• by Joe Mandese  @mp_joemandese, May 11, 2010

Social media may be one of the most talked about segments of Madison Avenue's media mix, but it's still relatively miniscule, according to a new study being released today by a highly regarded media economics tracking firm. The report, Social Media Sponsorships Forecast 2010-2014, which is the first to be produced by Stamford, CT-based PQ Media, estimates that despite a healthy 23.6% rate of growth this year, social media sponsorships will reach only $56.8 million in marketing expenditures during 2010.

While that is a relatively tiny segment of the roughly half trillion advertising economy, the report represents a valuable benchmark for a medium that has been exploding in terms of consumer usage, and which marketing and agency professionals are just starting to get their arms -- and marketing budgets -- around. Perhaps the most important part of the new report is the fact that PQ Media has created an operational definition for social media sponsorships that can be used to track its dimensions and growth over time.

According to PQ, social media sponsorships are: digital, word-of-mouth marketing, "in which brands provide material compensation, such as cash, products, points or trips, to social media content creators to promote and/or review their products and services through long-form text or status updates, often with accompanying visuals."

While a mouthful, the definition creates a construct for understanding where and when social media fits into marketing budgets and parameters. The PQ report further divides social media sponsorships into "cash-sponsored" and "non-cash sponsored" segments, and estimates that the latter currently accounts for more than three-quarters (77.6%) of total expenditures.

To further put some dimensions on social media sponsorships, PQ estimates that total expenditures -- both cash and non-cash -- currently represent only 2.7% of all word-of-mouth marketing expenditures, online and offline.

While the overall size of social media sponsorships is small relative to mature marketing categories, PQ notes that it is growing fast, even amid the global economic recession, and the rollbacks in other areas of marketing spending. Between 2004 and 2009, the value of social media sponsorships grew at a compound annual rate of 77.6%.

Significantly, social media sponsorships defied another critical industry expectation, that federal regulations forcing marketers and social media brand advocates to disclose their relationships would actually stymie not stimulate its growth.

PQ Media CEO Patrick Quinn actually singles out the Federal Trade Commission's "transparency guidelines," which require social media content creators to disclose when they receive compensation in exchange for editorial coverage, as part of the reason for the industry's growth.

"The FTC guidelines have served to bolster the category's growth over the past year, despite what some industry observers thought would happen -- that growth would be hampered," the PQ report concludes.

The report notes that the largest brand categories by spending are consumer packaged goods, food and beverage, health and beauty, and media and entertainment.