Ad Dollars Flood to Social Nets

Following eyeballs

The Nielsen Company reports Internet users increased the time they spent on social networks by a substantial margin in August 2009. The sites took up 17% of all time spent on the Web in August, up from just 6% the prior year.

Meanwhile, advertising spending on the top social networking and blogging sites more than doubled, jumping from $49 million in August 2008 to about $108 million in August 2009.

“In the past, advertisers had significant concerns with social media advertising,” said Jon Gibs, vice president, media and agency insights, Nielsen’s online division. “The considerable increases we’ve seen in ad spending over the past year suggest that many of these concerns have subsided or been addressed.”

The entertainment industry led the charge, with 812% year-over-year growth in social network ad spending. Travel, business to business, and automotive advertisers all increased spending on social networks by more than 150% between August 2008 and August 2009—even while decreasing overall online ad spending.

Assuming that the growth that Nielsen tracked between August 2008 and August 2009 continues along the same trajectory through December 2009, ad spending on social networks and blogging sites could reach roughly $1.2 billion in 2009, according to eMarketer calculations. This figure would be very similar to eMarketer’s forecast of $1.1 billion in US social network ad spending in 2009.

However, there are some differences in methodology. eMarketer’s estimate covers only social networking sites, while Nielsen’s includes blogging sites as well as social networks. eMarketer also factors in some types of advertising (such as search advertising and sponsorship fees) that Nielsen does not account for in its estimates. Nielsen could end up appearing conservative because of the limitations on what they track and include—only image-based advertising sold on a CPM basis. That means strategic partnerships between publishers and advertisers, text units, paid search, sponsorships, e-mail, units contained within applications (such as messengers and prerolls) and performance-based advertising are excluded from the estimate.

“The reported growth in social network and blog ad spending is a sign that companies are finally implementing an overall social media marketing strategy,” said eMarketer senior analyst Debra Aho Williamson. “This foundation is essential for future growth in social network ad spending.”

Source: Emarketer

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