Social Networking Ad Spending Revised Downward
Interesting note from eMarketer that they are downward revising their US social network ad spending projections for 2008. They reduced their estimate of ad spend from $1.6 billion to $1.4 billion.
They also reduced their projections going forward. Their crystal ball projects that 2012 social networks ad spending to be $2.6 billion down from $2.7 billion.
The reason for the downgrade is the state of the economy. Or as eMarketer puts it:“Today’s economy, combined with the fact that social networks are still trying to come up with successful ad models, has led to lowered ad spending projections for the next few years.”
eMarketer projects that US online social network ad spending will grow 55% this year, down from 163% growth in 2007. The good news is that spending growth at online social networks will be more than double the 23% growth that eMarketer projects for the total US online ad market. Social networks are among the most popular sites on the Internet—particularly for the hard-to-reach youth audience—and marketers will continue to look for ways to reach consumers at those sites.
MySpace will account for 53% of total US online social network ad spending this year, but it has had monetization difficulties. Revenues at Fox Interactive Media, the News Corp. unit that is dominated by MySpace, fell to $210 million in the March quarter from $233 million in the previous quarter, News Corp. reported in its earnings conference call last week. News Corp.’s fiscal year ends June 30.
As a result, eMarketer has lowered its forecast for 2008 US ad spending on MySpace to $755 million, from the previous estimate of $850 million.
eMarketer also lowered its 2008 forecast for Facebook ad spending to $265 million, from the previous estimate of $305 million. In addition to issues related to the economy, Facebook may also see a short-term revenue dip if marketers use ad budgets to create applications for its platform instead of purchasing advertising. Facebook does not receive any direct ad revenue when marketers launch applications on the site.
Filed under Social Media Marketing : Comments (0) : May 14th, 2008
