Social Media Advertising revenues expected to continue growth till 2017, marketers cautious

According to a report by emarketer, social media advertising revenues in US are expected to reach close to US$ 4.5 billion in 2013 and also predict the revenues to grow by more than billion dollars and reach close to US$ 6 billion in 2014 and reach US$ 7 billion in 2015. According to BIA/Kelsey’s U.S. Social Local Media Forecast, social display ad revenues in the U.S. will grow from $4.3 billion in 2013 to $6.8 billion in 2017, a 12.6 percent compounded annual growth rate (CAGR). During the same period, U.S. native social advertising, spurred primarily by Facebook’s Sponsored Stories and Twitter’s Promoted Tweets, will more than double, from $2.4 billion to nearly $5 billion, a 20.3 percent CAGR. U.S. social mobile ad revenues are expected to grow from $1.6 billion in 2013 (up 250 percent from 2012) to $3.5 billion by 2017, a 21.3 percent CAGR. BIA/Kelsey projects total U.S. social media advertising revenues will grow from $6.7 billion in 2013 to $11.9 billion in 2017, representing a CAGR of 15.5 percent. Locally targeted social advertising will grow at a 22.6 percent CAGR, from $1.7 billion in 2013 to $3.9 billion in 2017.

Facebook, Twitter, You Tube, LinkedIn, Google+,  etc. are the major social networking sites that are expected to drive revenue growth and they are investing heavily on the advertising platforms and looking to monetize. But the crucial fact is that all the major social networking sites are struggling with mobile advertising platforms as majority of the social networking sites users are using their mobile devices to access social networking sites rather than personal computing devices like laptops and desktops. Facebook is still experimenting and constantly changing their website layouts and also experimenting with different types of brand pages format and also the ad display formats. Almost all the social networking sites are seeing good growth in revenues but the amount spent on social media advertising is small compared to the traditional television, print and even overall digital advertising like search and Google ads. Reasons for this is that marketers are not able to exactly quantify the return on investment of the social media advertising, effect on customers in terms of retention and satisfaction levels.

According to Dachis group social media predictions for 2014, less than 10% of advertising budgets are allocated to social channels, Social media budgets will only be 12% of all marketing spend in 2014, and despite the critical importance of content to seed social marketing and community engagement efforts, only 9% of marketers have a full time blogger. Yet over 70% of marketers plan on increasing their investment in social media in 2014. Image based social networking sites like Instagram, Pinterest, Video based sites like We Chat and chat based social networking sites like WhatsApp, etc. also causing confusion in the marketers as there is an argument that fatigue is setting in Facebook site users and they are slowly moving away to other social networking sites. Even the reemergence of blogging is also attracting the marketers to look back at it. Overall marketers are looking for quality engagement rather than quantity engagement on social media sites and are also recruiting specialists who will help them effectively manage the social media presence. Social networking sites on their behalf have to make sure their advertising platforms deliver the best value.