US social networking adspend to fall

15 May 2009

NEW YORK: Social networking adspend in the US will decline by 3% on an annual basis this year to a total of $1.14 billion (€838m; £750m), according to a revised forecast from eMarketer, the online research firm.

Many brands have sought to increase their presence on social media services as the medium has increased in popularity among consumers, although the best way of doing so has yet to be established.

eMarketer reports that advertising expenditure through social networking websites reached a total of $1.18bn in 2008, with an annual growth rate of 33% for the year as a whole, following on from an upturn of 129% over the previous 12 months.

MySpace, which is owned by News Corp, took a 49.8% share of category revenues in the US last year, at $585m, but is set to post a decline in share of over 6% this year as its revenues fall by $495m.

Globally, its advertising sales will reach $520m in 2009, but eMarketer argues its current troubles are evidenced by a 16% downturn in adspend reported by Fox Interactive Media – to which it contributes the bulk of marketing spend – in Q1 this year.

Facebook is likely to be the major beneficiary of this trend, with its US revenues rising from $210m to $230m, and its market share growing by 2.3% to 20.2%.

The portal's global ad revenues will also reach $300m in 2009, though the vast majority of this figure is accounted for by its home market.

Advertising expenditure directed to other social networking sites in the US is due to rise by 1.5%, to $345m, this year, with outlay on tools such as "widgets" and "apps" growing 75% to $70m.

Data sourced from eMarketer; additional content by WARC staff