According to revised estimates by eMarketer, $1.4 billion is the expected amount to be spent on advertising on social networking sites in 2008 in the U.S., a 55% increase from 2007's $920 million figure. Previously, this spending was projected to be $1.6 billion.
U.S. online social network ad spending is expected to increase to $1.8 billion in 2009, $2.1 billion in 2010, $2.4 billion in 2011, and $2.6 billion in 2012. Prior to the revised projections, eMarketer had expected this ad spending to reach $2.7 billion in 2012.
The main reasons for the weathered expectations are the dragging economy and the inability for social networks to come up with viable advertising models.
MySpace was previously expected to reign in $850 million worth of ad spending in 2008, but eMarketer has lowered that figure to $755 million, which would give it 53% of the total ad spending in the online social networking realm. This is mostly due to Fox Interactive Media’s revenue difficulties.
Facebook is expected to draw $265 million in ad spending in 2008, or 19% of the total. Previously, the estimate for Facebook was $305 million. The lowered expectation is partly due to the overall economy, and partly to the possibility that marketers will shift more dollars into creating applications, which do not garner Facebook any direct revenues.
The $1.4 billion expected to be spent on online ad spending in the social networking realm in the U.S. during 2008 will account for 5.5% of total online ad spending.
Worldwide, $2.0 billion is expected to be spent on advertising on online social networks in 2008. This figure will increase to $2.7 billion in 2009, $3.2 billion in 2010, and $3.8 billion in 2011, according to eMarketer estimates.
The ability to generate consistent, viable sources of revenue will be the next giant leap to legitimacy that social networks will have to make if they want to justify some of the exorbitant evaluations being thrown around.
Source:
http://www.emarketer.com/Article.aspx?id=1006278
Jason Hahn
e: jhahn221@gmail.com
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