Social Media Sites Set to Make $3.3 Billion from Advertising This Year

We just did an assessment of advertising placed on social networking sites and were surprised to find that nearly 20% of all ad spending is by local businesses. Our assumption going into this research was that commercials on social networks were almost purely national. We’re estimating that local advertisers will account for about $641 million of nearly $3.3 billion this year trying to reach consumers via these sites.

In the scheme of things, it’s still a drop in the bucket. The total is less than 3% of all locally spent online advertising. If we estimated it for individual local markets (we usually don’t do that until an advertising segment reaches $1 billion), it would equate to a few hundred thousand dollars or less in most markets.

Before you rush to create a networking site for Oklahoma City pet lovers or Duluth skydivers, consider this: 57% of all that local social-networking advertising is going to two sites, Facebook and MySpace They are the only two sites generating more than $100 million from local advertising placement. We’re seeing quite a few local ads placed either through Google or Yahoo’s contextual placement program – probably through an intermediary and not by the advertiser directly.

“57% of all social-networking advertising is going to two sites, facebook and myspace.”

We’ll be studying the full list of social networking sites and their local ad dollars over the next several days and offering more insights. The relatively small amount may not seem like much, but the swift growth of these networks appears to be causing a corresponding upswing in local ad placement. Keep an eye on Facebook. It is the biggest share-getter. In fact, 74% of its ad revenues are from local businesses.

Source: http://www.marketsensus.com

Further Research

Gauging the (Actual) Size of Local Web Traffic

Global Digital Signage Industry – Porter’s Five Forces Strategy Analysis

Mobile App Stores: Business Models, Strategies & Market Segmentation 2010-2015

Mobile Commerce: Meeting the Demands of Tomorrow’s Consumers Today

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