Social media advertising continues to perplex some small business owners, but at least one highly respected research firm is predicting that will change dramatically over the next four years.
BIA Kelsey’s first-ever forecast of geo-targeted social media projects that the local segment of U.S. social media advertising revenues will grow from $400 million in 2010 to $2.3 billion in 2015, representing a compound annual growth rate (CAGR) of 33.3 percent. During the same forecast period, the firm expects overall U.S. social media ad revenues to grow from $2.1 billion in 2010 to $8.3 billion in 2015 – a CAGR of 25.7 percent.
“To date, local targeting has not been widely adopted by SMBs or national brands,” says Jed Williams, analyst and program director of BIA/Kelsey’s Social Local Media practice. “However, the paradigm is moving to performance, with Facebook and other networks focused on improving format, creative and targeting to boost rates and drive deeper ad engagement. We expect social local ad spend to steadily increase through 2015, especially as smaller businesses learn how to leverage targeting features to optimize results.”
The predominant social ad format continues to be display, spending on which will increase from $2.1 billion in 2010 to $7.7 billion in 2015 (24.2 percent CAGR), according to the forecast. BIA/Kelsey expects the social non-display segment to grow from $50 million in 2010 to $610 million in 2015 (51.6 percent CAGR).
BIA/Kelsey defines social media advertising as money spent on advertising formats across social networks. It does not encompass virtual goods and rewards, social gaming, social commerce or social marketing.