Social Media Advertising: Study Predicts an Upcoming Boom

by | Jun 5, 2013

Original Article from www.businessinsider.com

It’s not difficult to understand the lure of social media advertising.

Social Media Advertising

Social networks like Facebook and Twitter are daily destinations for millions of consumers. Increasingly, their ad products offer targeting according to specific demographics, social connections, interests, and habits. 

As brands look across a fractured media landscape, where few digital properties offer any scale, social networks offer them an interesting proposition. 

New Study of Social Media Advertising Shows Growth 

In a new report from BI Intelligence, we analyze the state of social media advertising and where it is heading, offering a comprehensive guide and examination of the advertising ecosystems on Facebook and Twitter, offer a primer on Tumblr as an emerging ad medium, and detail how mobile is an important part of this story as mobile-friendly native ad formats fuel growth in the market.

Here’s an overview of some major players in the mobile advertising ecosystem: 

  • Social media advertising offers a potentially unique advertising opportunity: As brands look across a fractured media landscape, social networks offer them an interesting proposition. Social networks have scale –  enormous user bases and deep databases. And they have high engagement and desirable demographics – Americans were spending an average of 12 hours per month on social networks as of July 2012, with 18-24 year olds averaging 20 hours. 

  • Even conservative estimates predict huge growth: BIA/Kelsey recently came out with a study that offers one view – forecasting $11 billion of social ad spend in 2017, up from $4.7 billion last year. Social media advertising is a young and growing market and, so far, it only represents 1% to 10% of ad budgets for a wide majority of advertisers. There’s significant opportunity for that share to grow.  
     
  • Increased mobile usage will be a huge growth driver: Both Twitter and Facebook have passed the 50% mobile usage mark and, given the continued growth of mobile devices, it will only rise. Mobile accounted for 11% of Facebook’s ad revenue last year even though it didn’t release mobile ads until the tail end of the second quarter. By the fourth quarter, it was up to 23%. And now, Twitter is reporting that its mobile ad revenue now regularly outpaces its desktop ad revenue.
     
  • As in-stream advertising, easily transferable across devices, drive the change: According to social ad optimization platform TBG, Facebook’s mobile ads have the highest click-through rates by a substantial margin. Furthermore, native in-stream ads are perfectly transferable across devices, whereas display ads can have issues on a smaller screen. The BIA/Kelsey prediction calls for mobile to account for only $2.2 billion of that in 2017 – a 20% market share. It seems highly unlikely that mobile will account for only 20% of the social ad market come 2017, especially as usage habits continue to change.

In full, the report includes:

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