Social media revenue to hit US$29B by 2015

Social media revenue worldwide on consistent growth track over next four years, with advertising dollars contributing the most, reveals new research.
Written by Jamie Yap, Contributor

Global social media revenues are on a roll, according to latest statistics from Gartner. The worldwide market is on track to hit US$10.3 billion this year, a 41.4 percent jump from US$7.3 billion in 2010. It will reach US$14.9 billion by 2012 and by 2015, nearly double this amount at US$29.1 billion.

The biggest contributor behind the "consistent growth" is advertising revenue, Gartner said Wednesday in a statement.

The research firm predicted that social media advertising revenue, including display advertising and digital video ads, will clock US$5.5 billion this year and grow to US$8.2 billion in 2012.

Marketers are allocating more of their advertising budget to social networking sites, as they move from "onetime placement and click of ads" to having ongoing engagement with online users, said Neha Gupta, senior research analyst at Gartner, in the statement.

The shift toward social media advertising is that with social analytics, social networking sites can now "unlock the interconnected data structures of users--mapping lists of friends, comments, messages, photos, and all their social connections, contact information and associated media", the New Delhi-based analyst added.

After advertising, social games revenue was the next major contributor. It will grow from US$3.2 billion this year to US$4.5 billion in 2012, Gartner estimated. This includes the revenue social networking sites earn directly from social gamers, such as through virtual goods, as well as from game developers or publishers who host their games on these platforms.

Social networks have taken a platform-oriented approach to game monetization, publishing APIs (application programming interfaces) that help build an ecosystem of developers and publishers, and replying on mainly ad-supported or freemium models, Gupta said.

In contrast, social media subscription revenue estimates were lower--the forecast for 2011 was US$236 million, which will increase to US$313 million next year. Few social networks charge subscription and revenue is typically derived from premium or enhanced services, according to Gartner.

The research firm's positive forecast for social media revenue was also due to its observation that the social media market "still in its early stages" in terms of monetization and revenue generation, as compared to the already large number of users who exhibit increasingly mature usage patterns.

Therefore, social media players must build new business models to tap this increased usage and level of engagement from users, Gupta advised.

Last month at its developer conference F8 in San Francisco, social networking juggernaut Facebook announced a slew of changes to its site, so its members can connect and share with friends faster and more easily, and at the same time, appeal to developers to write applications for the Facebook platform.

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