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.