Social media revenue to hit $10.3bn

2011-10-11 12:42

Johannesburg - Global social media revenue is set to reach $10.3bn in 2011, up 41.4% from 2010 revenue of $7.3bn, according to new data out on Tuesday by IT research and advisory company Gartner.

Worldwide social media revenue was forecast for consistent growth with 2012 revenue expected at $14.9bn, and the market was projected to reach $29.1bn in 2015, it said.

Advertising revenue was, and would remain, the largest contributor to overall social media revenue. Social media advertising revenue was forecast to total $5.5bn in 2011, and grow to $8.2bn in 2012.

Advertising revenue included display advertising and digital video commercials on any device including PCs, mobile and media tablets, Gartner explained.

"Marketers will begin to transition from 'onetime placement and click of ads' towards 'ongoing engagement' with the internet user and will therefore allocate a higher percentage of their advertising budget to social networking sites," said Neha Gupta, senior research analyst at Gartner.

"This is mainly because social networking sites, with the help of social analytics firms, are able to unlock the interconnected data structures of users - mapping lists of friends, their comments and messages, photos and all their social connections, contact information and associated media."

Social gaming revenue was on pace to reach $3.2bn in 2011 and grow to $4.5bn in 2012. Social gaming included revenue that social networking sites earned directly from users who played games that were developed in-house, and the revenue earned by allowing game developers/publishers to use their sites as a platform to let users play with friends on the network. It also included revenue earned from "virtual wallets" within games.

"We have seen social networks take a platform-orientated approach to game monetisation. That is, the social networks have evolved into platforms for social gaming by publishing APIs (application programming interfaces) that help build an ecosystem of developers and publishers," Gupta said.

"The dominant monetisation models for social games are ad-led and 'freemium' models. The free-to-play games are funded either through advertising (wall advertisements and in-game branding) or through in-game monetary transactions that enable users to 'level up' or buy virtual goods."

Social media subscription revenue was forecast to reach $236m in 2011 and $313m in 2012. Only a few social sites charged subscriptions, and those that did mostly billed only for premium services, Gartner pointed out.

Some professional sites such as LinkedIn, Xing in Germany and Vladeo in France charged a subscription fee from their users for enhanced services, such as an expanded profile view.

"From a revenue perspective, the social media market is still in its early stages, even though it has a large number of users who, in some cases, are exhibiting increasingly mature usage patterns," Gupta said.

"Market participants need to build new business models to tap into this increased usage and users' increased level of engagement."