Social Ad Spending Trending to Local Markets

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According to the recent BIA/Kelsey forecast, U.S. social media ad revenues will reach $9.2 billion in 2016, up from $4.6 billion in 2012, representing a compound annual growth rate of 19.2 percent. According to the U.S. Local Media Forecast, the local segment of U.S. social media advertising revenues will grow from $1.1 billion in 2012 to $3 billion in 2016 (CAGR: 28 percent).

While roughly three-quarters of social media spend this year is estimated to be national, that share is predicted to drop to about 68% by 2016.

Jed Williams, program director, Social Local Media, BIA/Kelsey, says “... the continued development of native ads... Facebook’s Sponsored Stories and Twitter’s Promoted Tweets... and the acceleration of mobile monetization will be the primary drivers of social advertising growth through 2016...”

BIA/Kelsey defines social media advertising as money spent on advertising formats across social networks. Social display advertising will continue to account for a higher percentage of revenues, due in large part to Facebook’s Marketplace Ads and YouTube’s multiple display units (video, traditional banners).

Spending on social display advertising will increase from $3 billion in 2012 to $5.4 billion in 2016 (a CAGR of 15.2%), according to the forecast, accounting for a higher percentage of revenue through 2016 than native social ads (e.g., branded content in newsfeeds and content streams).

The forecast expects robust growth during the forecast period from native social ad formats, which are emerging as viable display alternatives. The report defines native social advertising as branded content integrated within a social network experience (e.g., the newsfeed or content stream). Spending on native social advertising will grow from $1.5 billion in 2012 to $3.9 billion in 2016 (CAGR: 26%). Growth will be driven by the higher premiums native social ad units command.

The forecast also identifies mobile as a key growth area for social media. The report estimates social-mobile ad revenues will increase from $500 million in 2012 to $1.5 billion in 2016 (CAGR: 28.5 percent). A variety of forces will influence this growth, including rapid social-mobile consumer usage growth, active experimentation by vendors and deep integration of native ad units on the platform.

Desktop ad spending will grow at a slower rate than social mobile ads through 2016 (CAGR of 17.7% vs. 28.5%), but will continue to account for most of the spending, finishing at $7.7 billion in 2016 versus $1.47 billion for mobile spend.

For more information from BIA/Kelsey, please visit here.

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1 comment on "Social Ad Spending Trending to Local Markets".

1. David Deering from Touch Point Digital Marketing Agency
   

   commented on: December 26, 2012 at 9:49 a.m.
   Interesting facts about the future of ad spending. Obviously, social-local-mobile (aka SoLoMo) is where businesses need to invest with regards to marketing their business, as the article clearly reiterates. Unfortunately, many small businesses have been slow to adapt, especially when it comes to having a mobile-friendly web site, but the ones that do will be that much ahead of their competition.

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