• by Gavin O'Malley  @mp_gavin, April 24, 2009

Thanks to the rapid growth of Web video and social networking, online engagement only continues to deepen, according to a report released Wednesday by The Nielsen Co.

"The Internet remains a place of continuing innovation, with users finding new ways to integrate online usage into their daily lives," said Charles Buchwalter, SVP of research and analytics at Nielsen Online.

"In recent years, the Internet has changed dramatically as people seek more personalized relationships online," said Buchwalter. "In particular, time spent on social networks and video sites has increased astronomically."

And according to Buchwalter, advertisers are beginning to catch on. "Advertisers are starting to positively reassess the value of the online experience and create more meaningful relationships with consumers."

With the global recession in full swing, online display advertising has plateaued at 20% of total online ad spend in the U.S. In particular, spending on online display advertising by financial services, automobile and retail companies has declined steeply. On the other hand, several key, heavy ad-spending industries such as health care, consumer products and telecommunications appear to be moving even more spending online.

Since 2003, the interests of the average online user have shifted significantly. Categories that consisted of portal-oriented browsing sites, such as shopping directories and guides and Web tools and services, used to be the top categories for user engagement.

However, Internet users today tend to prefer sites that contain more specialized content, according to Nielsen. This change in preferences is seen in the fact that video and social networking sites have moved to the forefront, becoming the two fastest-growing categories in 2009.

The number of U.S. consumers who frequent online video destinations has climbed 339% since 2003, while time spent on video sites has shot up almost 2,000% over the same period. In the last year alone, unique viewers of online video grew 10%, while the number of streams grew 41%, the streams per user grew 27%, and the total minutes engaged with online video grew 71%.

Meanwhile, there are 87% more online social media users now than in 2003, with 883% more time devoted to those sites. In the last year alone, time spent on social networking sites has surged 73%, while in February, social network usage exceeded Web-based e-mail usage for the first time.

Over the long term, Nielsen predicts that the Internet's share of total ad spend will continue its steady upward trend as global economies emerge from the current recession. What's more, given the increased focus on digital marketing by leading packaged goods companies, the Internet's share of commerce will continue to rise as well.