small compared to blogging - even in France, the market of lowest adoption 48% have shared. These numbers are consequently vast (see figure 11). The total universe for photo sharing is 122 million in our research universe with a massive 43 million in the US and 41 million in China alone.

Tags / Tagging
“A series of keywords assigned by users to categorise web pages, products and services or content by subject or category. Pages can also be scored or ranked allowing search for content based on Social Recommendation rather than traditional algorithm based search engines.”

Australia, 1.05

US, 43.23

China, 40.67

Figure 10: “Sharing Photos Online”. Base = All Respondents

South Korea, 6.6 Russia, 2.74 Singapore, 0.35 UK, 6.03 Spain, 3.72 Italy, 5.74 Germany, 3.95 France, 3.73 Hong Kong, 0.35 Thailand, 1.09 Malaysia, 0.91 Philippines, 1.13

Figure 11: “Sharing Photos - Universe”. Base = All Respondents. Figures in Millions.

Creating and sharing content
Implications

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Sharing photos online is the most mainstream of content sharing. It is easily accessible and a natural step for digital photos and images. Interestingly users are very willing to share these images publicly through services such as Flickr, who report that 70% of photos uploaded are made public (.Net Magazine September 2006). It's the popularity of sharing images which is changing the internet to a much more personal and connected medium and its impact is huge in terms of how users interact online. Photo sharing is changing concepts of privacy, openness and connection with strangers on an unprecedented scale in part thanks to its reach into the mainstream. The fact that 40m+ people in China have uploaded photos online provides an amazing internal perspective that would have never existed just a few years ago. Photo sharing is in effect making the internet into a mass storage device for the world's experiences and memories - making the whole world visible and visually accessible.

Reviewing products and services
Implications

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Although there has long been the facility to review products and services, in a Web 2.0 enabled space this has become more central to shopping online and researching purchases. Reviews have become easier to create and due to integration with tagging and profiles, now carry more weight than they did. Reviews matched with social profiles allow you to search for products and services that will interest you from people you trust. Regular reviewers are often rewarded for their work with a higher status and often users become habitual reviewers. For many users, writing reviews is one of their primary contributions to the Internet and this can be seen in the level of usage as shown in figure 12. All markets show a very high level of involvement and the global average is 74.1%, making it the second highest reaching activity in the survey. France and Spain lead the way, however it is interesting to see that some of the more developed markets show lower adoption rates than may be expected, in particular the US, UK, Germany and Italy. Russia is the one market with significant lag, but, in the main, reviewing products and services online is a mass market phenomenon and the adoption in less developed consumer markets is very significant - particularly marked is usage in Thailand and Malaysia. Again, as with blogging adoption of online services does not follow traditional economic lines.

The role of online as a commerce tool is firmly entrenched, both in terms of purchasing through online channels and as a source of information for products and services. In a Web 2.0 world where social interaction and personal content are central, the role of the consumer review will hold huge weight. As web users become more comfortable with interacting with people they do not know personally and become more familiar with the concepts of tagging and consumer powered recommendation systems, the role of the consumer review will increase in importance, changing the nature of “word of mouth” as a communication channel. It will be the primary source of information in the purchase process for all online consumers. Also it is clear that online helps cement consumer societies in all markets where online is active.

Figure 12: “Reviewing products and services online”. Base = All Respondents

Social interaction online

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Communication online has never been simpler. Not only have a wealth of new social networking sites emerged such as Myspace, Tagworld and Bebo that encourage interaction through personal profiles and message boards; but technologies such as Instant Messaging and VOIP have become essential online tools that have opened up whole new channels of real time peer to peer communications. These two platforms could potentially revolutionise telecoms and could transform the Internet into the key communication medium, spelling trouble for the fixed line telecoms world. Social Networking The first clear observation on the uptake of dedicated Social Networking platforms (figure 13) is that usage is higher than blogging, with a global average of 28.6%. Again as with blogging there are some differences by market, with South Korea leading the way on 51.5%, however Asia does not dominate as it does with blogging. The other interesting point is that Russia, with its younger online profile has the highest usage in Europe, far exceeding that of Western Europe. The US, often seen as the home of social networking thanks to Myspace, Friendster and Facebook amongst others, actually lags other markets in percentage reach but in terms of numbers (see figure 14) remains the largest market - its 17.8m users representing nearly half the global research universe.

Social Networking
“Virtual communities of users who have their own online profile of personal information and content. The social network technology allows them to associate, communicate and share content with other users based on their personal profiles - thus building a network of individuals.”

Instant Messenger
“Software that allows real time email type conversations with messenger buddies. Popular programmes include MSN Messenger, Yahoo Messenger and Google Talk”

VOIP (Voice Over Internet Protocol)
”Voice telephone calls conducted over the internet. The most well known service is Skype”

Figure 13: “Usage of Social Networking Sites / Platforms” Base = All Respondents

Social interaction online
Implications

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Social networking is outperforming blogging in Western Europe and the US. Why? Well mainly because it is very simple to use and interact with, but also because it has become an essential part of maintaining social status for a certain generation. It is now a core tool, along with the mobile phone to both to stay in contact with friends but also as a way of meeting new people. Blogging in its traditional sense is more demanding, even when writing about personal topics. However, increasingly it will become difficult to pick the two apart as the big social networks increasingly make blogging a core component. It is also worth considering that mass usage of Social Networking is a fairly new concept and many users of these sites are populated by under 16's (hence outside our research). Dramatic growth should be anticipated as they move into the 16+ bracket. That said there are already huge numbers using Social Networks between the ages of 16-44, with our research estimated at least 49m - suggesting a worldwide figure of almost 90m. These are massive numbers and its impact is big in terms of socialising the web - in particular changing concepts of privacy, by making every one and everything public and searchable. It is also making users comfortable with the idea of meeting people online and using online as a social tool. Also we should not forget the role that Social Network sites play in content creation and sharing. Users are becoming more sophisticated in the creation of their personal pages with the integration of graphics, photos, blogging, music and video. For many people online this is where they create most content. The social networks have embraced this, integrating music and video streaming, blogging platforms and full html support. As personal blogging and social networking continue to merge this is a trend set to continue.

Australia, 0.31

US, 17.87

China, 15.64

South Korea, 4.39 Singapore, 0.14 Russia, 1.81 UK, 1.85 Spain, 1.32 Italy, 1.01 Germany, 1.77 France, 1.1 Hong Kong, 0.11 Thailand, 0.4 Malaysia, 0.51 Philippines, 0.64

Figure 14: “Social Networking Universe Sizes” Base = All Respondents

Social interaction online
Instant Messenger (IM)

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The number of IM users is vast, one that could only be rivalled by email. Figure 15 below shows how mass market Messenger has become, with a global average penetration of 78.4%. There are small market differences, with Asia marginally ahead of Europe, US and Australia. China leads the way with near universal usage at 97% and (see figure 15 and 16) 43m users, tied with the US also on 43m. The only exception is Germany, where strangely it has failed to take off. The interesting difference with other platforms is that usage is consistently high across the whole of Asia, regardless of market development.
Figure 15: “Instant Messenger” Base = All Respondents
Australia, 1.14

US, 43.1

China, 43.35

Russia, 3.87

South Korea, 6.89 Singapore, 0.38 Hong Kong, 0.35

UK, 7.74 Spain, 4.35 Italy, 6.53 Germany, 3.78 France, 6.58

Thailand, 1.65 Malaysia, 0.98 Philippines, 1.24

Figure 16: “Instant Messenger Universe Sizes” Base = All Respondents

VOIP (Voice Over Internet Protocol)

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As a technology VOIP could be one of most revolutionary online developments in the past few years. The ability to make phone calls for free anywhere in the world could completely revolutionise not just the online experience but the telecoms model. VOIP is becoming more consumer centric with services such as Skype and retailers like Tesco making it easier to set up and operate while existing online platforms like Ebay are beginning to integrate it as a form of buyer / seller communication. Understandably telecom companies the world over look at VOIP with a sense of foreboding and figure 17 will show why. For such a new and relatively complex technology the growth in VOIP users is impressive. The global average is 23.4% with less developed markets leading the way; embracing a service that bypasses unreliable, expensive and bureaucratic fixed line services. Malaysia has the highest level of usage with 39%, while interestingly the US and the UK which are two of the most developed telecoms markets, rank last with just 12%. This suggests that VOIP may grow more slowly in more developed markets. Once again, adoption of online services is not linked to economic development.

Australia, 0.27 China, 16.04

US, 6.73

Russia, 0.66 UK, 1.36 South Korea, 1.54 Spain, 0.95 Singapore, 0.12 Hong Kong, 0.08 Thailand, 0.47 Italy, 2.92 France, 2.06 Germany, 1.87 Malaysia, 0.44 Philippines, 0.48

Figure 18: “VOIP universe” Base = All Respondents

Figure 17: “Usage of VOIP” Base = All Respondents

VOIP (Voice Over Internet Protocol) + (IM) 22
Implications

It is clear that IM is changing the nature of global communication. Its stealth growth has made IM a main stream form of communication. Its impact is much underrated, enabling real-time global communication for no cost above the price of the internet connection. Anyone with friends and relatives abroad will tell you how important it is. Thanks to these factors it is universally embraced in all markets (except strangely Germany) and plays a big role in globalising and connecting the web. It is a much untapped platform and more could be done to integrate it into social network platforms, ecommerce or as a real time method of customer service and site assistance. It is however clearly acting as a catalyst for VOIP, with growing availability of video and voice via webcams through Instant Messenger platforms. Most VOIP services are not much more than enhanced Messenger services and it's this similarity that could propel it into the mainstream and potentially revolutionise telecoms. It could have bigger ramifications for an existing business model than consumer content creation could have on the established media world. It is also interesting to see that growth of VOIP is driven by less developed markets suggesting that this technology could help level the playing field and play a role in creating an increasingly globalised and connected world.

Personalised multimedia experience 24
Watching video clips online

Fuelled by Web 2.0 technology and the massive growth in broadband the Internet has taken real steps towards becoming an entertainment medium. The much quoted rise of youtube.com and its 3 billion streams a month sum up the rise of multimedia content online. There are signifiers of the multimedia nature of the Internet everywhere you look, for example: all Champions League football is now broadcast online; Warner Music signing a deal to make all their music videos available through youtube.com; MTV launching MTV flux an online video portal. It's a clear shift - not only for video, but podcasts, online radio, music, aggregators and personalised homepages. It is also easier for consumers to get involved: creating video and audio thanks to the wealth of low cost and increasingly high quality digital cameras and mobile phones which offer live recording. Figure 19 shows the extent to which watching online video is now beginning to enter the mass market - with a global average penetration of 32%. There are however some interesting distinctions by market. China leads the way with a massive 56.2%, fuelled by the opportunity to consume independent and relatively un-censored media. The next two markets are Malaysia and Philippines, again demonstrating the global appeal of new Internet services. The other interesting point within Asia is the relatively low take up in South Korea - a market normally at the forefront. Within Europe, Italy, Spain and the UK are more entertainment oriented, while France and Germany lag. The US hits the global average which for such a mature market shows the real impact of online video.

Figure 19: “Watching Video clips online” Base = All Respondents

Personalised multimedia experience 25
Podcasts

Podcasts Compare watching video clips to Podcasts (figure 20), and it's clear that on demand video is beating audio hands down. The global average is just 17.4%, well beneath video clips. Interestingly France and South Korea have the highest reach, but the pattern across all markets is similarly low. Why? There are a number of clear reasons that could explain this: copyright limits the musical content that Podcasts can include so the vast majority are voice and special / niche interest; video clips are shorter, more interactive and easier to share virally; it is easier to create video clips that are entertaining - Podcasts require more equipment and radio production skills to make engaging content; the distribution platforms for video clips are more consumer friendly and easier to make part of your day to day surfing. Distribution platforms for Podcasts are improving, in particular the integration with the Itunes music store, however until copyright issues are resolved then the Podcasts in the future are still likely to lag video.

Podcasts
“A method of delivering audio files over the net. Podcasts are typically half and hour to an hour in length and usually recorded in the style of a radio show. Podcasts available to today cover every imaginable topic from unsigned bands to technology. You can subscribe to Podcasts via RSS, through services like iTunes or downloaded directly from the publishers website. Once you have subscribed you automatically receive the next installment when it is published” individuals.”

Figure 20: “Listening to Podcasts” Base = All Respondents

Personalised multimedia experience 26
Streaming

Comparing these figures to Figure 21 for Streaming Live Video / Audio and some interesting differences emerge. Firstly the levels of streaming live are much higher in all markets, secondly live streaming is driven by Western Europe and the US - whereas watching video clips is driven by Asia. This suggests a different relationship to media, with established Western Europe and US markets orientated around delivery in a more conventional live form. One reason is that the majority of live streaming is likely to be audio, hence far more likely to be Internet radio streams. Radio has a stronger heritage in Western Europe and the US and higher levels of online listening have been inherited from traditional broadcasters. Also developed media markets have better resourced organisations such as the BBC, Canal+, CBS who have the resource to deliver live content and have promoted it. The one Asian market that matches Europe and the US is China, whose figures again indicate the appeal of external new sources of media.

Figure 21: “Streaming Live Music / Video” Base = All Respondents

Personalised multimedia experience 27
Streaming

Australia, 0.4

US, 19.17

China, 25.2

South Korea, 2.53 Russia, 1.03 Singapore, 0.15 UK, 3.52 Spain, 1.46 Italy, 3.29 Germany, 1.57 France, 1.83 Hong Kong, 0.15 Thailand, 0.58 Malaysia, 0.44 Philippines, 0.56

Comparing the universe sizes for streaming to those for watching video clips on demand (figure 22 /23) makes these differences even more obvious. Asia has a much larger share of watching video clips versus streaming and China is marginally the largest market. The other interesting comparison is within Western Europe, where France, Germany and the UK lead in terms of volume for streaming but only the UK has a large take up of watching clips. The enthusiasm with which Europe and the US embrace streaming is an interesting difference and one that is likely to be a result of the legacy of well resourced and established media organisations that are more likely to stream live and more likely to promote it.

Figure 22: “Universe of users viewing video clips online” Base = All Respondents

Australia, 0.44 US, 32.84

China, 25.39

Russia, 1.63

UK, 5.52

South Korea, 2.96 Singapore, 0.15

Spain, 3.42 Italy, 4.09 Germany, 4.23 France, 5.33

Hong Kong, 0.12 Thailand, 0.59 Malaysia, 0.5 Philippines, 0.61

Figure 23: “Universe of users streaming live music / video online” Base = All Respondents

Personalised multimedia experience 28
Implications

Multi-media online is now the norm for our online universe in all markets. This is particularly case for streaming media via online in the traditional live sense. Watching clips on demand has a much smaller reach but its growth is significant. The idea of trawling pre made and user generated video is a fairly new concept. Podcasting is also relatively new and, although its take up is markedly lower, thanks to the global nature of online there is still an audience of millions. Streaming live media is more popular particularly in developed media markets mainly due to existing media organisations moving their radio and, increasingly, TV delivery online. This has been promoted heavily and has been made available through existing media organisations' online properties. In the main it is an easier point of entry for consumers wishing to utilise their PC as an entertainment medium. It is also a more familiar concept, with media delivered in real time. On-demand media is newer, requiring more consumer input and sifting of content. Despite this, on demand is clearly set to grow and become the preferred method of receiving content online. Video will lead the way especially as established media content producers start distribution of new productions in an on-demand format and see the value of monetising their archives. Podcasting is likely to continue to lag and will only compete if copyright issues are resolved currently the record industry is holding this back.

In summary the internet clearly is evolving into a global entertainment platform, which, for content producers both consumer and professional, is a massive opportunity. It is also a big boost for the advocates of convergence and the idea of internet delivered content being made available through your main TV set in the living room. It is surely only a matter of time before this is the norm and many companies will benefit substantially: online distribution channels like Yahoo Go; technology companies such as Sony who will connect the PC and the TV and content producers themselves. The barriers to creating globally recognised and appreciated content are falling and a golden age of video could emerge. The industries who should be really concerned are the networks, cable companies and satellite broadcasters who have historically controlled distribution within markets very tightly.

Personalised multimedia experience 29
RSS (Really Simple Syndication)

RSS at face value may seem somewhat unexciting, however it is a very important concept in enabling the on-demand multimedia internet that is taking shape. RSS essentially brings content to you rather you having to search for it - hence its importance in a world of seemingly infinite media choice. RSS technology is gradually becoming integrated into various online applications, including email systems, web browsers, personalised home pages, news aggregators and media centre software. It delivers new stories from blogs and news sites, Podcasts and videocasts. However as figure 24 shows RSS has really failed to take off across all markets. Just 20% have ever used it with the developed markets of Europe and US lagging Southern Europe and Asia. Mirroring Germany's low use of blogs, just 5% have ever used RSS. In all markets the low use is far below the adoption of platforms such as blogging, online video platforms, Podcasts etc that have RSS as an integral technology. This makes it clear that RSS has not resonated as a concept with consumers.

RSS Feeds
- “A web technology which allows you to subscribe to content from a particular web page or blog. When new content is published it is send directly to you, rather you having to visit the web page or blog. As well as specialist reader products aggregator technology is gradually being built into portals, search engines, and email programmes.”

Figure 24: “RSS Usage” Base = All Respondents

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Implications

RSS clearly has a bit of image problem and its adoption lags the technology it helps consumers find, use and subscribe to. The concept of subscribing to content is not yet consumer friendly enough and has not been promoted or packaged correctly. It needs simplifying and needs clearer integration into the tools everyone uses online, such as web mail and instant messenger. Once RSS has been integrated properly across all platforms, particularly home media centers, it will inevitably become a core mass market technology, even if it is not known as RSS. As more and more web users immerse themselves in user generated content and the world of near infinite media choice, RSS will become required to navigated the wealth of content choice.

Overall summary - what is the impact? 31

It's clear that Web 2.0 technologies are being adopted on a global scale regardless of internet penetration, region of the world and economic development. It is a global phenomenon and web users are showing signs of living up to the hype. The summary of adoption as shown in figure 23 demonstrates how wide-scale overall adoption levels are, while figure 24 demonstrates the size of these potential audiences. Consumers are creating and sharing content, connecting socially and increasingly using the internet as a multi-media experience. The numbers are huge (see figure 24) and it is happening now, not in the future. Interestingly adoption is not along the traditional economic lines. Figure 25 reveals the extent to which online is going to be driven by Asia, with the top five markets all being from Asia, with only Thailand falling into the bottom half. Spain and France lead the rest of the world, including the US.

Figure 24: “Global Research Universes” (Figures in millions) Base = All Respondents

Figure 23: “Global reach” Base = All Respondents: Average usage across all markets

Figure 25: Global Web 2.0 adoption index (average take up by market across all technologies and activities in the questionaire) - All Respondents

Overall summary
Implications for media owners

32

Online is progressively becoming the core medium for interaction, creativity and entertainment across the world. Although it goes without saying that internet users are not yet entirely bypassing regular media sources in favour of creating, sharing and consuming user generated content there are clearly massive implications for all media owners, in terms of near and far future trends. If offline media owners have not already put online at the heart of their product, they must do so regardless of the market they operate in. Media brands need stretch across a variety of digital platforms if they are going to survive this world of unlimited fragmentation and the demise of tightly controlled market orientated distribution platforms. Web 2.0 technologies are increasingly shifting media distribution platforms to a global scale - presenting media owners both with opportunities to reach new audiences, but also the some key challenges: remaining relevant to their audience; increased competition; growing issues with copyright and rights ownership. Also, media owners will have to produce more as the delivery of basic news will increasingly become commoditised due to the wealth of sources and the always switched on nature of online. Editorially there will be more demand for expertise and niche content as people increasingly mix and match expert content with a distinct voice and point of view via their personalised page or content aggregator. As well as an increasingly competitive professional environment, there is going to be huge competition from consumer content, which as demonstrated has a big future in all markets. Asia is leading the way with content creation and interaction, but the other regions will follow along the path from passivity to interactivity. Although vast majority of this content is of personal interest and clearly not everyone will start creating content, the scale is alarming for established media companies. Supposing that 10% of users create content and 10% of these produce something of wider interest, millions of new media sources will emerge to challenge established media owners. The threat is magnified by the new online platforms that are emerging: video sites, photo sharing, aggregators and personalised homepages all sift and sort the best of user generated content bringing together user created media into a viable channel.

In order to survive this onslaught of user generated content, existing media brands must try to involve consumer interaction and content creation within their digital platforms, while at the same time opening up communication with users to become more conversant. They must be comfortable at releasing their content in channels not controlled by them, while delivery should evolve into short regular feeds in order to remain relevant in an age of RSS feeds, aggregators and personalised home pages. Anyone that produces video and audio content is provided a massive opportunity if they embrace Web 2.0 properly: broadcasters, production companies, record labels, movie production companies and TV stations could potentially distribute their new and archived content across the world - directly controlling distribution and access rather than relying on the satellite, cable and TV networks or the DVD and CD store. This should be seen as a massive opportunity rather than a threat. Also the potential to make revenue from old content currently sitting in dusty boxes is vast it can be monetised through sponsorship, adverts, subscription or pay per view. Why TV networks, movie studios and record companies cannot see this currently is baffling. Rather than threatening to sue the users and channels who use their content illegally they should be embracing the potential to reach hundreds of millions of consumers in new markets with recycled content. Media in this on-demand format will change revenue structures meaning that retaining revenue through traditional interruptive advertising formats, such as the 30 second commercial will become more difficult. Live broadcasting and event TV will become more important to deliver any kind of significant mass audience. However the rights to screen live events will become more difficult to source as rights owners may in the future increasingly wish to distribute coverage themselves rather than sell their rights to the TV networks and Satellite broadcasters. The real threat is to the existing controllers of the distribution channels. The appetite online users across the world show for consuming audio and video media online is a real long term threat to the cable, satellite and TV networks. When online links to the main screen in the household as will happen inevitably in the near future, services such as Youtube and Itunes, or the future as yet to emerge equivalent could be the distribution channels of the future.

Overall summary
Implications for advertisers

33

Advertisers and marketers who embrace the changes that Web 2.0 is delivering have massive opportunities to connect with consumers as never seen before. The number of new channels of communication are huge and the possibilities are endless. It also opens up new revenue streams, and links communications and sales in ways that were never previously possible. Future communications can work as revenue earner for Web 2.0 embracing brands. There is also a major opportunity to build global brands and access new markets in ways and at a cost never previously possible. As culture becomes more intermixed and accessible it is likely that existing established international brands many of which are European and American will be well placed to benefit. Marketers and agencies that continue view this as a threat and refuse to adapt from the old interruptive model will see their communications lose effectiveness over time and their brands and sales suffer. The clear global trends of adoption show this is taking off now so it is not something to plan for in ten to twenty years. This is a current reality and as more and more people move online and embrace Web 2.0 services it will grow and grow. There are a number of things that marketers, advertisers and communications agencies need to do to survive in a world of consumer generate media and infinite channel fragmentation.

• • • • • • •

Embrace sponsorship and new online formats, such as Podcasts and Videocasts. Consumers like online because access is generally free and will happily trade commercial intrusion for access. E.g Visa and Dell sponsoring “This week in technology” and “Inside the Net” Podcasts In an on-demand content world there are huge opportunities for brands to create experience for customers by providing free content and media. E.g Free iTunes downloads with Coca-Cola. Encourage consumers to interact with your brand E.g Lynx Boost - Shower boy blog and myspace site tracking their on street event activity Be comfortable distributing your brand in channels you cannot control. In a world orientated around consumers creating content anything could happen. Good brands will benefit, bad brands with false promises will be found out E.g Mentos and Diet Coke fountains competition on youtube Do not try to control the channels of creativity consumers have too many options. They will go somewhere else E.g. Land Rover’s ‘go beyond’ video platform. In the new world of online, everything is inter-connected. This also applies to branded websites - siloed sites will struggle to engage in the future online space. Web 2.0 is globalising media consumption - online media platforms work across markets, really only limited by language. The conventions of working within a market will lose relevance and increasingly, a global perspective will be needed. Brands will have to have global identities and positioning universal, executed through global strategies by agencies who can deliver on a worldwide basis. Conflicting local positioning in a Web 2.0 world is likely to create confusion in the eyes of consumers.

• • •

Ensure online is central to all brand communications linking all elements together Shift from thinking about interruptive advertising to creating content and services available across multiple digital platforms that offer genuine consumer benefit. E.g Pampers.com which offers a full online resource for parents with young children. Brands have the same opportunities as consumers it's never been easier to create and share content and they should embrace it. E.g BMW video casts on iTunes

For more information contact Tom.smith@universalmccann.com