Social media revenue to reach US$10.3bn in 2011

12 Oct 2011

Worldwide social media revenue is on track to reach US$10.3bn in 2011, Gartner, Inc says, and it’s not stopping there: it’s also forecast to reap US$14.9bn in 2012 and US$29.1bn in 2015.

The US$10.3bn forecast for this year is a 41.4pc increase from 2010 revenue of US$7.3bn, according to Gartner, Inc.

Advertising revenue is, and will remain, the largest contributor to overall social media revenue, Gartner said. Social media advertising revenue is forecast to total US$5.5bn 2011, and grow to $8.2bn in 2012. Advertising revenue includes display advertising and digital video commercials on any device, including PCs, mobile and media tablets.

“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.”

Revenue from social games

Social gaming revenue is on pace to reach US$3.2bn in 2011 and grow to US$4.5bn 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. It includes revenue earned from “virtual wallets” within games (such as when users spend virtual money on in-game items, like swords or tanks, or to create virtual armies).

“The dominant monetisation models for social games are ad-led and ‘freemium’ models,” Gupta said. “The free-to-play games are funded either through advertising (wall advertisements and in-game branding) or through in-game monetary transactions that enable users to ‘level up’ or buy virtual goods.”

Social media subscription revenue

Social media subscription revenue is forecast to reach US$236m in 2011 and total US$313m 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,” Gupta said. “Market participants need to build new business models to tap into this increased usage and users’ increased level of engagement.”