While marketers continue to try to find the best ways to target consumers through social media and how to access metrics to calculate true ROI from social media marketing initiatives, the ambiguities around the social media industry haven’t deterred brands from investing in social media ads. According to forecasts from BIA/Kelsey, U.S. social media ad revenues are projected to increase from $4.6 billion in 2012 to $9.2 billion in 2016. That’s an impressive compound annual growth rate of 19.2%.
For the purposes of its projections, BIA/Kelsey defines social media advertising as, “money spent on advertising formats across social networks.” Social media advertising includes social display advertising as well as native social ad formats, which the company defines as, “branded content integrated within a social network experiences (e.g., the newsfeed or content stream).”
Social Media Ad Revenue Growth Projections
BIA/Kelsey forecasts that spending on social display advertising will increase to $5.4 billion in 2016 (up from $3 billion in 2012 and representing a 15.2% compound annual growth rate). Spending on social display advertising is expected to do even better growing from $1.5 billion in 2012 to $3.9 billion in 2016 (compound annual growth rate of 26%).
Local social media advertising will grow at an even faster compound annual growth rate of 28% driving revenue up from $1.1 billion in 2012 to $3 billion in 2016. However, mobile social advertising will experience the greatest growth of all social media ad revenues with a 28.5% compound annual growth rate. That growth will bring mobile social ad revenue up from $500 million in 2012 to $1.5 billion in 2016.
What’s Behind Social Media Ad Revenue Growth?
The growth of social media ad revenues that is expected to occur during the next four years can be attributed to a variety of factors but BIA/Kelsey identifies several primary drivers in its U.S. Local Media Forecast report:
- The ongoing development of native ads like Facebook Sponsored Stories and Twitter Promoted Tweets along with higher premiums for those ad units.
- The rapid growth of mobile monetization.
- The acceleration of social-mobile consumer usage.
- The continued experimentation by advertisers and social media vendors.
Is your brand testing social media advertising? An integrated approach that leverages all social ad formats for experimentation (including mobile) is extremely important right now, and based on these projections, if you’re not already experimenting, your brand is already behind.
Image: Channelship Web Agency
Susan Gunelius is the author of 10 marketing, social media, branding, copywriting, and technology books, and she is President & CEO of KeySplash Creative, Inc., a marketing communications company. She also owns Women on Business, an award-wining blog for business women. She is a featured columnist for Entrepreneur.com and Forbes.com, and her marketing-related articles have appeared on websites such as MSNBC.com, BusinessWeek.com, TodayShow.com, and more.
She has over 20 years of experience in the marketing field having spent the first decade of her career directing marketing programs for some of the largest companies in the world, including divisions of AT&T and HSBC. Today, her clients include large and small companies around the world and household brands like Citigroup, Cox Communications, Intuit, and more. Susan is frequently interviewed about marketing and branding by television, radio, print, and online media organizations, and she speaks about these topics at events around the world. You can connect with her on Twitter, Facebook, LinkedIn, or Google+.
