Social Networks Ad Spending Forecasts Revised — Up

After suffering a slowdown along with the rest of the ad industry during the recession, social networks are on a growth trajectory this year. And this sector is growing both in the U.S. and in foreign markets. By 2011,  the $2.17 billion spent on social networks in foreign markets will comprise 50.9% of global spending while the U.S. will have 49.1% or $2.09 billion of the total.

eMarketer analysts expect to see spending on social networks in the U.S. reach $1.68 billion in 2010. This represents a 20.3% increase over the $1.4 billion spent on this format last year. These numbers were revised up from the December 2009 projection of $1.3 billion.

The industry leader in the social networking arena, for now, is Facebook. The company is expected to collect over $1 billion in 2010 ad revenues. A key factor in the company’s growth has been its self-​serve ad system that “ allows advertisers to create small ads that appear on the right-​hand side of Facebook pages and then target the ads to segments of the Facebook audience.”  Other major players include MySpace and Twitter. For now, MySpace traffic has been sliding and Twitter has just begun to monetize its business model through advertising.

Writing for eMarketer, Debra Williamson points out that "Facebook is asserting itself not only as a social-​networking giant but also as a real rival to Google, Yahoo! and Microsoft."  The continued interest in the social networking channel means marketers are likely to shift more resources to this format in 2011 and beyond.

[Sources : Williamson, Debra Aho. Facebook Is Closing the Ad Revenue Gap with the Portals. eMarketer​.com. 23 Jun. 2010. Web. 24 Aug. 2010. Social Network Ad Spending to Approach $1.7 Billion This Year. 16 Aug. 2010. eMarketer. Web. 23 Aug. 2010] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.