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Social Media Revenue $17B in 2012

Things have become quite exciting in the world of social media. In 2012, its revenue is forecast to grow 43% from last year’s $12B to almost $17B.  Of course, these are worldwide numbers as the world of social media is increasingly globally significant.

This forecast is part of a just-released study by research firm Gartner Inc. who also reports that advertising will continue to be the largest contributor to this figure: $8.8B. Social gaming revenue is expected to more than double to $6.2B, while subscriptions revenue will reach $278 million by year-end.

Overall, social media is still in its early stages of market development from a revenue perspective.  However, the research firm predicts that over 1 billion people worldwide will use social networks this year, and the number of social media users will continue to increase at a moderate pace.

Emergence of New Forms of Social Media & Entertainment

We are going to see new forms of social media and entertainment, both web-based and mobile thanks to the rising competition and innovation among social media players.

Social networking sites offer large pools of engaged users who spend considerable time on their sites, increasing potential click-through-rates. This is a key reason why marketers are spending a higher % of their advertising budget on these sites.

What is particularly of interest is that social media sites offer marketers a way to target ads to very discrete customer segments. Segmentation is based on interconnected data structures of users, friends, comments, messages, photos, social media connections, contact info and associated media.

When social networking sites will deploy data analytic technologies, marketers will have a more accurate understanding of trends in consumer needs and preferences.

Growth of Social Media Revenue

Sale of virtual goods will remain the primary source of revenue, but social media sites will continue to embrace gaming for revenue opportunities, said Gartner analysts.

Increasing growth is forecast in users paying for professional networking accounts.  Social sites are changing. They are moving toward lower subscription fees and moving their focus to other sources of revenue, such as advertisement-based sales. A few exceptions aside, limited success is seen with the premium subscription models.

Prominence of Digital Services

Sale of virtual goods outside of social gaming is the largest revenue earner in the “other” category, the research indicated. 

  • The trend to sell high-value advisory services – like PR to brands to better manage their presence on social networks – is emerging.
  • Payments on social media sites will grow, providing more revenue opportunities to social media sites to serve as a payment platform for transactions of digital content (to pay for applications), as part of social gaming (e.g. FarmVille), or to make a person-to-person (P2P) payment to another user of the network site.
  • New revenue opportunities for social media will also arise as both mobile and TV platforms integrate with social networking as a core service.

 

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