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Social Media: Advertising Expected to Power Social Networking Revenues
Despite some recent hiccups from now-public companies Facebook and Zynga have had recently, Gartner and other analysts are predicting huge growth in advertising revenues from Social Media. This year Social Mediarevenues are on track to bring in $16.9 billion, a 43 percent increase over previous year revenues. Roughly half of those revenues — $8.8 billion — come from advertising. Sales from gaming and virtual goods are also expected to be a big contributors to revenues.
That’s not too surprising given the huge audience of Social Media. Facebook alone, for example, has more than 900 million users and 58 percent of them log into Facebook every day. And many of those users spend considerable time on the site once they get there. Research from Comscore found that users spend about 15 percent of their online time using Social Media. Information that users freely provide about themselves on social networking sits allow marketers a way to fine tune their advertising to target specific customer segments.
Part of the reason why advertising revenues are up is that ads are becoming more expensive. A report by TBG Digital studied Facebook advertising and found that over the past year that the CPM or cost per thousand impressions grew by 58 percent over last year.
Neha Gupta, senior research analyst at Gartner, said that “usage of online social media has matured, and more than one billion people worldwide will use social networks this year. Although the number of social media users is large, and in some cases increasingly mature in their usage patterns, the market is still in its early stages from a revenue perspective.”
