e marketer worldwide_social_network_ad_revenues-a_10_billion_market_by_2013

Digital Intelligence Copyright ©2011 eMarketer, Inc. All rights reserved.

The eMarketer View 2US Social Network Ad Revenues 3Worldwide Social Network Ad Revenues 5Social Networks in the Advertising Mix 11Facebook 13Twitter 17LinkedIn 20Google+ 22Social Gaming 25Conclusions 27Appendix: Forecast Methodology 28eMarketer Interviews 28About emarketer 30

October 2011

Executive Summary: Worldwide social network advertising revenues will top $8 billion in 2012 and approach $10 billion in 2013, as marketers continue to increase their social media marketing budgets. 132429

The bulk of these ad dollars will go toward Facebook, which is expected to draw $5.8 billion in worldwide ad revenues in 2012 and $7 billion in 2013. This year, Facebook will surpass Yahoo! to become the leader in US display ad revenues.

Twitter and LinkedIn will also see healthy ad revenue increases, although they’ll remain much smaller players than Facebook. Twitter’s ad revenue is forecast to grow to $260 million in 2012 and $399.5 million in 2013, while LinkedIn should generate $201 million in 2012 and $249.6 million the following year.

Social network ad revenues outside the US will continue to rise as well, accounting for 51.9% of the worldwide total in 2013, or $5.2 billion. Social games likewise will expand their ad revenues, reaching $641 million worldwide in 2013.

On the horizon, the launch of Google+ will give marketers a new social network to test. The site could siphon some ad dollars away from competitors by offering a mix of social and search advertising opportunities that other networks cannot match.

Key Questions

■■ How much ad revenue will social networks like Facebook, Twitter and LinkedIn generate between 2011 and 2013?

■■ Are ad budgets shifting more heavily toward social networks?

■■ Will social games become stronger ad destinations?

■■ What effect will Google+ have?

2009

billions and % changeSocial Network Ad Revenues Worldwide, 2009-2013

2010

$3.56

2011

$5.54

2012

$8.04

2013

$9.99

Social network ad revenues % change

Note: includes paid advertising appearing within social network sites, socialnetwork games and social network applications; excludes spending bymarketers that goes toward developing or maintaining a social networkpresenceSource: eMarketer, Sep 2011132429 www.eMarketer.com

49.6%55.6%

45.0%

24.2%20.0%

$2.38

Debra Aho Williamson [email protected]

Report Contributors Kimberly Maul, Tracy Tang, Mitchel Winkels

Worldwide Social Network Ad Revenues: A $10 Billion Market by 2013

Worldwide Social Network Ad Revenues: A $10 Billion Market by 2013 Copyright ©2011 eMarketer, Inc. All rights reserved. 2

The eMarketer View

Key eMarketer Numbers—Social Network Ad Revenues

Worldwide US

Facebook

Ad revenues worldwide (billions)

Social network ad revenues (billions)

$3.80

$7.00$5.78

Twitter LinkedIn

2011 20132012Source: eMarketer, Sep 2011132449 www.eMarketer.com

$2.74

$4.81$3.90

2011 201320122011 20132012

$5.54

$8.04

$9.99

2011 2012 2013

$0.14 $0.20 $0.25

2011 20132012

$0.14$0.40$.0.26

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More marketers than ever believe their brands should be engaging with consumers on social networks—and advertising is an increasingly successful tool for doing so. As a result, worldwide social network ad revenues will surpass $8 billion in 2012 and approach $10 billion by 2013. Spending in the US will reach $3.9 billion next year, up from $2.74 billion in 2011.

eMarketer’s forecast for social network ad revenues, updated from our earlier 2011 estimate, includes the following highlights:

Facebook will receive $7 of every $10 spent on social network advertising. In 2012, Facebook will tally $5.78 billion in ad revenues, garnering 72% of all social network advertising revenues and 6.1% of worldwide online ad spending. This year, it is expected to pass Yahoo! to become the No. 1 site in US display ad revenues.

Twitter is gaining momentum. Although some ad offerings, such as its self-serve system, have yet to launch, Twitter’s strong engagement metrics are leading more advertisers to test the platform. The addition of self-serve will enable more small and medium-sized businesses to advertise on Twitter and help propel ad revenues to $260 million in 2012 and $399.5 million in 2013.

International social network ad revenues will surpass the US total in 2011. This year, markets outside the US will account for more than half of social network ad revenues. A major reason is Facebook, whose international ad revenues have increased to 47% of the total, up from 35% in 2010. But homegrown social networks in markets such as China, Japan and Russia will also continue to see ad revenue growth.

Nearly 12% of US online ad spending will go to social networks in 2013. Advertisers are shifting budgets from search, TV and print to fund social campaigns. Several executives interviewed by eMarketer said a goal for 2012 is to better integrate social networks into their overall advertising mix and understand the inter-relationships between offline media and social media.

LinkedIn is building a solid business-to-business (B2B) ad revenue stream. Its sought-after professional audience and improving usage metrics will help LinkedIn increase ad revenues to $200.9 million in 2012, up 78.5% over 2011. New ad products that take better advantage of the information posted by users on LinkedIn will also support ad revenue growth, reaching $249.6 million in 2013.

Google+ will help brands pump up their search marketing. The social network will open up to marketers in late 2011, offering opportunities to blend social and search in ways that were not possible before. While it’s too early to predict how big Google+ will get, it will not need hundreds of millions of users to be attractive to marketers.

Social gaming ads will diversify. Worldwide social gaming ad revenues are expected to rise 53.1% to $449.1 million in 2012, as marketers expand their presence in social games. Branded integrations and video ads will increase, while lead generation offers will remain an integral (if controversial) part of the revenue mix. The social game ad market will reach $641 million worldwide in 2013.

eMarketer Definitions

Social network sites: Sites where the primary activities involve creating a profile and interacting with a network of contacts by sharing status updates, comments, photos or other content.

Social network ad revenues: Figures include paid advertising appearing within social network sites, social network games and social network applications. Figures do not include spending by marketers that goes toward developing or maintaining a social network presence (e.g., a Facebook brand page or Twitter account).

For the list of industry experts interviewed for this report, see the eMarketer Interviews section.

US social network ad revenues are on pace to reach $2.74 billion in 2011 and $3.9 billion in 2012, according to eMarketer’s latest forecast. In 2013, US advertisers are expected to spend $4.81 billion on social network advertising, up 23.4% over 2012.

Comparative estimates vary widely because forecasters have differing definitions of what constitutes social network advertising. Several use a broader term, social media advertising, in their forecasts.

Myspace

Effective with this report, eMarketer no longer includes Myspace in its social network ad revenue forecast. Sold by News Corp. to Specific Media in July 2011, the site is being recast as an online music discovery destination. Although it will continue to have social networking features, it no longer fits with eMarketer’s definition of a social network site.

At the high end of industry estimates, BIA/Kelsey in May 2011 forecast $5.9 billion in US ad spending for social media in 2013. It defines social media advertising as “money spent on advertising formats across social networks,” adding that “[c]urrently, the predominant ad format is display, though there are some non-display ad formats (e.g., Twitter’s ‘promoted’ products).”

On the low end, ZenithOptimedia estimated that $1.76 billion would be spent on social media advertising in 2013. The company’s figures are lower than others because they do not count ad formats such as display or search when they appear within social media sites. eMarketer includes those formats when they appear within social networks.

millions

Comparative Estimates: US Social Media MarketingSpending, 2010-2015

Spending type

BIA/Kelsey*, May 2011

Social media ad

Barclays Capital, May 2011

Social network ad

eMarketer**, Sep 2011Social network ad

Forrester Research, Aug 2011 Social media marketing

ZenithOptimedia, July 2011

2010

$2,100

$1,990

$2,000

-

$740

2011

$3,400

$2,890

$2,740

$1,590

$980

2012

$4,700

$3,950

$3,900

$2,120

$1,320

2013

$5,900

$5,220

$4,810

$2,760

$1,760

2014

$7,900

$6,470

-

$3,450

-

2015

$8,300

$7,640

-

$4,220

- Social media ad

Note: *excludes social commerce, gaming, marketing, virtual goods andrewards; **includes paid advertising appearing within social network sites,social network games and social network applications; excludes spendingby marketers that goes toward developing or maintaining a social networkpresenceSource: eMarketer, Sep 2011; various, as noted, 2011132887 www.eMarketer.com

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Forrester’s figures include not only paid advertising in social media but also fees paid to external agencies and the cost of technology to support social media efforts. Even with the inclusion of those extras, the figures are lower than most other forecasters’ calculations. That is because Forrester does not include ad formats such as display or search in its social media spending estimates.

In essence, Forrester’s figures cover external spending that goes toward marketing and advertising that is innately “social,” such as Facebook brand pages, Facebook’s Sponsored Stories ad units or Twitter’s Promoted Products ads.

US Social Network Ad Revenues

billions and % changeUS Social Network Ad Revenues, 2009-2013

2009

$1.44

19.3%

2010

$2.00

38.7%

2011

$2.74

37.3%

2012

$3.90

42.2%

2013

$4.81

23.4%



132426

Highlights

■■ US social network ad revenues will rise 42.2% to reach $3.9 billion in 2012.

■■ 2013 revenues will rise at a slower, 23.4% rate, to $4.81 billion.



Marketing Spending vs. Advertising Spending

Marketing via social networks has become a requirement for nearly every business. Marketers recognize the importance of having a presence in destinations where consumers are spending more and more time. eMarketer forecasts that 80% of US companies with 100 or more employees will use social media tools for marketing this year.

As more companies build out their marketing presence in social networks, they are also increasing their focus on spending ad dollars there. According to a 2011 study by Brandon Hall Group and Covario, 90% of marketing executives who had used social media marketing for at least one year believed that paid social media sites would play some role in their marketing in the coming year. Of those, 47% said paid social media would have a “critical” or “major” role, and 43% cited a “minor” role.

% of respondents

Role* of Paid Social Media Sites in Their Marketing Strategy According to US Marketing Executives, by Length of Social Media Marketing Use, 2011

Greater than one year17% 30% 43% 10%

Less than one year6% 12% 44% 38%

Critical role Major role Minor role No role

Note: marketing executives surveyed currently incorporate social media marketing into their overall search marketing strategy; *in the next yearSource: Brandon Hall Group and Covario, "How Does Integration of SocialMedia Marketing (SMM) Enhance a Company's Online Marketing Strategy?"May 19, 2011128927 www.eMarketer.com

128927

Those who were newer to social media marketing were less convinced; only 62% thought paid social media would contribute to their marketing.

Meanwhile, the percentage of ad agencies allocating client ad budgets to social media reached 68% in Q2 2011, according to STRATA, the media buying/selling software company owned by Comcast. That was the highest point in four quarters.

% of respondents

US Ad Agencies that Allocate Ad Spending to Social Media*, Q3 2010-Q3 2011

Q3 2010

65.1%

Q4 2010

56.1%

Q1 2011

52.9%

Q2 2011

68.0%

57.0%

Note: *Facebook, LinkedIn, etc.Source: STRATA quarterly survey results, 2010 & 2011128951 www.eMarketer.com

Q3 2011

128951

The spending trend is not consistently upward, however. STRATA’s figures have fluctuated over the past several quarters, and in Q3 2011 the response rate went down to 57%. The quarterly changes may be due to campaign flighting, indicating that ad spending in social media may be important but not necessarily occur in a steady stream throughout the year.

US Social Network Ad Revenues

Social networks will have $8.04 billion in ad revenues worldwide next year, up 45% from 2011. By 2013, revenues will approach $10 billion, according to eMarketer estimates.

With all the focus on the US market, it is easy to forget that social network advertising is a sizeable business internationally. In fact, 50.6% of all social network ad revenues in 2011 will come from non-US markets. Just two years ago, the international contribution was 39.6%.

billions and % of total

Social Network Ad Revenues Worldwide, US vs.Non-US, 2009-2013

2009 2010 2011 2012 2013

USRevenues

% of worldwide total

Non-USRevenues

% of worldwide total

$1.44

60.4%

$0.94

39.6%

$2.00

56.0%

$1.57

44.0%

$2.74

49.4%

$2.80

50.6%

$3.90

48.5%

$4.14

51.5%

$4.81

48.1%

$5.18

51.9%


132431

In 2011, non-US social network ad revenues will rise 78.8%, vs. 37.3% growth in the US. However, growth rates will become more similar in 2012 and 2013 as international markets catch up to the US.


% change

Social Network Ad Revenue Growth Worldwide, US vs. Non-US, 2009-2013

2009

19.3%

21.1%

20.0%

2012

47.8%

42.2%

45.0%

2011

78.8%

37.3%

55.6%

2010

66.3%

38.7%

49.6%

2013

23.4%

25.1%

24.2%

US

Non-US

Worldwide

50%

30%

70%

90%

132435

Worldwide Social Network Ad Revenues

2009

billions and % changeSocial Network Ad Revenues Worldwide, 2009-2013

2010

$3.56

2011

$5.54

2012

$8.04

2013

$9.99



49.6%55.6%

45.0%

24.2%20.0%

$2.38

132429

Highlights

■■ Ad revenues will reach $8.04 billion in 2012 and rise 24.2% to $9.99 billion in 2013.

■■ The US will account for just under half of worldwide social network ad revenues in 2011.

■■ Contributors to growth include Facebook’s rising non-US ad revenue and the increasingly international social network audience.



Three factors are driving increases in social network ad revenues outside the US:

■■ Facebook’s international presence. With more than 75% of its active user base coming from outside the US, Facebook is attractive to international advertisers. eMarketer forecasts that in 2012, Facebook will get half of its ad revenue, or $2.98 billion of the $5.78 billion total, internationally, up from 24.8% in 2009. (For more on Facebook revenues, see the “Facebook” section later in this report.)

■■ Strength of local social networks. Although Facebook and Twitter garner the lion’s share of attention in the US, there are many ad-supported social networks in other countries, such as mixi in Japan, Renren in China and VKontakte in Russia. While none of these individually has anywhere near Facebook’s ad revenue, social networks based outside of the US will have a combined total of more than $700 million in ad revenues in 2011, eMarketer estimates.

■■ The increasingly international social network audience. According to comScore Media Metrix, just 18.1% of social network visitors in June 2011 hailed from North America, while 32.5% were in Asia-Pacific and 30.1% came from Europe. And when measured by time spent, Europeans dominated with a 38.1% share of minutes on social network sites. At these usage levels, social network users outside the US are a ripe target audience.

Share of minutesShare of visitors

% of total

Share of Social Network Visitors and Minutes SpentWorldwide, by Region, June 2011

Note: ages 15+; home and work locations; accessing the internet via PC orlaptopSource: comScore Media Metrix, "The Rise of Social Networking in LatinAmerica," Sep 20, 2011132703 www.eMarketer.com

Asia-Pacific 32.5%

Europe 30.1%

Middle East & Africa9.1%

LatinAmerica 10.2%

North America 18.1%

Asia-Pacific 16.5%

Europe 38.1%

Middle East & Africa11.2%Latin

America 12.8%

North America 21.4%

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Facebook looks unlikely to cede its ad revenue dominance among social networks. About $7 out of every $10 flowing to social networks worldwide will go to Facebook in 2011, eMarketer estimates. The company’s share is expected to remain steady through 2012 but will decline slightly in 2013 as Twitter makes incremental gains.

% of total

Social Network Ad Revenue Share Worldwide, by Venue, 2009-2013

2009 2010 2011 2012 2013

Facebook 31% 52% 69% 72% 70%

Social games 5% 5% 5% 6% 6%

LinkedIn 2% 2% 3% 2% 2%

Twitter * 1% 3% 3% 4%

Myspace 20% 7% 1% ** **

Other*** 42% 32% 20% 17% 17%

Note: numbers may not add up to 100% due to rounding; *Twitter didn'thave ad revenue in 2009; **effective in 2012, Myspace will no longer beincluded in eMarketer's forecast; ***includes international social networks, portal-based social networks and social appsSource: eMarketer, Sep 2011

132444 www.eMarketer.com132444

The following sections provide a snapshot of trends in key countries in Europe, Asia-Pacific and Latin America.

UK

UK advertisers have been somewhat slower than those in the US to gravitate toward social networks. According to eCircle, 50% of UK marketers used social media marketing as of January 2011. By contrast, eMarketer estimates that 80% of US marketers will use social media marketing this year.

The difference may be because UK consumers are somewhat less likely than US consumers to visit social networks. Forty-six percent of UK consumers used social networks in Q1 2011, according to the Office of Communications–UK (Ofcom), while Pew Internet & American Life Project found in an August 2011 study that 65% of US adults used social networks. The pace of growth is leveling off in the UK; penetration grew 10 percentage points between 2008 and 2009 and again between 2009 and 2010, but only 6 points between 2010 and 2011.

% of respondents in each group

UK Consumers Who Access Social Networks, by Ageand Gender, Q1 2008-Q1 2011

GenderFemale

Male

Age16-24

25-34

35-54

55-64

65-74

75+

Total

Q1 2008(n=5,812)

20%

19%

38%

31%

21%

9%

3%

1%

20%

Q1 2009(n=6,090)

31%

28%

50%

46%

35%

13%

3%

1%

30%

Q1 2010(n=9,013)

42%

39%

61%

61%

48%

20%

7%

3%

40%

Q1 2011(n=3,474)

47%

45%

69%

64%

54%

28%

12%

5%

46%Source: Office of Communications (Ofcom) - UK, "The CommunicationsMarket 2011," Aug 4, 2011130972 www.eMarketer.com

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While Facebook is the social network leader in the UK, its dominance has diminished somewhat since 2010, according to Hitwise. It received 50.14% of all social network visits in July 2011, down from 54.59% in July 2010. Meanwhile other sites posted gains in market share, including YouTube (which by eMarketer’s definition is not a social network) and Twitter.

Top 10* Social Networks Among UK Internet Users,Ranked by Market Share of Visits, July 2010 & July 2011

July 2011

1. Facebook 50.14%

2. YouTube 22.54%

3. Twitter 3.49%

4. Yahoo! Answers 2.47%

5. Gumtree 1.32%

6. Tumblr 0.84%

7. LinkedIn 0.83%

8. Moshi Monsters 0.48%

9. MoneySavingExpert 0.46%

10. Myspace

July 2010

54.59%

17.10%

2.22%

2.26%

1.10%

0.23%

0.38%

0.25%

0.46%

1.20% 0.44%

Note: *2011 rankingsSource: Hitwise as cited by ClickZ, Aug 9, 2011132013 www.eMarketer.com

132013

China

The social networking market attracting the most attention in Asia-Pacific is China. Closed off to most US social networks, the Chinese internet audience has embraced native social networks such as Renren and Tencent’s Qzone and Pengyou.

According to GlobalWebIndex, China had 155 million active social network users in June 2011, more than four times as many as in India, the second-largest Asia-Pacific social network market.

millions

Active Social Network Users in Select Countries inAsia-Pacific, June 2011

China155.3

India35.1

Indonesia18.9

Philippines14.4

Japan13.7

Malaysia11.5

South Korea10.9

Australia7.1

Hong Kong2.6

Singapore2.0

Source: GlobalWebIndex as cited in company blog, June 14, 2011130011 www.eMarketer.com

130011

The Data Center of China Internet (DCCI) forecast that $256 million would be spent on social network advertising in 2011, or about 5% of total online ad spending in the country.

billions of Chinese yuan renminbiOnline Ad Spending in China, by Category, 2007-2015

Search Portals Adnetworks

Video Socialnetworks

2007 2.73 3.12 1.06 0.21 0.41

2008 5.08 4.77 1.81 0.43 0.66

2009 7.01 4.83 2.25 0.88 0.78

2010 10.83 6.02 2.88 1.75 1.06

2011 18.05 7.70 3.64 3.26 1.73

2012 27.52 9.51 4.62 5.51 2.62

2013 40.51 11.55 5.94 8.80 4.16

2014 59.35 14.11 7.67 13.70 7.16

2015 85.52 17.07 10.08 20.58 13.50

Source: Data Center of China Internet (DCCI), "Internet Insight: First Half2011," July 13, 2011131392 www.eMarketer.com

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Renren has emerged as one of the leaders in social network ad revenue in China. The company, which went public in 2011, had $32 million in ad revenues in 2010 and $25 million in the first half of 2011.

Another market leader, Tencent, does not break out ad revenues for its social networks, but it had $207 million in online advertising revenue across all of its properties in 2010, a gain of 42.6%. Online ad revenue in 2011’s first half grew nearly 32%, to $122.6 million.



The major change in China’s online space since early 2010 has been the rise of Twitter-style “weibo” microblogging sites, including Tencent’s Tencent Weibo and Sina’s market-defining Weibo.com. According to the China Internet Network Information Center (CNNIC), there was a 200% increase in the number of weibo users in the first half of 2011, reaching 40% of China’s online population.

Microblogging in China: The Story of Weibo

Microblogging is growing rapidly in China, challenging the Chinese social networks for consumers’ online time and reaching user numbers that dwarf Twitter’s worldwide user base.

In Q2 2011, Analysys International reported that 174 million people used weibo sites for microblogging at least once per month in China, a 24.3% increase from Q1. In comparison, in September 2011, Twitter reported it had 100 million total worldwide accounts that were active on a monthly basis.

millions and % changeMicroblog Site Users* in China, Q1 2010-Q2 2011

Q1 2010

20.7

Q2 2010

56.7(174.2%)

Q3 2010

80.0(41.2%)

Q4 2010

101.3(26.7%)

Q1 2011

140.0(38.2%)

Q2 2011

174.0(24.3%)

Note: *individuals, organizations or enterprises that use microblogs atleast once per monthSource: Analysys International as cited in press release, Aug 4, 2011130840 www.eMarketer.com

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Chinese microblogs often combine several elements of social networking, including instant messaging, daily deals, video- and photo-sharing, and groups, so they are more robust than Twitter and offer greater competition for social networks such as Renren. Twitter has been blocked in China since 2009, following the Xinjiang riots and the 20th anniversary of the Tiananmen Square protests.

In a March 2011 study from iResearch and China International Capital Corporation, two weibo sites dominated: Sina Weibo had a 56.5% market share of active users, and Tencent Weibo came in second with 21.5%. Sina is the older service, launched in 2009 by Sina Corp., one of China’s top portal operators. The service had more than 200 million registered users in August 2011, up from 140 million in May. Tencent, known for its instant messenger service QQ, had 233 million weibo users as of August 2011.

Sohu and NetEase also offer weibo sites, though their user numbers are much smaller. Sohu, which has a strong gaming base, and Netease, with a large mobile presence, in March 2011 had 6.4% and 2.5% of the market, respectively, according to iResearch.

The pressure to succeed has already claimed one entrant: In August 2011, search company Baidu shut down its Baidu Shuoba, or Baidu Talk, service. Twitter, for its part, has not announced plans to re-enter China, although it became available in both simplified and traditional Chinese in September 2011.

Which weibo will be bigger? Sina has the buzz, while Tencent has the backbone. Tencent has more experience in social networking, but Sina has drawn attention for the role its weibo has played in current events, such as a July 2011 train crash.

When it comes to advertising, Tencent Weibo is further ahead. It has a more robust platform that is connected throughout Tencent’s social network offerings, and there are ads on the homepage of its weibo. For its part, Sina Weibo plans to introduce advertising in the first half of 2012.

Several international brands already are using weibo accounts to interact with users, similar to how businesses use Twitter for customer service and other types of marketing. Nike, Starbucks and the National Basketball Association all have weibo accounts. However, marketers should not plan to port their Twitter advertising strategy directly to China’s weibo sites. Because the services are more interactive than Twitter, brands can do more than share 140 characters of text and links.

The success of China’s weibo sites will depend on how quickly they can mobilize their current users and gain new ones, and how well their ad products will meet the needs of marketers. Given the rapid growth of the weibo market, expect many changes in the coming year.



Latin America

Internet users in Latin America are among the heaviest users of social networking. According to comScore, five countries—Argentina, Chile, Colombia, Venezuela and Mexico—ranked in the top 10 countries worldwide based on the average number of hours spent on social networks per visitor in June 2011.

Internet users in Argentina spent an average of 10 hours on social networks, while people in the other four countries spent between 7.1 and 8.7 hours on such sites.

As in most parts of the world, Facebook is the most popular social network in Latin America. However, in this region Windows Live Profile and orkut also have strong audiences, each about one-third the size of Facebook’s.

millions

Top 10 Social Media Sites Among Internet Users inLatin America, Ranked by Unique Visitors, June 2011

1. Facebook91.1

2. Windows Live Profile35.6

3. orkut34.4

4. Twitter24.4

5. Badoo8.8

6. SlideShare8.2

7. Sonico7.7

8. LinkedIn7.3

9. Myspace6.6

10. Fotolog5.6

Note: ages 15+; home and work locations; accessing the internet via PC orlaptopSource: comScore Media Metrix, "The Rise of Social Networking in LatinAmerica," Sep 20, 2011132705 www.eMarketer.com

132705

Twitter is rising in usage. As one point of comparison, 14% of internet users in the US visited Twitter in May 2011, but the penetration rate was much higher in Brazil (26.7%), Venezuela (23.7%) and Argentina (17.2%), according to comScore.

However, when it comes to advertising within social networks, the Latin American market is small. In Mexico, Venezuela, Peru, Chile, Colombia and Argentina combined, social media ad spending will reach just $37 million in 2011, according to Starcom MediaVest Group. But significant growth is expected in the next two years at which time total social media ad spending in the six countries will reach $128 million, according to Starcom.



Brazil Moves Beyond orkut

Google’s orkut social network has been popular in Brazil since it launched in 2004. But the site’s dominance is being challenged as Facebook and Twitter make inroads in the country.

An August 2011 study from IBOPE Nielsen Online put Facebook out in front, with 30.9 million users, or 68.2% of internet users. Meanwhile, orkut had 29 million, or 64% of internet users, and Twitter came in with 14.2 million, for a penetration rate of 31.3%.

millions and % of internet users

Social Network Users and Penetration in Brazil, bySite, Aug 2011

Facebook 30.9 (68.2%)

orkut 29.0 (64.0%)

Twitter 14.2 (31.3%)

Note: home and work locations; according to IBOPE Nielsen Online, socialnetwork users in Brazil connected to these sites for an average of 7 hoursand 14 minutes during August 2011Source: IBOPE Nielsen Online as cited in press release, Sep 9, 2011132498 www.eMarketer.com

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However, when it comes to how often web users in Brazil use these social sites, Twitter has momentum.

In early 2011, market intelligence company E.Life surveyed internet users in Brazil and asked which three social network services they used the most. Twitter was mentioned by 74% of users, while Facebook was noted by 63%. Coming in fourth, below MSN, was orkut, with just 34.1% choosing it as one of their most-used sites.

% of respondents

Top 10 Social Networks* Used by Social NetworkUsers in Brazil, Jan 2011

Twitter74.0%

Facebook63.0%

MSN48.4%

orkut34.1%

YouTube12.0%

Blogspot9.0%

Google T8.4%

Blogger7.7%

Skype6.5%

WordPress5.6%

Note: n=945; *respondents selected three most-used servicesSource: E.Life, "Usage and Behavioral Habits of Brazilian Internet Users inSocial Media," March 1, 2011131867 www.eMarketer.com

131867

It’s too early to declare a new social networking leader in Brazil, however. Facebook’s users continue to grow, but Twitter is improving its Brazilian offering, introducing Brazilian Portuguese as an official language in June 2011. It is also worth noting that Google, orkut’s owner, is currently focused on its other social offering, Google+, which has also become popular in Brazil.


Social networks will steadily increase their share of total online ad spending in the US and around the world.

In 2011, 8.8% of all US online ad spending will go to social networks, increasing to 10.6% in 2012 and 11.7% in 2013. On a worldwide basis, 6.9% of online ad spending will go to social network sites in 2011, or $5.54 billion out of the total $80.2 billion. By 2013, social network ad revenues will reach 9.4% of the worldwide total for online ad spending.

billions and % of total online ad spending worldwideSocial Network Ad Revenues Worldwide, 2009-2013

2009 2010 2011 2012 2013

Social networkad revenues

Total online ad spending worldwide

Social network % of total

$2.38

$55.20

4.3%

$3.56

$68.40

5.2%

$5.54

$80.20

6.9%

$8.04

$94.20

8.5%

$9.99

$106.10

9.4%


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There is some evidence that social networks are contributing to growth in overall online ad spending and are taking budget from traditional media.

MAGNAGLOBAL in June 2011 increased its 2011 total US online ad spending forecast to $30.1 billion, citing “strong momentum in online video and social media as large national advertisers begin to invest more in building brand awareness online.”

Investment bank Barclays, in a July 2011 research note, stated: “Increasingly, we believe marketers are allocating a larger percentage of their budgets to social networks, which we believe are by and large incremental to online search advertising and which we believe are being funded primarily from traditional media budgets.”

The budget question is one that marketers will likely be forced to address in 2012 as social media ad spending eats more noticeably into available funds. While one theory is that marketers will turn to search budgets to fund social network advertising, this isn’t the case broadly.

As Kris Narayanan, Samsung’s vice president of digital marketing, North America, noted in an interview with eMarketer: “In the past couple of years, [social ad spending has] been coming from traditional ad budgets. Because the amounts haven’t been that significant, it hasn’t been that substantive as to be considered a reduction in traditional ad media dollars.”

One goal Narayanan has for 2012 is to get smarter about “optimizing across these media as we recognize what the linkages are between TV advertising, print advertising and now social as a part of the digital mix.”

“We’ll be looking more at social’s role in the entire marketing mix vs. isolating it as an area of innovation.” —Amanda Richman, president of digital at MediaVest, in an interview with eMarketer, August 15, 2011

As the worldwide economy continues to struggle, it is unclear whether social network ad revenues will be affected. eMarketer’s viewpoint is that the impact will be felt more strongly in traditional media than in online media. And within online media, social networks will be more insulated because for many marketers the spending is no longer being funded by experimental dollars, which often get cut first. The channel is also less vulnerable because social networks, particularly Facebook, offer a combination of mass audience and the ability to target ads to discrete segments.

Social Networks in the Advertising Mix

billions and % of total US online ad spendingUS Social Network Ad Revenues, 2009-2013

2009 2010 2011 2012 2013

Social network ad revenues $1.44 $2.00 $2.74 $3.90 $4.81Total US online ad spending $22.70 $26.00 $31.30 $36.80 $41.20

Social network % of total 6.3% 7.7% 8.8% 10.6% 11.7%Note: includes paid advertising appearing within social network sites, socialnetwork games and social network applications; excludes spending bymarketers that goes toward developing or maintaining a social networkpresenceSource: eMarketer, Sep 2011132427 www.eMarketer.com

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Highlights

■■ Social networks will surpass 10% of total online ad spending in the US in 2012 and reach 11.7% in 2013.

■■ Marketers worldwide will increase social network ad spending to 8.5% of online ad budgets next year.

■■ Advertisers are shifting budgets from several places, including search, print and TV, to fund social spending.



If economic conditions drive cuts in TV spending, Facebook may help fill the gaps. There has been some talk in the industry that the company is already targeting TV budgets. While not explicitly admitting to that, Facebook’s vice president of global marketing solutions, Carolyn Everson, told eMarketer: “Everyone that buys in the TV upfront should be demanding that [their buy] has a social component. Anytime anyone’s talking about hot TV shows or live events, they’re doing it in a social environment.”

Q&A: Where are budgets for social media advertising coming from?

As social media advertising becomes a bigger part of companies’ marketing plans, brands are making tough decisions about how to fund these projects. While the funding sources are still a mix, coming from search, display and even traditional advertising, some companies are creating new budget lines just for social media advertising.

Amanda Richman President, Digital

MediaVest

“Today, it’s still a combination of budgets coming from the display world and the search world. Social is also starting to get more branding dollars as marketers understand the environment and how to connect with consumers in a richer way. We are also seeing more of a blending approach, where it’s not specific to a social, mobile, local or video budget, but it’s about how all of these can work together to develop an experience.”

Justin Merickel Vice President of Marketing and New Product Development

Efficient Frontier

“It’s primarily coming from traditional channels. We haven’t seen an impact to search or display budgets, at least on the exchange side of display. There could be a little bleed-over from traditional display, but we think it’s primarily coming from traditional media because a lot of these brand advertisers are hungry for new outlets. They see a lot of new opportunity.”

Micah Nyatsambo Director of Emerging Technologies

Media Contacts

“We’ve seen independent budgets for social media advertising grow. Clients started out testing and are now deciding to take new money that wasn’t from search or display and put it straight to paid media on Twitter and Facebook.”

Dave Williams CEO and Co-founder

BLiNQ Media

“At this stage, the budgets are coming from different places. One of our clients, an entertainment brand, has shifted a lot of budget away from search into Facebook. We’re also seeing some of our clients migrate some of their TV buying over to social. That’s where the biggest opportunity is. These clients see social as an engagement platform and as an audience buying platform, which is quite different from the way you look at a display buy or even a search buy.”

Social Networks in the Advertising Mix

Facebook is cementing its dominance of the social network ad market. eMarketer expects Facebook to have $5.78 billion in worldwide ad revenues in 2012 and $7 billion in 2013.

Facebook’s 2011 ad revenue will come in at $3.8 billion, about 6% less than the $4.05 billion eMarketer had forecast earlier this year. The change in the forecast should not be taken as a sign that Facebook’s business is losing momentum, however. In 2012, Facebook will slightly surpass our earlier projection of $5.74 billion in ad revenue.

Facebook’s revenue streams will continue to diversify, with ads representing a decreasing proportion of the total while other revenue sources, such as Facebook Credits, grow.

eMarketer forecasts that Facebook will have $4.27 billion in total revenue in 2011, with $3.8 billion from ads and $470 million from Credits and other sources.

Ads, which represented an estimated 95% of Facebook’s revenue in 2009, are expected to fall to 89% of revenue this year.

millions and % of totalFacebook Revenues Worldwide, by Source, 2009-2011

2009 2010 2011

Advertising* $738 $1,860 $3,800

Facebook Credits and other revenue $39 $140 $470

Total $777 $2,000 $4,270Advertising % of total 95% 93% 89%Note: *paid advertising only; excludes spending by marketers that goestoward developing or maintaining a Facebook presenceSource: eMarketer, Sep 2011132436 www.eMarketer.com

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Facebook has grown rapidly as an online advertising venue in 2011. For digital agency Razorfish, it has become one of the top 10 sites in terms of spending, Deidra Bodkin, vice president of media, told eMarketer.

In 2012, 7.9% of all online ad spending in the US will go to Facebook, eMarketer estimates, rising to 8.2% in 2013.


Facebook Share of Total US Online Ad Spending,2009-2013

2009 2010 2011 2012 2013

Facebook US ad* revenues $0.56 $1.21 $2.01 $2.89 $3.36Total US online ad spending $22.70 $26.00 $31.30 $36.80 $41.20

Facebook % of total 2.4% 4.7% 6.4% 7.9% 8.2%Note: *paid advertising only; excludes spending by marketers that goestoward developing or maintaining a Facebook presenceSource: eMarketer, Sep 2011132439 www.eMarketer.com

132439

Facebook

billions and % changeFacebook Ad Revenues Worldwide, 2009-2013

2009

$0.74

2010

$1.86

2011

$3.80

2012

$5.78

2013

$7.00

Facebook ad revenues % change

Note: paid advertising only; excludes spending by marketers that goestoward developing or maintaining a Facebook presenceSource: eMarketer, Sep 2011132438 www.eMarketer.com

152.0%

104.3%

52.1%

21.1%

132438

Highlights

■■ Facebook’s worldwide ad revenues will reach $7 billion in 2013, up from $3.8 billion in 2011.

■■ Total revenue, including Facebook Credits, will reach $4.27 billion in 2011.

■■ Ads are falling as a percentage of revenue and will make up 89% of Facebook’s total revenue in 2011.



In dollars, that will make Facebook the third-biggest online ad seller in the US for the second year in a row. Google will remain far ahead, with $16.53 billion in net US online ad revenues in 2012, but Facebook is gaining ground on second-place Yahoo!

billions

Net US Online Ad Revenues at Top 5 Ad-SellingCompanies, 2009-2012

2009 2010 2011 2012

Google $7.90 $10.03 $12.77 $16.53

Yahoo! $3.66 $3.47 $3.46 $3.57

Facebook $0.56 $1.21 $2.01 $2.89

Microsoft $1.18 $1.49 $1.92 $2.66

AOL $0.99 $0.88 $0.85 $0.86

Total top 5 $14.28 $17.07 $21.01 $26.51Total internet $22.66 $26.04 $31.30 $36.80Note: net ad revenues after companies pay traffic acquisition costs (TAC) topartner sites; Facebook figures are eMarketer estimates from Sep 2011Source: company reports, April-May 2011; eMarketer, June & Sep 2011132516 www.eMarketer.com

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In the display ad market, Facebook’s control is stronger. In 2011 it will surpass Yahoo! as the top display ad seller in the US, while Google will come in third, eMarketer predicts.

billions

Net US Online Display Ad Revenues at Top 5Ad-Selling Companies, 2009-2012

2009 2010 2011 2012

Facebook $0.56 $1.21 $2.01 $2.89

Yahoo! $1.26 $1.43 $1.62 $1.85

Google $0.36 $0.86 $1.15 $1.82

Microsoft $0.37 $0.51 $0.60 $0.71

AOL $0.51 $0.47 $0.52 $0.58

Total top 5 $3.05 $4.47 $5.91 $7.86Total online display $7.97 $9.91 $12.33 $14.82Note: includes banner ads, rich media, sponsorships and video; net adrevenues after companies pay traffic acquisition costs (TAC) to partnersites; Facebook figures are eMarketer estimates from Sep 2011Source: company reports, April-May 2011; eMarketer, June & Sep 2011132520 www.eMarketer.com

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In July 2011, Facebook controlled 30.4% of US display ad impressions, according to comScore, well ahead of Yahoo! sites, which had 10.7% of the market.

William Blair & Co., in its May 2011 report “The Future in Digital Media,” forecast that Facebook would receive 38% of all US display ad impressions in 2011, rising to 47% by 2015. In raw numbers, that would amount to more than 2 trillion display ad impressions in 2011, increasing to 3.28 trillion in 2015.

US Facebook Display Ad Metrics, 2011-2015

Facebook display ads (trillions)

Total US display ads (trillions)Facebook % of total display ads

2011

2.02

5.338%

2012

2.34

5.741%

2013

2.67

6.144%

2014

2.98

6.546%

2015

3.28

7.047%

Source: William Blair & Company, "The Future in Digital Media," May 16, 2011131833 www.eMarketer.com

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Facebook is also showing increasing strength in the worldwide online ad market. In 2013, eMarketer expects it to receive 6.6% of all online ad spending.


Facebook Share of Total Online Ad SpendingWorldwide, 2009-2013

Facebook ad*revenues worldwide

Total online adspending worldwide

Facebook % of total

2009

$0.74

$55.20

1.3%

2010

$1.86

$68.40

2.7%

2011

$3.80

$80.20

4.7%

2012

$5.78

$94.20

6.1%

2013

$7.00

$106.10

6.6%Note: *paid advertising only; excludes spending by marketers that goestoward developing or maintaining a Facebook presenceSource: eMarketer, Sep 2011132440 www.eMarketer.com

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The strong international showing comes as non-US markets account for a growing proportion of ad revenue. In 2013, more than half of Facebook’s $7 billion in ad revenue will come from non-US markets.


Facebook Ad Revenues Worldwide, US vs. Non-US,2009-2013

2009 2010 2011 2012 2013

US $0.56 $1.21 $2.01 $2.89 $3.36% of worldwide total 75.2% 65.0% 53.0% 50.0% 48.0%

Non-US $0.18 $0.65 $1.79 $2.89 $3.64% of worldwide total 24.8% 35.0% 47.0% 50.0% 52.0%

Worldwide $0.74 $1.86 $3.80 $5.78 $7.00Note: paid advertising only; excludes spending by marketers that goestoward developing or maintaining a Facebook presenceSource: eMarketer, Sep 2011132437 www.eMarketer.com

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Facebook


Challenges

Although Facebook’s ad revenue is growing rapidly, there are at least two areas where the company still needs to prove itself to marketers.

[Editor’s Note: These were contributing factors to the change in eMarketer’s 2011 forecast for the company as well.]

Facebook needs to show that its ad products consistently deliver results. Despite years of wooing marketers, Facebook has still failed to convince many that its ads are effective at driving clicks and other actions.

One of the challenges the company has yet to overcome is its exceedingly low average clickthrough rate. According to agency SocialCode’s 2011 analysis of its clients’ Facebook ads, the average clickthrough rate for women was 0.029%, compared to 0.026% for men. Among both genders, the click rate was higher for older adults than for younger ones.

Clickthrough and "Like" Rate* of Facebook Display Ads Among US Internet Users, by Age and Gender, 2011

Clickthrough rate "Like" rate*

18-29

30-39

40-49

50+

Total

Male0.025%

0.024%

0.026%

0.030%

0.026%

Female0.026%

0.028%

0.031%

0.034%

0.029%

Male41%

38%

38%

36%

39%

Female39%

38%

40%

36%

38%Note: *based on people who had clicked on the adSource: SocialCode, Aug 30, 2011131993 www.eMarketer.com

131993

The ad industry acknowledges this. As Marc Ruxin, chief innovation officer of Universal McCann, told eMarketer in August 2011: Facebook ads are “performing at least as well as traditional display advertising, which performed horribly in the first place. But no one would describe display advertising as a super-effective mousetrap, yet we still do it on a global basis” anyway.

Facebook must either work to improve its clickthrough rate or show that its advertising is effective even without a click or other action. Offering more information on the value of a Facebook impression is one way to do this.

Facebook’s rapid growth as a marketing vehicle is a double-edged sword. Many major marketers have developed extensive presences on the site. Procter & Gamble, for example, has added shopping features to several of its brand pages and made a reported multimillion-dollar ad buy on the site in 2011.

Media agency MediaVest, which counts P&G among its clients, has helped an increasing number of clients in 2011 develop “high-volume, deeper, large-scale partnerships with Facebook” that have resulted in large budget allocations “supporting not just advertising opportunities, but opportunities to look and grow the space together as well,” said MediaVest’s Amanda Richman, in an interview with eMarketer.

Wine and spirits producer Diageo has also committed $10 million to advertising on Facebook and is among several companies that joined Facebook’s client council, an advisory board composed of top executives at major marketers and agencies.

However, other marketers, having amassed a large quantity of “likes,” feel that they can continue to market to these people directly through their pages rather than by buying advertising on Facebook. This may especially be the case for companies that market to Facebook’s younger users, because these users tend to be more likely to interact with brand pages.

According to a survey by Barkley that compared millennials to other adults, 23.5% of millennials who had “liked” a brand on Facebook interacted with content from a brand’s Facebook page at least once daily, vs. 17% of older adults who did the same.

% of total

Frequency of Interacting with Content from a BrandThey "Like" on Facebook According to US MillennialConsumers vs. Consumers Ages 35-74, June 2011

Multiple times per day (i.e., 7+ times per week)11.3%

7.9%

Once a day (i.e., approximately 7 times per week)12.2%

9.1%

3-6 times a week12.8%

9.4%

1-2 times a week13.9%

12.9%

2-3 times a month11.6%

10.0%

Once a month9.3%

9.8%

Less than once a month15.2%

15.3%

Does not apply13.8%

25.6%

16-34 35-74

Note: n=3,082 millennials ages 16-34; n=660 ages 35-74; numbers may notadd up to 100% due to roundingSource: Barkley, "American Millennials: Deciphering the EnigmaGeneration" in partnership with Service Management Group and TheBoston Consulting Group, Aug 18, 2011131678 www.eMarketer.com

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Facebook


Adding fuel to this perspective is the fact that Facebook doesn’t offer the splashy rich media ad units that attract advertisers to other types of sites. Facebook must continue to convince marketers that buying advertising in addition to bulking up a brand presence leads to better overall results, even if the ads aren’t as flashy. The message is akin to using the combination of search engine optimization to rank high in organic search results along with complementary paid search ads.

Trends for 2012

Making advertising more social. With the pending launch of redesigned profile pages and other new features announced at its f8 developer conference in September 2011, Facebook has made it clear that it plans to create new ways for companies to market to users based on the actions they take on Facebook.

The company hopes to build on the success of Sponsored Stories, an ad format Facebook launched in January 2011 that lets an advertiser highlight a user’s action, such as a comment or a “like,” and show that action to a user’s friends in an ad unit on the right side of the page. These have already proven successful, with higher clickthrough rates than other ad types.

“In general, we’ll see that [Sponsored Stories ads] typically perform at 200% to 300% improvement over standard Facebook-brand ad units, and that’s specific not only to clickthrough rate but also to the conversion rates.” —Dave Williams, CEO of BLiNQ Media, in an interview with eMarketer, August 16, 2011

In an example cited at f8, someone listening to the Dave Matthews Band on Spotify, one of Facebook’s partners, would be tagged as a fan and could then receive ads targeted to fans of the band. Or that person’s listening behavior could be used as an ad itself, encouraging the user’s friends to also listen to and, ideally, buy music.

Moves toward social advertising may encourage marketers to spend more ad dollars on Facebook. Said Alan Gellman, senior vice president of digital marketing at Wells Fargo, in an interview with eMarketer: “I would argue that the premium [ad] placement [on Facebook] isn’t social at all. But that’s not how the industry is talking about it. You read articles and people say if you’re spending money on Facebook, it’s paid social. But I actually think of it as just another form of digital marketing, and Facebook is a really important publisher.”

Targeting TV. As Facebook continues on its mission to add social context to everything people do, it will become both a partner and a threat to TV. The company is focusing on convincing media companies to share their content through Facebook, but at the same time, it is teaming with Nielsen to offer metrics that make Facebook advertising more comparable with other advertising, including TV.

“Over time, marketers will start to see Facebook not just as a social network, but an aggregation of audiences that are having conversations about brands, about television shows, pop culture, areas they want to connect with,” MediaVest’s Richman told eMarketer. “When that pivot starts to happen, then we may see an opportunity for more television dollars to flow” into Facebook.

Some TV budgets are already starting to move. Said BLiNQ’s Williams: “We’re seeing some of our clients migrate some of their TV buying over. I would say we’re in the very early stages of that. I think that’s where the biggest opportunity is, and Facebook is setting itself up to be very complementary to television in terms of the metrics it’s offering: reach and frequency and things like that, vs. traditional performance metrics through display.”

Greater focus on metrics. Proving the effectiveness of Facebook’s advertising is also a necessity for 2012 because enabling advertisers to compare the effectiveness of Facebook and other media, such as TV, may convince them to shift budgets.

This means Facebook will focus on answering questions such as how it can complement other media, how marketers can reach their audience on Facebook, and what parts of their campaign can be run on Facebook vs. on other media.

In addition, Facebook will work toward proving return on investment from its advertising, beyond measuring clicks. Focusing on the offline sales impact from running ads on Facebook will enable the company to better show that it moves the needle.

“Our ability to track and measure needs to improve and that’s really where the advances are happening. [Facebook] built basic capabilities that are getting more and more enhanced to be able to measure and target and segment. That’s going to make ad performance a lot better.” —Kris Narayanan, vice president of digital marketing at Samsung, in an interview with eMarketer, August 24, 2011

Facebook

http://totalaccess.emarketer.com/Interview.aspx?R=6000557



Twitter is gaining momentum. It is expected to earn $259.9 million in worldwide ad revenue next year, rising to nearly $400 million by 2013.

Advertising revenue will come almost exclusively from the US in 2011, with just 4% from international markets. As Twitter rolls out ad sales offices worldwide, the percentage of ad revenue from international markets will reach 10% in 2012 and 12% in 2013, eMarketer estimates.

millions and % of total

Twitter Ad Revenues Worldwide, US vs. Non-US,2010-2013

2010 2011 2012 2013

US% of worldwide total

Non-US% of worldwide total

Worldwide

98%

2%

$44.1

$0.9

$45.0

96%

4%

$133.9

$5.6

$139.5

90%

10%

$233.9

$26.0

$259.9

88%

12%

$351.6

$47.9

$399.5Note: paid advertising only; excludes spending by marketers that goestoward developing or maintaining a Twitter presenceSource: eMarketer, Sep 2011132443 www.eMarketer.com

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This forecast features a slightly lower 2011 ad revenue estimate than eMarketer’s previous estimate from January 2011, which pegged Twitter’s 2011 ad revenues at $150 million. This decrease is the result of Twitter’s slower-than-expected rollout of its non-US sales offices as well as its delay in launching a platform enabling advertisers to buy ads on a self-serve basis.

Twitter’s suite of ad products, which includes Promoted Trends, Promoted Accounts and Promoted Tweets, has seen success in the US. The addition of new sales efforts in the UK and other markets, as well as the self-serve platform, will drive revenue up in 2012 and 2013. In addition, a new ad capability enabling marketers to place Promoted Tweets in users’ timelines will also provide targeting opportunities for advertisers.

Twitter is very much focused on advertising as its main revenue driver, though the site has a licensing partnership with Microsoft’s Bing. (A deal with Google expired in 2011 and has not been renewed.) It also gains some revenue from providing access to its tweets for research and curation purposes.

Twitter

millions and % changeTwitter Ad Revenues Worldwide, 2010-2013

2010

$45.0

2011

$139.5

2012

$259.9

2013

$399.5

Note: paid advertising only; excludes spending by marketers that goestoward developing or maintaining a Twitter presenceSource: eMarketer, Sep 2011132442 www.eMarketer.com

210.0%

86.3%

53.7%

132442

Highlights

■■ Ad revenue will rise to $259.9 million in 2012, up 86.3% from $139.5 million this year.

■■ 2013 ad revenue will approach $400 million.

■■ 2012–2013 growth is predicated on the release of Twitter’s self-serve platform, as well as its international sales rollout.



Although Facebook is seeing the biggest spending boost, marketers have reported that they expect to increase ad spending on Twitter. A February 2011 survey by The Creative Group and American Advertising Federation found that more than three-quarters of US advertisers and marketers planned to increase their ad spending on Twitter “significantly” (26%) or “somewhat” (51%) in the next three to five years.

% of respondents

Change in Ad Spending on Select Social NetworksAccording to US Advertisers/Marketers, Feb 2011

Facebook

YouTube

Twitter

LinkedIn

foursquare

Flickr

Increasesignificantly

40%

33%

26%

20%

10%

6%

Increasesomewhat

49%

49%

51%

51%

36%

37%

No change

6%

13%

13%

18%

23%

31%

Decrease

5%

4%

8%

9%

14%

17%

Note: n=500 AAF Ad Club members; in the next 3-5 years; numbers maynot add up to 100% due to roundingSource: The Creative Group and American Advertising Federation (AAF),"The Creative Team of the Future," July 12, 2011130215 www.eMarketer.com

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Challenges

As Twitter gains more traction as an ad vehicle, it faces several challenges.

Its ad products are labor-intensive. Twitter’s ads are unique, requiring more attention and resources from marketers than other formats. The company encourages advertisers to tweak hashtags and search parameters during the course of a campaign to take advantage of user interaction, and that requires real-time attention.

“A lot of the buys take a tremendous amount of resources in terms of structuring the posts,” said Josh Martin, senior vice president and director of client services for ID Media, in an August 18, 2011 interview with eMarketer. “It’s an ongoing, evolving process and it does require commitments from the client side as well as the agency side.”

Users may feel inundated with marketing messages. Twitter’s plan to slowly roll out Promoted Tweets in users’ timelines is an indicator that it is concerned about overwhelming users with ads. The delays in the launch of the self-serve platform likely result from Twitter’s nervousness about opening up its system to potentially thousands of new advertisers, while still maintaining control over the user experience.

Online market research firm Lab42 in August 2011 found that 21% of US Twitter users it surveyed saw Promoted Tweets as detracting from the Twitter experience. However, 27% said they had retweeted a Promoted Tweet and more than 40% had either learned about new brands, gotten discounts or seen Promoted Tweets from relevant brands.

% of respondents

Attitude of US Twitter Users Toward PromotedTweets, Aug 2011

I see Promoted Tweets from brands that are relevant to me48%

I've gotten discounts from Promoted Tweets42%

I've found out about new brands through Promoted Tweets41%

I've retweeted a Promoted Tweet27%

They are annoying and take away from the Twitter experience21%

I haven't noticed them8%

I don't know what Promoted Tweets are7%

Note: n=500; Promoted Tweets are clearly labeled but otherwise ordinarytweets that are paid for by advertisers in order to reach a wide group ofusers or to spark engagement from their existing followersSource: Lab42 survey as cited in company blog, Aug 20, 2011131720 www.eMarketer.com

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Keeping the ad buzz going. STRATA, in its quarterly surveys of US ad agencies, found that fewer were considering placing Twitter advertising in 2011 vs. 2010. In Q3 2011, 37% of US ad agencies reported they would be likely to use Twitter as part of their clients’ campaigns, down from 57.1% in Q1 2010.

% of respondents

Social Media Sites US Ad Agencies Are Most Likely toUse in Their Clients' Campaigns, Q1 2010-Q3 2011

2010 2011

Facebook

YouTube

Twitter

LinkedIn

Google+

foursquare

Myspace

Digg

Other

Not using

Q187.5%

39.3%

57.1%

17.9%

-

-

5.4%

3.6%

-

12.5%

Q284.0%

37.0%

43.2%

23.5%

-

-

4.9%

3.7%

3.7%

14.8%

Q387.9%

39.4%

42.4%

18.2%

-

15.2%

3.0%

4.5%

3.0%

13.6%

Q478.9%

38.9%

45.6%

20.0%

-

14.4%

1.1%

3.3%

7.8%

21.1%

Q182.7%

37.8%

35.7%

18.4%

-

10.2%

2.0%

2.0%

3.1%

16.3%

Q280.7%

35.8%

38.5%

20.2%

26.6%

11.0%

0.9%

2.8%

4.6%

13.8%

Q389.0%

39.0%

37.0%

23.0%

14.0%

13.0%

1.0%

0.0%

1.0%

11.0%

Source: STRATA, 2010 & 2011133699 www.eMarketer.com

133699

Twitter


The falloff indicates that the fascination with Twitter’s ad products has become more subdued, at least among the agencies surveyed by STRATA. Additionally, it highlights the differences between Facebook, considered a necessity in the digital marketing world because of its outsize audience, and Twitter, whose much smaller user base still puts it in the experimental realm for many marketers.

Trends for 2012

Expansion of international ads. In September 2011, Twitter introduced Promoted Products in the UK, allowing advertisers to reach local users with relevant content. Starting with a campaign promoting the TV show “Glee,” which airs on the Sky network in the UK, other launch partners in the UK included Eurostar, Paramount Pictures UK and Electronic Arts. Another international focus area is Japan, where Twitter has partnerships with several digital media companies and recently hired a country manager. Twitter is currently available in 17 languages, leaving the door open to introduce ad offerings in other markets worldwide.

Self-serve plus geotargeting. These two offerings in combination will help smaller and local businesses use Twitter to target audiences in specific regions or cities, or who have certain affinities. Currently, Promoted Accounts and Promoted Tweets can be targeted to most countries and US metro areas, but Promoted Trends are available only on a global buy. Geotargeting Promoted Trends is a logical next step.

Better metrics. As is the case with Facebook, marketers want to know more than whether someone clicked on an ad or shared it with their followers. They want to know if the ad drove results. Twitter has promoted the fact that its ads are highly engaging, but it must partner with marketers to show how social engagement translates to sales and leads.

Twitter

LinkedIn, which went public in 2011, is proving that offering social media advertising to B2B marketers can be a solid revenue stream.

LinkedIn’s ad business, which it refers to as its Marketing Solutions business segment, had 2010 revenues of $79.3 million, according to the company’s S-1 document, accounting for about one-third of the company’s total revenue. eMarketer forecasts that LinkedIn’s ad revenue will rise 78.5% in 2011, to reach $140.8 million.

Recruitment services offerings have increased as a percentage of revenue, reaching 42% in 2010, while premium subscriptions have fallen to 25% of revenue. However, advertising has remained a steady backbone of LinkedIn’s service, giving marketers the ability to target ads to the highly sought-after professional audience. Like Facebook, LinkedIn offers both direct sales via its ad sales team and a self-serve ad system.

LinkedIn does not break out its US vs. non-US ad revenues, but it does provide a breakout of its total revenues. For all of 2010, about 27% of total revenue of $243.1 million came from international markets, LinkedIn reported. And in the first half of 2011, 31% of the company’s $121 million in total revenue came from outside the US.

eMarketer uses these percentages as a gauge of the US vs. non-US ad revenue split and estimates that 68% of 2011 ad revenue, or $95.7 million, will come from the US, with 32%, or $45 million, from elsewhere.

millions and % of total

LinkedIn Ad Revenues Worldwide, US vs. Non-US,2010-2013

2009 2010 2011 2012 2013

US% of worldwide total

Non-US% of worldwide total

Worldwide

$28.374%

$10.026%

$38.3

$57.172%

$22.228%

$79.3

$95.768%

$45.032%

$140.8

$126.663%

$74.337%

$200.9

$149.860%

$99.840%

$249.6Note: figures represent revenue from LinkedIn's Marketing Solutionsbusiness segmentSource: eMarketer, Sep 2011132446 www.eMarketer.com

132446

Trends for 2012

Three factors will contribute to the continued growth of LinkedIn as an advertising destination.

Increase in users. LinkedIn ranked as the fourth most-visited social network in the world in June 2011, with 84.4 million unique visitors, according to comScore. As of October 2011, the company had more than 120 million members, up from 72 million in June 2010.

Increase in page views. The number of page views increased 88% to 14.2 billion in the first half of 2011, LinkedIn reported, using comScore data. Continued growth in page views will demonstrate increased user engagement. One of the common criticisms of LinkedIn has been that users do not spend much time with the site. By providing regular email updates about a member’s connections, as well as a Twitter-like stream of comments and activity, LinkedIn has drawn more users to its features.

LinkedIn

millions and % changeLinkedIn Ad Revenues Worldwide, 2009-2013

2009

$38.3

2010

$79.3

2011

$140.8

2012

$200.9

2013

$249.6

Note: figures represent revenue from LinkedIn's Marketing Solutionsbusiness segmentSource: eMarketer, Sep 2011132445 www.eMarketer.com

107.0%

78.5%

43.7%

24.3%

132445

Highlights

■■ LinkedIn will generate $140.8 million in worldwide ad revenue in 2011, and reach $249.6 million in 2013.

■■ Future growth is predicated on increases in unique visitors and time spent on the site.



Improved ad targeting and ad offerings for B2B marketers. LinkedIn offers two main ad products: a self-serve text ad product sold on a cost-per-click basis, and an enterprise product that includes display ads, branded groups, sponsorships and white papers. In October 2011 it unveiled two new features: company status updates, enabling companies to communicate directly with their followers, and a certified developer program that marketers and agencies can tap to create marketing programs on LinkedIn.

Despite the user growth, LinkedIn still trails other social sites in engagement. According to comScore data cited by investment bank Evercore Partners in an August 2011 research note, between January and June 2011, each unique visitor to LinkedIn viewed an average of 30.1 pages per month. Facebook users, on the other hand, viewed an average of 522.5 pages per month during the period. Even Myspace users viewed more pages, 43.3 per month, according to comScore.

By its own admission, the company is less focused on improving those engagement metrics. CEO Jeff Weiner said during the company’s Q2 2011 earnings conference call: “Sometimes we get asked about time spent, and as we like to say, it’s not about enabling people to pass the time, it’s about enabling people to save the time.”

If LinkedIn can make business-focused social networking more efficient for its users, it will keep them coming back, and advertisers will see the benefits of an engaged professional audience.

LinkedIn

Google’s newest social network is its most ambitious effort yet to attract consumers—and marketers—to socialize with the search giant. Google+ will formally open up to marketers in late 2011, offering business profile pages that enable companies to create “Circles” and “Hangouts” to market to segments of the Google+ user base.

Google earlier this year started adding +1 information—its answer to Facebook’s “like” button—to search results. Now, if a Google+ user clicks the +1 button next to a brand, story, comment or other piece of content, that information will appear not only in his or her friends’ Google+ newsfeeds but also in the search results if a friend searches for the same thing.

“When search results and search ads have personalized annotations, there is a very real change in clickthrough rate to the benefit of you as a publisher or advertiser,” said Christian Oestlien, Google group product manager for social advertising, during a presentation at the Ad Age Digital West conference in September 2011.

In a limited test of adding +1 to search results, Dutch search engine optimization company SEO Effect found that a +1 mark “has a higher visibility in a search result, which could raise the clickthrough rate to the website.”

Google will also add the +1 button to ads on the Google Display Network, enabling people to recommend ads to their friends.

eMarketer will monitor these developments and may publish a breakout forecast for Google+ ad revenues in future reports. In the meantime, there has definitely been curiosity over how Google will use its social network to enhance the marketing and advertising opportunities provided by its search engine, Gmail, YouTube and other products.

In Q2 2011, when Google+ launched, 26.6% of ad agencies surveyed by STRATA said they were likely to use the site for their clients’ campaigns. However, in Q3 2011, the percentage fell to 14% as Google+ remained closed off to marketers.

As of August 2011, 8.1% of the top 10,000 websites worldwide had already placed a link to Google+ on their homepage, according to BrightEdge.

% of top 10,000 websites

Social Links or Plugins on the Homepage of WebsitesWorldwide, Aug 2011

Facebook 50.3%

Twitter 42.5%

Google+ 8.1%

LinkedIn4.0%

Source: BrightEdge, "Social-Share Analysis: Tracking Social Adoption andTrends," Aug 29, 2011132097 www.eMarketer.com

132097

Early usage trends for Google+ have been up and down. Early adopters flocked to the site after its closed field trial began in June, but many stopped visiting after kicking the tires for a while. Usage picked up again in late September after Google+ entered open beta.

According to Experian Hitwise, Google+ was the eighth most visited social media site during the week ended September 24, 2011, with a 0.55% share of visits. The week before, it ranked 54th. However, analytics company and online ad network Chitika said in October 2011 that while usage rose dramatically the day the site went into open beta, it fell sharply in the succeeding days.

Google+

millions and % share

Top 10 US Social Media Sites, Ranked by Visits, Weekending Sep 24, 2011

Visits % share

1. Facebook 1,758.1 64.85%

2. YouTube 530.1 19.55%

3. Twitter 33.1 1.22%

4. Yahoo! Answers 28.0 1.03%

5. Tagged 19.7 0.73%

6. LinkedIn 17.8 0.66%

7. Myspace 16.3 0.60%

8. Google+ 15.0 0.55%

9. myYearbook 10.6 0.39%

10. iVillage 10.3 0.38%

Note: excludes mobile traffic or traffic from the Google Notification BarSource: Experian Hitwise as cited in company blog, Sep 26, 2011132863 www.eMarketer.com

132863

Highlights

■■ Google+ will open up to brands in late 2011, offering business profile pages and linking the +1 button to search results and ads.

■■ Usage is ticking upward as the site moves beyond the test stage.

■■ Questions about the size of the Google+ audience may be moot if Google can successfully meld social and search for marketers.



In August 2011, 22% of US internet users said they currently used or were likely to join Google+ in the next 12 months, according to a survey by Bloomberg and YouGov. That was greater than the percentage who said they were using or might join LinkedIn, Twitter or Myspace.

% of respondents

Select Social Networks of Which US Internet UsersAre Members, Aug 2011

Estimatedpenetration*

Facebook 69%

LinkedIn 20%

Twitter 20%

Myspace 13%

Google+

Currentpenetration

71%

19%

18%

14%

13%

Likely to join*

1%

2%

3%

1%

9%

Likely to closeaccount*

3%

<1%

<1%

2%

<1% 22%

Note: *in the next 12 monthsSource: Bloomberg and YouGov survey as cited in company blog, Aug 5, 2011

131536 www.eMarketer.com131536

When looking at the conflicting data about Google+, marketers should remember that Twitter still faces questions about its usage several years into its existence.

eMarketer will be watching Google+ usage carefully, but it is entirely possible that the site will not need an especially strong user base to be successful. Any information that Google is able to glean from Google+ users can be used to improve ad targeting for the rest of its products. Facebook doesn’t allow Google to access content that its users do not make public, which means a significant portion of social activity on the web is unavailable to Google’s search engine. Google+ will help fill that gap.

Spotlight: How Ford Uses Google+

Even though Google has prevented other marketers from using Google+, Ford Motor Co. was allowed to create a brand profile on the site. In an interview with eMarketer, Scott Monty, Ford’s digital and multimedia communications manager, described the company’s early learnings from its test account.

What Ford has learned so far: “Our followers on Google+ want more personal interaction and opportunities, especially as the platform supports it. They want us to use the Hangout feature. They want to chat directly with people deep within the Ford organization—engineers, designers, product people—rather than executives or marketers. And they want content that isn’t simply a replication of what they might be getting on Facebook.”

How Ford is building its follower base: “We’re providing unique visual content—views from inside Ford buildings, rare vehicles that may be in our lobbies, historical photos from our archives and occasional interaction with Ford employees via video.”

How the company uses Hangouts and Circles: “We live-streamed a forum that included a Hangout. We plan to have more interaction with our designers and engineers. We haven’t bothered with Circles yet because, frankly, we have no way of knowing enough about our fans to be able to categorize them. That’s one of the dangers of brands using a personal Google+ profile as it currently exists.”

How Ford integrates Google+ into other social media efforts: “We’re not doing that at this time, but we’ll certainly be looking at it, especially since Google announced that the +1 button would be turned on in certain advertising.”

Google+

https://plus.google.com/114277687548103339609/posts


Q&A: How can marketers use Google+?

Ad industry executives are intensely curious about the marketing opportunities Google+ will offer. While they are excited about how to maximize the relationship between Google+ and other properties, they also question how many people will use the social network and how engaged they will be.

Marc Ruxin Chief Innovation Officer

Universal McCann

“The jury’s still out on Google+. Clearly, most people that are on the internet interact with Google a little bit every day, whether they’re doing a search or going to YouTube or opening their Gmail account. So having a timeline-like presence on Google makes sense. I don’t think it’s a Facebook killer, but it’s certainly a good way to pull together all of the disparate Google connections that a consumer has.”


BLiNQ Media

“We think Google+ is potentially the biggest competitor for Facebook in terms of Google’s track record, size and the ability to quickly execute products. Compared to Facebook, Google is more of an ROI platform, so Google+ creates more brand opportunities. Google is also able to capture a lot of user data, which it can use across all its various products, including Google+. We definitely think Google’s going to be a big player and we don’t want to understate that—but at this point, it’s still relatively early and there will be a lot of unknowns.”


Efficient Frontier

“Google+ is very interesting to clients, but there aren’t brand pages yet. That’s going to be a quickly evolving market, depending on how that product takes off. The ad benefit is going to be huge. If you look at Facebook’s Sponsored Stories as an ad unit, and what social endorsements mean in terms of improved efficacy, there’s a tremendous opportunity if Google can capitalize on what’s happening with +1 activity and with the connection activity in Google+.”

Josh Martin SVP, Director of Client Services

ID Media

“It has the potential to be a very competitive threat to Facebook most directly. Will it be a threat next year? No, it will take a while. Given what Google can do from a contextual targeting ability, particularly within search, that is a bit of a weakness associated with Facebook. I see that as an inherent strength coming out of Google.”

Google+

Worldwide social game ad revenues will continue to rise through 2013 as marketers expand their presence in this channel. In the US, eMarketer projects that social game ad revenues will reach $291.9 million in 2012, growing by 42% from $205.4 million in 2011.

For purposes of this forecast, eMarketer defines a social game as a game played within a social network. We recognize that some social game companies, such as Zynga, are developing games that do not need to be played within a social network and we may update our definition in the future.

A May 2011 report by William Blair & Company estimated even higher US social gaming ad revenues. The firm expects revenues to reach $1.645 billion in 2015, growing steeply from $712 million in 2011.

millionsUS Social Gaming Ad Revenues, 2010-2015

2010

$517

2011

$712

2012

$896

2013

$1,147

2014

$1,374

2015

$1,645

Source: William Blair & Company, "The Future in Digital Media," May 16,2011131836 www.eMarketer.com

131836

Blair includes areas that eMarketer did not count in its estimates, such as lead generation offers and branded virtual goods. These inclusions help to explain why Blair’s figures are considerably higher than eMarketer’s.

Social Gaming

millions and % change

Social Gaming Ad Revenues Worldwide, US vs. Non-US, 2009-2013

US Non-US

Note: includes display, video, search and other forms of paid advertising;excludes spending by marketers that goes toward developing or maintaining branded social games; numbers may not add up to total due to roundingSource: eMarketer, Sep 2011132441 www.eMarketer.com

2012

$449.1

$291.9

$157.2

2013

$641.0

$416.7

$224.4

2009

$124.4

$99.5

2010

$162.7

$122.0

$40.7

2011

$293.4

$205.4

$88.0

$24.9

30.8%�

80.4%�

53.1%�

42.7%�

132441

Highlights

■■ Worldwide social gaming ad revenues will reach $641 million in 2013, up from $293.4 million in 2011.

■■ The US will account for 65% of the total in 2013.

■■ Social games are attractive to marketers because they have an immersive environment and an audience that is receptive to branded content and offers.

■■ Virtual goods represent the majority of revenue for social games, but ad revenue is increasing as marketers test branded integrations, video ads and other formats.



The Blair study also included a breakdown of social gaming ad types and concluded that brand engagement ads made up the biggest share of revenue in 2010. These ads include homepage takeovers, branded items and cross-promotions such as a recent campaign by Paramount Pictures to promote its animated feature “Rango” through the Zynga title FrontierVille.

Advertising $517

Social gaming revenues

millionsUS Social Gaming Revenues, by Type, 2010

Source: William Blair & Company, "The Future in Digital Media," May 16, 2011

131837 www.eMarketer.com

Micro-transactions $800

Subscriptions and purchases $500

Advertising

Brand engagement $240

Leadgeneration

$162

Displayadvertising

$115

131837

It should be noted that virtual goods represent the majority of revenue for most social games, while advertising represents a very small portion. For example, advertising accounted for just 5.4% ($28.2 million) of Zynga’s revenue ($522 million) in the first half of 2011, according to the company’s S-1 filing.

Similarly, in 2010, advertising represented only 3.8% ($22.8 million) of Zynga’s total revenue ($597.5 million). However, advertising played a greater role in 2009, when 29.4% ($35.7 million) of total revenue ($121.5 million) came from ads. The decline in ad revenue from 2009 through 2011 resulted from Zynga limiting the number of in-game offers it showed to users.

eMarketer’s growth forecast for social gaming ad revenues is based on the following assumptions:

A rise in the number of social game users. eMarketer forecasts that there will be 73.6 million social gamers in the US in 2013, up 18.9% from 61.9 million in 2011. These avid gamers represent an attractive audience for marketers.

A receptive audience. As long as the ads make sense within the game and do not intrude on the flow of play, gamers have shown that they accept seeing ads in exchange for game play or virtual currency.

A marketer-friendly climate. Brand campaigns tend to be more effective in these lighter, less-immersive games than in traditional, action-based titles.

New ad types. Social game companies are experimenting with different ways to incorporate ads, including offering branded virtual goods or in-game environments; showing video ads in exchange for virtual currency; and placing ads on game-start pages.

Zynga now offers three types of advertising: branded virtual goods/sponsorships, “engagement” ads (in which users engage with an ad and receive virtual currency) and mobile ads.

“If you look at CityVille, there’s a lot of real estate on each person’s game board, and there’s no reason that your city shouldn’t represent who you are as a player and what you’re interested in. A city with the brands you like, and where those brands actually help you in-game, will enhance the reality of that city for you.” –Jeff Karp, chief marketing and revenue officer at Zynga, in Advertising Age, August 22, 2011

Social Gaming


Q&A: How do marketers view social game ads?

Social game ads are intriguing to marketers and agencies because some formats, such as in-game placements, offer the possibility of strong user engagement. But there is also concern that other ad formats, such as ones that reward players for viewing a video, have much less engagement potential.

Josh Martin Senior Vice President of Client Services

ID Media

“These are the questions we are trying to figure out: How do marketers operate within social game environments? Is it the incentivize model: Get free elements in the game in exchange for consumption of an advertisement? And what value does that have to a marketer?

“But the usage is incredible and the consumer experience, overall, is very strong. When the consumer is getting a free game, and in exchange they have to get exposed to some ad messaging, in most cases that’s an exchange that they would be happy with.”


Universal McCann

“I look at environments like Zynga to become massive repositories for social spend. When you put a branded crop inside FarmVille and a bunch of people pay a bunch of money to buy virtual organic blueberries, if you’re General Mills, you can tick the box called, “User saw my ad.” Not only did they see it, they thought about it and they paid real money for it.”


Media Contacts

“We have run test campaigns. Some of them have worked out, but at the end of the day, a lot of clients have asked, ‘How many people signed up for this only to get the rewards and don’t really care about the brand itself?’ The clients have been happy with the interactions, but a lot of them have been just tests.”

Conclusions

Social networks have cemented their place in advertising. Marketers recognize the importance of reaching consumers where they are. And for many marketers, that means not just conducting marketing activities, but buying paid advertising. The result will be a $10 billion market in 2013.

Facebook will get the vast majority of social network ad revenues. With $7 of every $10 in social network advertising flowing to the company, Facebook is also taking an increasing proportion of total online ad spending. Although its ad offerings and metrics aren’t perfect, marketers still feel they need to be there to reach their target audience.

New ad products and international offices will propel Twitter. Ad revenues should reach $400 million in 2013, as Twitter rolls out sales offices outside the US and prepares to unveil its self-serve ad platform. It must work hard to keep the ad buzz going among marketers, while at the same time keep from inundating users with marketing messages.

LinkedIn benefits by offering a premium audience to B2B marketers. Ad revenue is a steady backbone to the company’s business, exceeding $200 million in 2012 and nearing $250 million in 2013. Increases in the number of users and page views, as well as new targeted ad offerings, will support ad revenue growth.

Google+ is a wildcard. Early usage trends are up and down, but marketers are anxious to test the social network when it opens up later this year. Even if it doesn’t attain hundreds of millions of users, Google+ may still be successful if it can offer marketers a blend of search and social advertising that its competitors cannot.

Social games present an attractive, engaged audience. Because users are willing to engage with ads in exchange for game assets or virtual currency, marketers are testing brand integrations, video ads and other formats that will propel the social game ad market to $449.1 million in 2012 and $641 million in 2013.

Social Gaming


Appendix: Social Network Ad Revenue Forecast Methodology

eMarketer has been forecasting social network ad revenues since 2006. By examining the long-term patterns of revenue growth or loss, and viewing those figures through the lens of current ad spending trends and marketers’ future intentions, eMarketer is able to develop its projections.

Major players. We begin to estimate the size and growth curve of the social network ad market by tracking the major ad-selling players: Facebook, LinkedIn and Twitter, as well as several dozen international social networks, social game developers and social app companies.

Other research firms. Several researchers project social network or social media ad revenues and/or revenues for individual social network companies. eMarketer aggregates these projections; the details behind how other researchers come to their numbers helps to inform eMarketer’s forecasting process. We include these comparative estimates for transparency, not necessarily to determine market size.

Other available data. We consider data on marketer usage, consumer usage, ad impressions and ad pricing as part of our model.

Interviews with industry executives. We conduct interviews with executives at ad agencies, marketers and the social networks to gain perspective on the development of the social network advertising business as a whole, as well as the revenues for individual companies.

eMarketer Interviews

Wells Fargo Counts on Social Media Measurement

Alan Gellman SVP of Digital Marketing

Wells Fargo Interview conducted on August 17, 2011

Samsung’s Social Spending on the Rise

Kris Narayanan Vice President of Digital Marketing

Samsung Interview conducted on August 31, 2011

Southwest Builds up Social Channels to Communicate with Travelers

Alice Wilson Associate Manager of Social Marketing

Southwest Airlines Interview conducted on August 24, 2011

Adam Bain President of Revenue

Twitter Interview conducted on July 26, 2011

Deidra Bodkin Vice President of Media

Razorfish Interview conducted on August 11, 2011

Carolyn Everson Vice President of Global Marketing Solutions

Facebook Interview conducted on August 18, 2011

Josh Martin SVP, Director of Client Services

ID Media Interview conducted on August 18, 2011

Joe Mele Senior Vice President, US Media

Razorfish Interview conducted on August 11, 2011






Efficient Frontier Interview conducted on August 11, 2011

Scott Monty Digital and Multimedia Communications Manager

Ford Motor Co. Interview conducted on October 3, 2011

Sean Muzzy Senior Partner and Managing Director

Neo@Ogilvy Interview conducted on August 18, 2011


Media Contacts Interview conducted on August 8, 2011

Amanda Richman President of Digital

MediaVest Interview conducted on August 15, 2011


Universal McCann Interview conducted on August 16, 2011

Sid Shah Senior Director of Business Analytics

Efficient Frontier Interview conducted on August 11, 2011


BLiNQ Media Interview conducted on August 16, 2011

Related eMarketer Reports

Facebook Marketing: Strategies for Turning ‘Likes’ into LoyaltyGaming for Marketers The Global Media Intelligence Report: Western Europe Twitter Advertising: Four Marketers Test the New PlatformVirtual Goods and Currency: Real Dollars Add Up Western Europe Social Network Usage

Related Links

comScore Media Metrix Starcom MediaVest Group STRATA William Blair & Co.

eMarketer Interviews

http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2000785






http://www.comscore.com

http://www.smvgroup.com/home.html

http://gotostrata.com

https://www.williamblair.com/Pages/index.asp


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