Report: Social Media Revenue Expected to Reach $16.9 Billion in 2012, Mostly from Advertising
STAMFORD, Conn., July 25, 2012—Global social media revenue is forecast to reach $16.9 billion in 2012, up 43.1 percent from 2011 revenue of $11.8 billion, according to Gartner, Inc.
Advertising is, and will continue to be, the largest contributor to overall social media revenue and is projected to total $8.8 billion in 2012. Social gaming revenue more than doubled between 2010 and 2011 and is expected to reach $6.2 billion in 2012, while revenue from subscriptions is expected to total $278 million this year.
"Usage of online social media has matured, and more than one billion people worldwide will use social networks this year," said Neha Gupta, senior research analyst at Gartner. "Although the number of social media users is large, and in some cases increasingly mature in their usage patterns, the market is still in its early stages from a revenue perspective."
Gartner expects the number of social media users will continue to increase at a moderate pace. New forms of media and entertainment will keep users engaged on social media sites and attract new ones. Rising competition among social media players, each vying for consumers' leisure time and attention, will lead to the rise of new forms of social media (Web based and mobile).
Marketers are allocating a higher percentage of their advertising budget to social networking sites. This is mainly driven by the fact that these sites offer a large pool of engaged users who spend considerable time on these sites — this increases the potential click-through rates (CTRs). Social media sites enable marketers to target ads to discrete consumer segments by unlocking the interconnected data structures of users that include lists of friends, their comments and messages, photos and all their social connections, contact information and associated media.
"Social media sites are becoming more innovative in their ad products to attract marketers," Ms. Gupta said. "Social networking sites should deploy data analytic technologies that interrogate social networks to give marketers a more accurate picture of trends in accordance with consumers' needs and preferences."