Social media adspend to double in US

27 November 2012

NEW YORK: Social media advertising expenditure will double in the US during the next four years, surpassing $9bn as a result, a forecast has predicted.

BIA/Kelsey, the insights provider, stated that advertising spend via this channel is set to expand from $4.6bn in 2012 to $9.2bn in 2016, a compound annual growth rate of 19.2%.

Within the overall total, display ads are anticipated to generate $3bn in revenues this year, rising to $5.4bn in four years' time.

The main facilitators of this process are likely to include Facebook's Marketplace Ads, alongside the video and traditional display formats available on YouTube, a site owned by Google.

Another trend supporting the category's expansion will be hardening demand for "native" ads, a form of branded content more closely integrated into social media sites.

Expenditure on these ads is pegged to surge from $1.5bn to $3.9bn over the forecast period as a whole, not least thanks to the higher premiums such units command.

Mobile is also expected to be a "key growth area" for social media services, with revenues growing from $500m to $1.5bn, as usage levels via wireless devices maintain their recent rapid progress.

"The year 2012 can be viewed as social advertising's 'coming of age,'" Jed Williams, BIA/Kelsey's program director, social Local Media, said.

"The continued development of native ads, such as Facebook's Sponsored Stories and Twitter's Promoted Tweets, and the acceleration of mobile monetisation will be the primary drivers of social advertising growth through 2016."

More broadly, the value share contributed by local advertisers is due to reach $3bn by the end of the timeframe covered by the analysis, measured against just $1.1bn this year.

According to Warc's latest International Advertising Forecast, adspend levels in the US should increase by 4.1% in 2012, to $153.1bn in all.

Data sourced from BIA/Kelsey; additional content by Warc staff