Commentary

Social Media Ad Revenues Will Reach $8.3 Billion by 2015

Social media ad spending will increase at a cumulative annualized rate of 31.6% per year from 2010-2015, according to a new forecast from BIA/Kelsey, which sees social media ad revenues jumping from $2.1 billion in 2010 to $8.3 billion in 2015. Four years from now, BIA/Kelsey expects that social media will contribute 21.9% of all digital advertising revenues -- up from practically nothing just two or three years ago.

 

There's no question this is an impressive growth rate, reminiscent of the first surge of Internet advertising in its glory years from 1997-2000 and then again from 2003-2008. And the growing proportion of digital ad revenues contributed by social media corresponds to its growing share of online activity, as more and more people spend more and more time on networks and self-publishing platforms like Facebook and YouTube.

 

But at the same time, the skeptic in me (driven by my perpetual anxiety about a social media bubble) has to ask whether this admittedly cheery forecast is cheery enough to justify some of the valuations ascribed to big social media players in recent months.

 

Yesterday, for example, the Wall Street Journal reported that Facebook will be worth $100 billion by spring 2012, citing anonymous sources familiar with the company's finances. The WSJ also reported that Facebook's revenues will top $2 billion this year.

 

Let's set aside the fact that Facebook's valuation is 50 times its revenues in the near term. Even assuming that all of BIA/Kelsey's projected 2015 social media revenues end up going to Facebook (which seems unlikely), and that Facebook's valuation remains stable at $100 billion (which also seems unlikely) -- the current valuation is still more than 10 times its projected revenues... four years from now! I'm no financial analyst, but in my humble op-ed something isn't adding up.

1 comment about "Social Media Ad Revenues Will Reach $8.3 Billion by 2015".
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  1. Elias shams, May 3, 2011 at 5:04 p.m.

    It’s no brainer to see that social media is here to stay for good. Given vast variety of the existing channels to choose and stick with, it’s time for such a hot space to enter into a new category. There is a need for a portal to provide a quick and intelligent decision for both the consumer and the enterprise about their online connections.

    A Platform to Help us to Distinguish Our Quality vs. Quantity Friends, Fans, Followers, and Companies

    Facebook, Twitter, LinkedIn, Youtube, Flickr and others have been doing a decent job of providing additional marketing exposure and even in some cases, additional revenue. However, as more and more social networking sites pop up, how do you manage your brand across all these channels? Maybe more importantly, which one of these sites should you select as the one that will help you best reach your target audience? The proliferation of the social media avenues is becoming overwhelming.

    This glut of information reminds me of the early 90’s when WWW was adopted broadly by the general public. Every company rushed to have a presence, to the point it became literally impossible to find the right information on the Web. That’s when a better generation of search engines – at first the Yahoo! and then Google – entered the market and helped us find the most relevant information by just typing simple keywords in their search box. If you had asked before Google launched, if there was a need for another search engine – most would have said no, we already have those….

    Then came Web 1.0 & 2.0 – Youtube, Flickr, myspace, Facebook, Twitter and countless others have turned everyday people into content producers, influencers and experts. We basically tripled down on the information overload How do you know which channels to select for deploying your social media strategy? How do you know which one is the right channel to let your fans and followers to find you, your products, and services? Most importantly, who is Joe Smith that is recommending that person, that company, that product?

    I hope my awesomize.me can accomplish such a mission. The site is not another social networking platform. Yet the portal to all your existing social media channels. The platform helps you, your fans, your potential clients to make an intelligent decision as to which company to connect to or follow via which social media channels and why? It’s free!

    Elias
    CEO & Founder
    http://awesomize.me

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About the Author

Erik Sass is editor of Publishers Daily. You can reach Erik at eriksass@gmail.com.