According to the Gartner report, advertising revenue is, and will remain, the largest contributor to overall social media revenue. It is forecast to total USD 5.5 billion in 2011, and grow to USD 8.2 billion in 2012. Advertising revenue includes display advertising and digital video commercials on any device including PCs, mobile and media tablets.
Worldwide social media revenue is set to grow to USD 10.3 billion in 2011, a 41.4 percent increase from 2010 revenue of USD 7.3 billion, according to a report released by Gartner. As per the report, worldwide social media revenue is forecast for a consistent growth with 2012 revenue totaling USD 14.9 billion, and the market is projected to reach USD 29.1 billion in 2015.
“Marketers will begin to transition from ‘onetime placement and click of ads’ toward ‘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.”
In order to calculate social media revenue, Gartner analysts defined social media as including websites where content is created, consumed, promoted, distributed, discovered or shared for purposes which are primarily related to communities and social activities, rather than functional, task-oriented objectives; content usually takes the form of words, pictures or videos; the website may be a closed or an open platform; and the flow of expression can be unidirectional or multidirectional.
As per the report, social gaming revenue is on pace to reach USD 3.2 billion in 2011 and grow to USD 4.5 billion in 2012. Social gaming includes revenue that social networking sites earn directly from users who play games that are 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.
Social media subscription revenue is forecast to reach USD 236 million in 2011 and total USD 313 million in 2012. Few social sites charge subscription revenue, mostly for premium services. Some professional sites such as LinkedIn, Xing in Germany and Vladeo in France, charge 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. Market participants need to build new business models to tap into this increased usage and users’ increased level of engagement,” said Gupta.