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Forecast: Social Media Revenues to reach $9.8 billion but will ROI measure up?
The excitement of the impending Facebook IPO has prompted BIA/Kelsey to forecast social media revenues will increase by more than 20% annually through 2016. Meanwhile data from WordStream indicates Facebook's ad strength may not be ready for primetime.
According to a new forecast from BIA/Kelsey the social ad revenues will increase from $3.8 billion (2011) to nearly $10 billion in 2016. Local social media spending is expected to increase to more than $3 billion alone in the US, finds the report, a near-30% CAGR.
"Social advertising's local business penetration will steadily increase as SMBs' understanding of social media deepens, and as the networks continually improve the ease of onboarding and campaign management," said Jed Williams, analyst and program director, Social Local Media, BIA/Kelsey. "Facebook opening its Ads API to more partners, including those that work with SMBs, and Twitter's self-serve platform will help to 'democratize' social ads, which will ultimately lead to more local growth."
The biggest hitter in social media advertising continues to be the display unit; spending on display ads is expected to increase to at least $9 billion by 2016.
Meanwhile, in a direct comparison between Google Display Network and Facebook - excluding core search marketing on Google's part - WordStream's data indicates that Facebook's ad performance is quite a bit lower than that of Google. While Facebook hosts 1 trillion page views per month, Google grabs a mere 180 billion.
But, when it comes to clicking, Facebook's average CTR is 0.1% (via WebTrends) while Google's is 0.4%; Google's CPC is about $0.75. WordStream's data also notes Facebook doesn't support mobile ad, retargeting or keyword-based contextual targeting options while Google does.
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