Social Media Revs To Reach Nearly $17 Billion

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Advertising will contribute $9 billion to social media global revenue of nearly $17 billion this year, up from $12 billion in 2011, estimates Gartner. The approximate 43% uptick supports stronger social signals that find their way into search, mobile and premium display ads.

Neha Gupta, senior research analyst at Gartner, estimates more than 1 billion people worldwide will use social networks in 2012, but not just for social streams on sites like Facebook and Google+. Gaming revenue from social media more than doubled between 2010 and 2011, and is expected to reach $6.2 billion in 2012.

According to Gupta: "There is now a social element to most websites, for example, most email services have integrated chat rooms for their users, and travel booking sites allow users to leave messages about their experiences. However, we have only included dedicated websites in our definition and not online environments with social features."

Revenue from subscriptions is predicted to reach $278 million this year. The sale of virtual goods will remain the primary source of revenue.

Some social developers, such as Zynga, GREE and DeNA, have moved to an open-platform strategy to support user convenience and choice. Along with the developers' move, marketers are allocating a higher percentage of their advertising budget to social networking sites -- not just traditional social sites like Facebook, but video services.

Gupta predicts that ecommerce on social media sites will evolve into a payment platform for transactions of digital content to pay for applications and social gaming or to make a person-to-person payment to another user in the network site. These new revenue opportunities will augment mobile and TV platforms that integrate with social networks as a core service.

Dan Salmon, equity research analyst for advertising and marketing services at BMO Capital Markets, views Google's YouTube as a social network. At the MediaPost OMMA Data & Targeting conference, he told attendees that Google built the service on paid media, but it's also an important earned media service.

Salmon gave attendees a snapshot of how advertising budgets are allocated. He looked at earned and owned media, estimating that paid media takes about 87% of marketing spend; that advertising takes up about 53%; marketing services like direct mail makes up 34%; IP marketing ad agency fees, 8%; and data and intelligence, 4%.

Despite all the hype, software and technology only makes up about 1% of spend; and IP marketing, 25% -- not just the Internet, but also mobile and connected TVs.

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