Commentary

Social Media Revenue Booms, Led by Ads

Social media is blowing up (in a good way, meaning monetization) according to Gartner, which predicts that total global social media revenues will increase from $11.8 billion in 2011 to $16.9 billion in 2012 -- then continue to grow to $34 billion in 2016. That’s 43% increase from 2011-2012, and a cumulative annual growth rate of nearly 20% per year from 2012-2016.

Advertising is still the largest contributor to social media’s bottom line, and will remain so, according to the Gartner forecast, which predicts total social media ad revenue will increase from $5.5 billion in 2011 to $8.8 billion in 2012. That’s a year-over-year growth rate of 60%, versus 43% for the medium overall. Meanwhile advertising’s share of total social media revenues worldwide will increase from 46.6% to 52%.

The other main revenue source for social media -- social gaming, including sales of virtual goods -- will reach $6.2 billion in 2012, Gartner predicts, representing 36.7% of total social media revenues.

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Maybe one of the most interesting, and telling, details is the way Gartner (like plenty of other research and analysis outfits) has had to revise its forecasts upward. Last year Gartner predicted that total revenues in 2011 would come to $10.3 billion, before revising it up to $11.8 billion in the latest analysis; for 2012, Gartner’s latest forecast of $16.9 billion is up from last year’s prediction of $14.9 billion. Focusing in on advertising, the predicted 2012 total of $8.8 billion is up from their 2011 prediction of $8.2 billion.

 
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