Social media as an industry will continue to boom, it will not be saturated in the near future. According to BIA/Kelsey, a social media advisor firm, social media advertising revenue will go up to $8.3 billion within 2015, while In 2010, revenue spent on social media advertising was $2.1 billion. So, the industry would see 295% hike in 2015 compared to the 2010 ad spending.
Along with this prediction, BIA/Kelsey made another proclamation. The firm informed that by 2015, non-display ad formats will muster popularity. Twitter’s business models which include the promoted tweets, profiles and trends are good examples of non-display ad formats. Although these ad formats do not generate much revenue now, BIA/Kelsey seemed optimistic when they said that by 2016, there will be scores of new non-display ad formats which will generate $600 million from null at present. Out of the said $8.3 billion, $7.7 billion is expected to be earned from display advertisement, while the rest will come from non-display advertising.
BIA/Kelsey’s report brings with it good news for Facebook as it suggests that a major share of the revenue earned by social media advertising by 2015 will belong to Facebook. A point that is worth mentioning here is that BIA/Kelsey doesn’t include virtual goods and rewards, social gaming and social commerce within their definition of social media advertising.
So, if earnings from those segments are added as well, the projected revenue will be even greater. A social media platform like Facebook does depend on ads for revenue but it has other business models as well like Credits, which is expected to become a major part of Facebook’s revenue stream. We had also reported earlier this year that Facebook is looking at more revenue sources past games. With these in mind, it seems like the prediction made by eMarketer that ad spending on Facebook will reach $4 billion in 2011 and the current prediction of BIA/Kelsey seem right.
Jed Williams, a chief analyst at BIA/Kelsey’s Social Local Media practice said in a press release:
It’s no surprise that Facebook commands a dominant share of all social ad impressions served and ad revenues generated. As the social market leader, it already serves the most display ad impressions of any digital company, surpassing both Yahoo and Google. We fully expect Facebook to increase both impression share and ad revenue, as buyer awareness accelerates and creative formatting and targeting improve to optimize performance.
However, one might look at the report from a skeptic’s point of view and argue that the projection is mostly speculative. Numbers often lead to sheer confusion. It happened with Efficient Frontier, where had to defend their premise that Facebook ad prices has climbed up by 40 percent this year. But even though skepticism can grow, one thing is undeniable, social media’s ad spending has still many cups to win and many stones to turn.
(Cross-posted from WAT Blog)