e marketer worldwide_social_network_ad_spending_forecast-robust_growth_set_to_continue_through_2014

Copyright ©2012 eMarketer, Inc. All rights reserved.

Worldwide Social Network Ad Spending 2

North America 6

Western Europe 8

Eastern Europe 9

Asia-Pacific 10

Latin America 12

Middle East and Africa 13

Conclusions 14

Appendix: Worldwide Social Network Ad Spending Forecast Methodology 14

Related eMarketer Reports 15

December 2012

Executive Summary: Worldwide social network ad spending is expected to reach nearly $9 billion in 2013, a 33% increase over 2012. While Facebook will maintain a significant share of the 2013 total ($5.48 billion), that leaves $3.5 billion to be spent on fast-rising Twitter, Chinese social networks, social games, LinkedIn and other sites. 144536

In our first-ever regional breakdown, North America leads with a 49.7% share of worldwide social network ad spending in 2012, followed by Western Europe, at 24.6%. However, Asia-Pacific will surpass Western Europe in share next year, an indication of both the strong inroads that Facebook is making in the region as well the improved monetization strategies of Chinese and other Asian social networks.

When it comes to Facebook, international revenues are coming on fast. The US will have a 51% share of Facebook ad revenues in 2012, but will fall to 49% in 2013. eMarketer expects Facebook to draw $5.48 billion in ad revenues in 2013 and reach $6.8 billion in 2014.

Twitter’s worldwide ad revenue will see substantial increases in 2013, rising 89% to $545 million. As the company rolls out ad products in international markets and expands its self-serve ad platform, Twitter will take an increasing share of worldwide social network ad spending.

This report highlights eMarketer’s forecast for social network ad spending around the world. The projections, which run through 2014, cover North America, Asia-Pacific, Western Europe, Eastern Europe, Latin America, and the Middle East and Africa, including further details and breakouts for the US, Canada, the UK and China.

billions and % changeSocial Network Ad Spending Worldwide, 2010-2014

2010

$3.70

55.2%

2011

$5.12

38.5%

2012

$6.71

31.0%

2013

$8.93

33.1%

2014

$10.93

22.4%

Social network ad spending % 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 2012; confirmed and republished, Nov 2012144536 www.eMarketer.com

Alison McCarthy [email protected]

Debra Aho [email protected]

Contributors Monica Peart, Martín Utreras, Haixia Wang

Worldwide Social Network Ad Spending Forecast: Robust Growth Set to Continue Through 2014

Worldwide Social Network Ad Spending Forecast: Robust Growth Set to Continue Through 2014 Copyright ©2012 eMarketer, Inc. All rights reserved. 2

Worldwide Social Network Ad Spending

Worldwide social network advertising spending is expected to reach nearly $9 billion in 2013, up 33% over 2012’s expected total of $6.71 billion. By 2014, ad spending on social networks will approach the $11 billion mark.

billions and % changeSocial Network Ad Spending Worldwide, 2010-2014

2010

$3.70

55.2%

2011

$5.12

38.5%

2012

$6.71

31.0%

2013

$8.93

33.1%

2014

$10.93

22.4%

Social network ad spending % 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 2012; confirmed and republished, Nov 2012144536 www.eMarketer.com

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2012 has been a year of intense scrutiny of the social network advertising business, primarily because Facebook’s ad revenues have not grown as rapidly as expected. eMarketer’s current forecast for social network ad spending in 2012 is $1 billion lower than our forecast published in February 2012, mainly due to the Facebook slowdown.

But social networking is an activity that is gaining strength around the world. eMarketer forecasts that there will be 1.63 billion monthly users in 2013, representing nearly one in four people across the globe. Marketers will continue to invest ad dollars to reach these people.

In Asia-Pacific, for example, marketers are making more serious efforts to reach a growing social network user population. Chinese social network Sina Weibo is seeing initial signs of strong monetization as advertisers begin to engage with the microblogging service’s 300 million-plus registered users.

Meanwhile, Twitter is flourishing in the UK, Japan and Brazil, and the company is expanding its international advertising sales efforts, allowing marketers new opportunities to reach its user base.

Among world regions, North America will claim the lion’s share of social network ad expenditures, at $4.36 billion in

2013. North America’s share will be more than double that of Asia-Pacific, the region that will have the second-highest amount spent on social network advertising next year. North America’s strong position among world regions is reflective of the hold that social networking has on the populations of the US and Canada and the fact that US businesses commonly incorporate social network advertising into their budgets.

millions

Social Network Ad Spending Worldwide, by Region,2010-2014

North America

Western Europe

Asia-Pacific

Eastern Europe

Latin America

Middle East & Africa

Worldwide

2010

$2,040.8

$1,013.8

$530.6

$61.6

$45.6

$4.3

$3,696.6

2011

$2,593.1

$1,302.6

$994.8

$119.3

$97.5

$11.3

$5,118.6

2012

$3,332.5

$1,648.3

$1,381.6

$167.8

$156.7

$21.0

$6,707.8

2013

$4,356.6

$1,990.9

$2,048.0

$250.0

$244.6

$37.1

$8,927.2

2014

$5,346.0

$2,280.4

$2,586.0

$307.7

$339.7

$68.5

$10,928.3Note: includes display, search, video and other forms of paid advertisingappearing within social networks, social games and social applications;excludes spending by marketers that goes toward developing ormaintaining social network profile pages or branded applications; numbersmay not add up to total due to roundingSource: eMarketer, Nov 2012147493 www.eMarketer.com

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The Middle East and Africa will experience the fastest growth throughout the forecast period, though investments will remain extremely low compared to the other regions. Latin America and Eastern Europe will also see higher-than-average growth.

% change

Social Network Ad Spending Growth Worldwide, byRegion, 2010-2014

2010 2011 2012 2013 2014

Middle East & Africa 287.6% 163.2% 84.9% 76.9% 84.7%

Latin America 179.8% 114.1% 60.7% 56.1% 38.9%

Eastern Europe 92.4% 93.8% 40.6% 49.0% 23.1%

Asia-Pacific 99.3% 87.5% 38.9% 48.2% 26.3%

North America 37.2% 27.1% 28.5% 30.7% 22.7%

Western Europe 75.1% 28.5% 26.5% 20.8% 14.5%

Worldwide 55.2% 38.5% 31.0% 33.1% 22.4%Note: includes display, search, video and other forms of paid advertisingappearing within social networks, social games and social applications;excludes spending by marketers that goes toward developing ormaintaining social network profile pages or branded applicationsSource: eMarketer, Nov 2012147557 www.eMarketer.com

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Social network ad spending in North America will lose some share to other regions during the forecast period, but eMarketer expects that it will continue to account for almost half of the global total through 2014. Asia-Pacific will see its share increase from 20.6% in 2012 to 23.7% in 2014, surpassing that of Western Europe. This will primarily be a result of Facebook’s increased monetization efforts in the region, but also a reflection that advertisers in China (where Facebook does not have a presence) are starting to spend more on advertising via local social networks.


% of total

Social Network Ad Spending Share Worldwide, byRegion, 2010-2014

2010 2011 2012 2013 2014

North America 55.2% 50.7% 49.7% 48.8% 48.9%

Western Europe 27.4% 25.4% 24.6% 22.3% 20.9%

Asia-Pacific 14.4% 19.4% 20.6% 22.9% 23.7%

Eastern Europe 1.7% 2.3% 2.5% 2.8% 2.8%

Latin America 1.2% 1.9% 2.3% 2.7% 3.1%


Note: includes display, search, video and other forms of paid advertisingappearing within social networks, social games and social applications;excludes spending by marketers that goes toward developing ormaintaining social network profile pages or branded applications; numbersmay not add up to 100% due to roundingSource: eMarketer, Nov 2012147561 www.eMarketer.com

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eMarketer expects social network ad spending to account for 7.3% of worldwide digital ad spending in 2013. Spending in North America will remain higher than worldwide average due to the more mature monetization efforts in the US, while marketers in the Middle East and Africa, an immature market, will concentrate very little of their digital ad spending on social network sites—only 3% expected in 2013.

eMarketer measures digital ad spending based on the location of the advertiser. Because there is a higher concentration of advertisers in the US, many of which put greater efforts into social network advertising, the US (and North America) are more heavily weighted than other regions, adding to the disparity in revenue.

% of digital ad spending

Social Network Ad Spending Worldwide, by Region,2010-2014

2010 2011 2012 2013 2014

North America 7.1% 7.5% 8.3% 9.5% 10.4%

Western Europe 4.6% 5.2% 6.0% 6.5% 6.8%

Asia-Pacific 3.0% 4.6% 5.1% 6.3% 6.9%

Eastern Europe 2.9% 4.1% 4.8% 6.1% 6.5%

Latin America 2.5% 4.0% 4.6% 5.9% 6.4%


Worldwide 5.1% 5.8% 6.4% 7.3% 7.8%Note: includes display, search, video and other forms of paid advertisingappearing within social networks, social games and social applications;excludes spending by marketers that goes toward developing ormaintaining social network profile pages or branded applicationsSource: eMarketer, Nov 2012147562 www.eMarketer.com

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Facebook will take 63% of the worldwide social network ad spending pie in 2012, dipping slightly to 61.4% in 2013 as LinkedIn and Twitter grow their shares. Twitter will see the biggest jump in worldwide social network ad revenue share, rising from 4.3% in 2012 to 7.4% in 2014.

Facebook will rebound slightly in 2014 as the combined share of smaller social networks falls somewhat. But, overall, Facebook’s share of the market has remained relatively constant since 2011. If the company were to start operating in China, its share might rise again—and substantially.

% of total

Social Network Ad Spending Share Worldwide, by Venue, 2010-2014

2010 2011 2012 2013 2014

Facebook 50.7% 61.6% 63.1% 61.4%

Social games 7.5% 7.6% 8.1% 7.8%

Twitter 1.2% 2.7% 4.3% 6.1%

LinkedIn 2.1% 3.0% 3.9% 4.3%

Myspace* 7.2% 0.9% - -

Other 31.1% 24.1% 20.7% 20.5%

62.3%

7.5%

7.4%

4.7%

-

18.1%

Note: includes display, search, video and other forms of paid advertisingappearing within social networks, social games and social applications;excludes spending by marketers that goes toward developing ormaintaining social network profile pages or branded applications; numbersmay not add up to 100% due to rounding; *effective in 2012, Myspace willno longer be included in eMarketer's forecastSource: eMarketer, Nov 2012147600 www.eMarketer.com

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Facebook Ad Revenues Worldwide

While internet users in the US fueled Facebook’s meteoric rise, foreign expansion is driving the company’s growth, both in users and in revenue. eMarketer expects Facebook to draw $5.48 billion in worldwide ad revenues in 2013 and pull in $6.8 billion in 2014.

billions and % changeFacebook Ad Revenues Worldwide, 2010-2014

2010

$1.88

146.3%

2011

$3.15

68.2%

2012

$4.23

34.1%

2013

$5.48

29.5%

2014

$6.81

24.2%

Facebook ad revenues % change

Note: paid advertising only; excludes spending by marketers that goestoward developing or maintaining a Facebook presenceSource: eMarketer, Sep 2012144542 www.eMarketer.com

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eMarketer has lowered its expectations for Facebook worldwide ad revenues in 2012 from its February 2012 estimate after the company underperformed market expectations in both Q1 and Q2. eMarketer now expects that ad revenue will grow 34% in 2012, compared with the earlier prediction of 60.5%.

In the first nine months of 2012, Facebook’s ad revenue grew 33%, according to the company’s Q3 2012 earnings report.

The US will represent 51% of Facebook ad revenue in 2012, but its share is expected to fall to 49% in 2013 and 47% in 2014, eMarketer forecasts. Much of Facebook’s user growth is happening outside the US; in Q3 2012, the primary sources



of new growth were Brazil, India and Japan, Facebook said. However, Facebook faces challenges in monetizing these users, particularly those in developing markets who may be of lower value to marketers.

In the first nine months of 2012, 51% of Facebook’s total revenue, including both ads and payments, came from companies based in the US, the company said in its Q3 2012 earnings report. (Facebook does not break out the percentage of ad revenue that comes from companies in the US, but eMarketer’s assumption is that the total revenue split and the ad revenue split are similar.)

Ads will continue to diminish as a portion of Facebook’s total revenue, but the rate of decline is slowing. Advertising fell from 95% of revenue in 2010 to 85% in 2011, according to eMarketer. In 2012, ads will account for an estimated 83.9% of total revenue. Facebook Payments revenue growth is slowing, mainly because social gaming company Zynga, the primary source of Payments revenue, has faced its own challenges. In Q3 2012, Facebook reported that Zynga accounted for 7% of Facebook’s total revenue, down from 12% in Q3 2011.

millions and % of totalFacebook Revenues Worldwide, by Source, 2009-2013

Advertising*

Facebook Payments andother revenueTotalAdvertising % of total

2009

$761

$16

$77798.0%

2010

$1,875

$99

$1,97495.0%

2011

$3,154

$557

$3,71185.0%

2012

$4,232

$811

$5,04283.9%

2013

$5,478

$1,122

$6,60083.0%

Note: numbers may not add up to total due to rounding; *paid advertisingonly; excludes spending by marketers that goes toward developing ormaintaining a Facebook presenceSource: eMarketer, Sep 2012144543 www.eMarketer.com

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Twitter Ad Revenues Worldwide

Twitter will generate more than $545 million in worldwide ad revenue in 2013, up 89% from 2012’s expected total of $288 million. eMarketer predicts that by 2014 Twitter ad revenues will surpass the $800 million mark.

millions and % changeTwitter Ad Revenues Worldwide, 2010-2014

2010

$44.6

2011

$139.5

213.1%

2012

$288.3

106.7%

2013

$545.2

89.1%

2014

$807.5

48.1%

Twitter ad revenues % change

Note: paid advertising only; excludes spending by marketers that goestoward developing or maintaining a Twitter presenceSource: eMarketer, Sep 2012144546 www.eMarketer.com

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Twitter’s ad revenue for 2012 has grown faster than eMarketer’s earlier expectations and so our forecast has been revised upward from the February 2012 estimate of $260 million.

This year, the company has steadily grown its monetization efforts, adding new features to its ad products and expanding sales efforts in international markets, which now make up 70% of Twitter’s reported user base. Key revenue drivers for the company in 2013 and beyond include:

■ The rollout of Twitter’s self-serve advertising platform, aimed at small and midsize businesses

■ The launch of a Twitter Ads API, expected in late 2012 or early 2013

■ Increased focus on selling ads in international markets, including Japan, the UK and Brazil

■ Better forms of ad targeting, including messages aimed at specific mobile devices, user geographies and interests

eMarketer forecasts that 90% of Twitter’s ad revenues will come from the US in 2012, but that percentage is expected to fall to 83% in 2013 and 79% in 2014, as Twitter’s international ad sales pick up steam.

LinkedIn Ad Revenues Worldwide

Advertising is a significant contributor to LinkedIn’s business, but the company also has strong revenue streams from recruitment and premium subscription products, which make it less dependent on ads than Facebook or Twitter.

As a result, LinkedIn has focused less on innovating new types of advertising and more on building tools for marketers to reach its business-oriented audience, such as branded communities, targeted status updates and sponsorships.



LinkedIn’s worldwide ad revenue will reach $381 million in 2013, up 46.2% from 2012. Ad revenues have grown faster in 2012 than earlier predicted, and eMarketer has revised its forecast upward for the year to $260 million, from the $226 million forecast in February 2012.

millions and % changeLinkedIn Ad Revenues Worldwide, 2010-2014

2010

$79.2

106.8%

2011

$155.9

96.8%

2012

$260.7

67.2%

2013

$381.1

46.2%

2014

$513.1

34.6%

LinkedIn ad revenues % change

Note: figures represent revenue from LinkedIn's Marketing Solutionsbusiness segmentSource: eMarketer, Sep 2012144548 www.eMarketer.com

144548

For the year through Q3 2012, LinkedIn had $175.1 million in ad revenue, representing 26% of total revenues in the period. eMarketer estimates that 64% of LinkedIn’s ad revenue will come from the US in 2012, falling to 60% in 2014.

Social Game Ad Spending Worldwide

eMarketer expects that worldwide social gaming ad spending will rise 28.6% in 2013 to $695 million and reach $824 million in 2014. Non-US markets will account for 59% of social game spending next year.

millionsSocial Game Ad Spending, US vs. Non-US, 2010-2014

2010

$111.6

$167.4

$278.9

2011

$135.4

$251.5

$387.0

2012

$210.9

$329.9

$540.8

2013

$285.1

$410.2

$695.3

2014

$371.0

$453.4

$824.4

US Non-US

Note: paid advertising only; excludes spending by marketers that goestoward developing or maintaining branded social games; numbers may notadd up to total due to roundingSource: eMarketer, Sep 2012144551 www.eMarketer.com

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Zynga, the most widely known social game company, has struggled in 2012, as its new games have not taken off and users have started to spend less money buying virtual items within games. However, advertising revenue is becoming more robust, propping up the company’s fortunes. Zynga’s ad revenue reached $100.2 million in the first nine months of 2012, up 113% from $47.1 million in the first nine months of 2011.

Zynga is just one company in the social game space, however, and consumer interest in social gaming remains relatively high in international markets, particularly in Asia-Pacific.

In Japan, for example, mobile social game network Gree has had steady growth in ad sales and has teamed up with a French mobile ad company to expand its mobile ad business.

Gree also launched a global platform, expanding the reach of its games to 169 countries, including the US. Other mobile game companies in Asia-Pacific are seeking to expand their games into the US, too, with the intention of earning revenue from both virtual goods and advertising.



North America

Given that Facebook, Twitter and LinkedIn all started in the US, it is not surprising that North America accounts for such a large percentage of the worldwide social network ad market. Spending in North America is expected to reach $3.3 billion in 2012 and rise 30.7% to $4.4 billion in 2013.

The percentage of digital ad budgets going toward social networks will reach 9.5% next year, up from 8.3% in 2012, as advertisers fund campaigns to connect with audiences through social networks on both desktop and mobile platforms.

billions, % change and % of digital ad spending

Social Network Ad Spending in North America,2010-2014

2010

$2.04

37.2%

7.1%2011

$2.59

27.1%

7.5%2012

$3.33

28.5%

8.3%2013

$4.36

30.7%

9.5%

2014

$5.35

22.7%

10.4%

Note: includes display, search, video and other forms of paid advertisingappearing within social networks, social games and social applications;excludes spending by marketers that goes toward developing ormaintaining social network profile pages or branded applicationsSource: eMarketer, Nov 2012147569 www.eMarketer.com

Social network ad spending% change % of digital ad spending

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With nearly 175 million social network users this year, North America provides advertisers with the third-largest regional audience after Asia-Pacific and Latin America. Marketers in North America will spend nearly $24 on social network advertising per social network user in 2013, an amount much higher than in other regions.

Social Network Ad Spending per Social Network Userin North America, 2010-2014

2010

$13.63

16.0%

2011

$15.82

16.0%

2012

$19.08

20.6%

2013

$23.95

25.6%

2014

$28.26

18.0%

% change


Social network ad spending per social network user

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US

As the world’s largest advertising market and home base for Facebook, the US dominates social network ad spending. Spending will surpass the $4 billion mark by the end of 2013 and climb to more than $5 billion in 2014.

Facebook is the key player, accounting for 68.8% of all social network revenues in the US in 2012.

Growth in 2013 will be slightly higher than in 2012, as Facebook and Twitter expand their mobile advertising businesses and as new products, such as the Facebook Exchange real-time bidding platform and Twitter’s self-serve ad platform, expand.

eMarketer predicts social networks will account for 9.6% of total digital ad spending in the US in 2013, rising to 10.5% in 2014.

Social network ad spending per social network user will reach nearly $20 in 2012 and then grow more than 25% to nearly $25 per user in 2013.


US Social Network Ad Spending per SocialNetwork User, 2010-2014

2010

$14.31

2011

$16.55

2012

$19.88

2013

$24.92

2014

$29.50


% changeSocial network ad spending per social network user

14.5% 15.7%20.1%

25.4%

18.4%

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For more on social network ad revenues in the US, including additional forecasts for Facebook, Twitter, LinkedIn and social games, see eMarketer’s October 2012 report, “US Ad Spending Forecast: Fall 2012 Update.”

Canada

eMarketer predicts that two-thirds of Canada’s internet users, or 17.7 million people, will use social networks in 2013. That year, marketers will spend $264 million on advertising to these users. Spending has risen steadily since 2011 and percentage gains are expected to reach 35% in 2013.

At 8.2% in 2013, social network ad spending as a percentage of total digital ad spending is slightly lower in Canada than in the US, most likely because consumers in Canada are somewhat less apt than US consumers to visit social networks. However, social networks’ share of ad spending is growing and will reach 8.9% in 2014.

millions, % change and % of digital ad spendingSocial Network Ad Spending in Canada, 2010-2014

2010

$115.0

52.4%

5.1%

2011

$146.9

27.8%

5.6%

2012

$195.8

33.2%

6.7%

2013

$264.3

35.0%

8.2%

2014

$310.1

17.3%

8.9%



147595

Marketers will spend $14.95 on social network advertising per social network user in 2013, a gain of 29% over 2012’s figure. However, growth will taper off in 2014, when social network ad spending per user is expected to reach $16.80—only 12% higher than 2013’s total. The amount spent per user will be substantially lower than in the US, where advertisers are expected to shell out $29.50 per user in 2014.

Social Network Ad Spending per Social Network Userin Canada, 2010-2014

2010

$7.61

37.1%

2011

$9.10

19.7%

2012

$11.58

27.2%

2013

$14.95

29.1%

2014

$16.80

12.4%



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North America

http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2000997


Western Europe

With a social network user base expected to total 158.8 million in 2013, Western Europe has a sophisticated audience that marketers have paid a fair amount of attention to. Facebook is the most popular social network in the region, visited by nearly 83% of Western Europe’s social network users in 2012, and many advertisers have established a presence on the site to engage with these consumers.

Social network ad expenditures in Western Europe will near the $2 billion mark next year, according to eMarketer estimates. The majority of this spending will come from the UK and Germany, which have the largest social network user populations in Western Europe. Growth in the region has slowed since 2010, and will continue to taper throughout the forecast period, but will remain in the double digits through 2014.

Social networks’ share of total digital ad spending in Western Europe is expanding, but at a slower pace relative to North America. eMarketer expects social network ad spending to account for 6% of Western Europe’s total digital ad spending this year. By the end of 2014, that share will have risen by only an eighth of a percentage point. eMarketer believes that there will be no major shifts from other ad formats to social network advertising through 2014.

millions, % change and % of digital ad spending

Social Network Ad Spending in Western Europe,2010-2014

2010

$1,013.8

75.1%

4.6%

2011

$1,302.6

28.5%

5.2%

2012

$1,648.3

26.5%

6.0%

2013

$1,990.9

20.8%

6.5%

2014

$2,280.4

14.5%

6.8%



147566

Social network ad spending per social network user in Western Europe will come in at $12.54 in 2013, according to

eMarketer forecasts, 10% higher than 2012’s spend of $11.39. Marketers in Germany and the UK will spend more per user than those in France, Italy and Spain and will help raise the regional average.

Social Network Ad Spending per Social Network Userin Western Europe, 2010-2014

2010

$9.25

37.7%

2011

$10.07

8.8%

2012

$11.39

13.1%

2013

$12.54

10.1%

2014

$13.41

7.0%

Social network ad spending per social network user% change


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UK

The UK has the largest population of Facebook users in Western Europe and the second-largest social network audience in the region after Germany. UK social network users are known to be a highly engaged group, yet UK advertisers have been somewhat slower than those in the US to gravitate toward social networks.

eMarketer expects marketers in the UK to invest $646 million in social network advertising in 2013, compared to $4 billion in the US. In the UK, 6.7% of total digital ad spending will go toward social networks next year, compared to 9.6% in the US.


millions, % change and % of digital ad spendingUK Social Network Ad Spending, 2010-2014

2010

$343.6

58.3%

5.2%2011

$463.0

34.7%

6.0%2012

$553.1

19.5%

6.3%2013

$646.4

16.9%

6.7%2014

$738.6

14.3%

6.9%



147577

The UK does parallel the US in social network ad spending per social network user, as the two countries have similar social ad cost per thousands (CPMs) and are monetizing at a similar rate. eMarketer predicts that advertisers will spend $23.30 on each social network user in the UK in 2013, just $1.60 less than the average amount spent in the US.

UK Social Network Ad Spending per SocialNetwork User, 2010-2014

2010

$15.78

37.7%

2011

$19.34

2012

$21.37

2013

$23.34

2014

$25.17

7.8%

Note: figures include display, video, search and other forms of paidadvertising appearing within social networks, social games and socialapplications; does not include spending by marketers that goes towarddeveloping or maintaining social network profile pages or brandedapplicationsSource: eMarketer, Nov 2012147578 www.eMarketer.com


22.6%

10.5%9.2%

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Eastern Europe

Social network advertising in Eastern Europe is still in a nascent stage, but is growing at a fast pace. eMarketer expects spending will nearly double between 2012 and 2014, from $167.8 million to $307.7 million.

As spending grows, social network advertising will become a bigger piece of the digital ad spending pie, making up 6.5% of the region’s total in 2014, up from 4.8% this year.


Social Network Ad Spending in Eastern Europe,2010-2014

2010

$61.6

92.4%

2.9%

2011

$119.3

93.8%

4.1%

2012

$167.8

40.6%

4.8%

2013

$250.0

49.0%

6.1%

2014

$307.7

23.1%

6.5%



147573

With more than 40 million users, the social network VKontakte maintains a stronghold in Eastern Europe and Russia. VKontakte (also known simply as VK) not only adopts and adjusts Facebook’s functionalities to appeal to the Eastern European audience, but offers users a much greater span of content options within the site, such as the ability to watch movies or listen to full albums.

But Facebook is expanding rapidly in the region. eMarketer estimates that more than half of all social network users in Eastern Europe will be Facebook users by the end of 2012, a tally that should rise to 62% by 2014. Russia, with 51.8 million social network users in 2012, is the sixth-largest social networking country in the world this year, though it has much lower Facebook penetration than Eastern Europe as a whole.

Despite the increasing presence of social networks in Eastern Europe, ad spending per social network user is very low. Local social networks in Eastern Europe do not monetize users on the same level as Facebook or Twitter. Lower wages

Western Europe


among the general population have affected spending as well, causing lessening demand for goods and services. eMarketer expects that in 2012, marketers will spend just $1.15 on advertising per social network user.

Social Network Ad Spending per Social Network Userin Eastern Europe, 2010-2014

2010

$0.54

57.5%

2011

$0.92

68.6%

2012

$1.15

25.5%

2013

$1.53

32.4%

2014

$1.71

12.4%



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Asia-Pacific

The Asia-Pacific region has a massive social network user base and a broad landscape of social networks for marketers to work with. From social sites such as Tencent Qzone and Sina Weibo in China to the increasing popularity of Facebook and Twitter in countries like Japan, India and Indonesia, the options are extensive.

Social network ad spending in Asia-Pacific is set to increase 48% in 2013 and pass the $2 billion mark, to become the region with the second-highest total that year. Japan and China, which have more sophisticated social network economies than other countries in the region, are helping to drive Asia-Pacific’s growth. Marketers there want to reach consumers who have shown a strong propensity to interact with brands on social media sites. According to a Q2 2012 InSites Consulting study, 66% of social network users in China and 56% of those in Japan followed a brand on a social media site—both greater than the US’s 53%.

Social network ad spending will account for just over 6% of total digital ad spending in Asia-Pacific in 2013.

millions, % change and % of digital ad spendingSocial Network Ad Spending in Asia-Pacific, 2010-2014

2010

$530.6

99.3%

3.0%

2011

$994.8

87.5%

4.6%

2012

$1,381.6

38.9%

5.1%

2013

$2,048.0

48.2%

6.3%

2014

$2,586.0

26.3%

6.9%



147564

Spending per user is quite low in the region, attributable to the enormous user base of 616 million, as well as the fact that some Asia-Pacific countries, such as India and Indonesia, have immature digital advertising economies. Spending per user will be much higher in countries with more developed monetization platforms in place, such as Australia and Japan.

Eastern Europe


Social Network Ad Spending per Social Network Userin Asia-Pacific, 2010-2014

2010

$1.37

52.5%

2011

$2.02

47.1%

2012

$2.24

11.3%

2013

$2.75

22.4%

2014

$3.03

10.3%

Social network ad spending per social network user% change


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China

China is the world’s largest social networking market, with 307.5 million users in 2012, nearly double the US user base.

Neither Facebook nor Twitter has an official presence there, though, leaving marketers’ advertising spend to collect among homegrown networks such as Sina Weibo, Renren and Tencent’s various social platforms.

Marketers in China will spend $612.8 million on social network advertising in 2013, or 6.4% of total digital ad spending in the country. The market will experience rapid growth throughout the forecast period, including a 51.3% gain next year.

millions, % change and % of digital ad spendingSocial Network Ad Spending in China, 2010-2014

2010

$148.0

128.4%

4.0%

2011

$233.1

57.5%

4.4%

2012

$405.1

73.8%

5.5%

2013

$612.8

51.3%

6.4%

2014

$789.5

28.8%

6.5%



147597

Unlike in the US, where Facebook is the dominant player, internet users in China tend to join multiple social networks, affording marketers more options to reach consumers. According to InSites Consulting, 53% of social network users in China use three or more such sites, compared to 33% in the US.

Social network ad spending per user is quite low in China. eMarketer predicts that in 2013, marketers in China will only spend $1.67 on each social network user. Though this is a fraction of what is spent per user in other markets, China has so many social network users that it adds up to significant total revenue.

Social Network Ad Spending per Social Network Userin China, 2010-2014

2010

$0.71

71.5%

2011

$0.91

27.1%

2012

$1.32

44.9%

2013

$1.67

27.0%

2014

$1.90

13.8%



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Asia-Pacific


Latin America

More than two out of three internet users in Latin America are expected to be social network users in 2012, according to eMarketer estimates. Facebook is the most popular, but Twitter and Google+ are rising, especially in Brazil.

Although the region’s social network user population is growing rapidly, Latin America is uneven in terms of internet access. Many people access social networks via their mobile phones, where social network advertising is not yet ubiquitous. These reasons, combined with marketers’ reliance on traditional advertising formats, have made marketers in Latin America slow to engage users through social network advertising.

With $245 million in social network ad spending in 2013, or 5.9% of the region’s total digital ad spending, Latin America will remain second to last globally when it comes to social spending, above only the Middle East and Africa. The market is expected to grow 39% to reach $340 million in 2014.


Social Network Ad Spending in Latin America,2010-2014

2010

$45.6

179.8%

2.5%

2011

$97.5

114.1%

4.0%

2012

$156.7

60.7%

4.6%

2013

$244.6

56.1%

5.9%

2014

$339.7

38.9%

6.4%



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eMarketer estimates that social network ad spending per social network user will increase from $0.89 in 2012 to $1.51 in 2014, but this is an extremely low investment compared to other regions.

Social Network Ad Spending per Social Network Userin Latin America, 2010-2014

2010

$0.37

119.9%

2011

$0.66

77.2%

2012

$0.89

35.6%

2013

$1.21

36.3%

2014

$1.51

24.5%



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One market that stands out in Latin America is Brazil. eMarketer expects that advertisers in Brazil will spend much more on social network advertising than in countries such as Argentina and Mexico. Brazil’s social network audience is largely urban and upwardly mobile, and the country is investing heavily in tech infrastructure, all of which will contribute to a healthy social network economy.


Middle East and Africa

The Middle East and Africa, combined, have the lowest social network ad spending among the major world regions. eMarketer expects just $37 million to be spent in 2013, representing 3% of digital ad spending in the region.


Social Network Ad Spending in the Middle East & Africa, 2010-2014

2010

$4.3

287.6%

1.1%

2011

$11.3

163.2%

1.9%

2012

$21.0

84.9%

2.4%

2013

$37.1

76.9%

2.9%

2014

$68.5

84.7%

3.9%



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Social network ad spending per social network user will be just $0.20 next year.

Social Network Ad Spending per Social Network Userin the Middle East & Africa, 2010-2014

2010

$0.05

179.8%

2011

$0.10

96.7%

2012

$0.14

40.3%

2013

$0.20

43.2%

2014

$0.33

59.5%



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Although the ad dollars are low, social network usage in the Middle East and Africa is quite high among web users. eMarketer estimates that 181 million people in the region will use a social network in 2013, representing three out of four of its internet users. This strong penetration rate makes social networks an ideal place for marketers to reach consumers. Moreover, the Middle East and Africa have illustrated how social networks can help people unite to create change and influence offline behavior.

That said, internet access in the region is very limited outside of urban centers, and many users access social networks via mobile devices, where the advertising options are more limited. However, with total digital ad spending forecast to rise 47.4% in 2013, to $1.24 billion, there is a chance that social networks will siphon off some of that growth.


Conclusions

Ad spending on social networks will continue to grow at a rapid pace. Social network users are only going to increase in number. Marketers will continue to follow social networkers as users connect with each other around the world.

The majority of worldwide social network ad spending will be invested in Facebook. However, Twitter, LinkedIn, social games and other social networks will make up a large portion of spending. Revenues will increase as these sites bolster their international audiences.

Social network ad spending is markedly diverse among the different regions. While North America leads in spending and Western Europe and Asia-Pacific follow, marketers in Eastern Europe, Latin America, and the Middle East and Africa still spend very little on social network advertising.

North America will continue to account for the bulk of worldwide social network ad spending through 2014. Though the US will slowly lose share of Facebook, Twitter and LinkedIn worldwide ad revenue throughout the forecast period as international audiences grow, the region’s strong hold on social network spending illustrates just how common social network advertising has become for marketers in the US and Canada.

Asia-Pacific is making rapid advances in social network advertising. Social network ad spending in the region, driven by efforts in Japan and China, is set to surpass Western Europe in 2013. China’s microblogging communities in particular are beginning to make inroads at monetizing their audiences.

Appendix: Worldwide Social Network Ad Spending Forecast Methodology

eMarketer forecasts regional social network ad spending based on the geographic location of the advertiser.

By examining the reported revenues from major social network companies, 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 reported revenues from Facebook and LinkedIn, which are public companies. We also analyze revenue at Twitter, as well as revenues at 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 help to inform eMarketer’s forecasting process.

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

Interviews with industry executives. We conduct interviews with executives at ad agencies, marketers and 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.


Related eMarketer Reports

UK Digital Advertising: Spending and Trends US Ad Spending Forecast: Fall 2012 Update The Global Media Intelligence Report Digital Ad Spending in Mexico: Advertising Giants Finally Join the Pioneers China Digital Media: Usage and Marketing Trends

Editorial and Production Contributors

Nicole Perrin Associate Editorial DirectorCliff Annicelli Senior Copy EditorEmily Adler Copy EditorDana Hill Director of ProductionJoanne DiCamillo Senior Production ArtistStephanie Gehrsitz Production ArtistAllie Smith Director of Charts






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