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Social media ad spend to exceed 1 billion

August 23, 2010
US advertisers will spend an estimated $1.68 billion (£1.08bn) on social networking sites such as Facebook, Twitter and MySpace in 2010, according to the latest forecast from eMarketer. This represents a 20 per cent increase over 2009, and means social media will account for 6.7 per cent of all US online ad spending.

The market research company predicts spending in the sector to increase further still in 2011, to exceed $2 billion (£1.3bn).

eMarketer identified changing trends in the social sphere, particularly the rise of microblogging site Twitter, which was incorporated in the market report for the first time due to the start-up developing a business model for advertisers earlier this year. Spending is not expected to really take off on Twitter until 2011, however, once the site "proves that its 'resonance' model of measuring advertising effectiveness works."

By contrast, eMarketer explained that social stalwart MySpace "continues to diminish in importance," while Facebook still dominates - accounting for half of the total social network ad spend.

US advertisers are ahead of the curve when it comes to recognising the value and consumer reach of social media, and at present more than half of social network ad spending worldwide takes place in the US. However, eMarketer believes the rest of the world will quickly catch up by 2011.

One of the core areas of social networking that's expected to drive more advertisers to the social sphere is the growing momentum of online games. Although advertising is not a primary revenue source for companies such as Zynga and Playdom, eMarketer believes these companies could earn up to $220 million (£141.1m) from advertisers in 2010, rising to $293 million (£188m) in 2011.


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