Jan 10, 2010

Marketing, Not Ads, Fuels Social Spending Growth

JANUARY 8, 2010

Focus on word-of-mouth and earned media

Going social is no longer an experiment for marketers; it is a reality. There is no question that companies and brands are investing real dollars in social network marketing. However, paid advertising in social networks—banners, text ads and search advertising, as well as the more targeted advertising being deployed by Facebook and MySpace—is only a fraction of the spending.
The remainder is difficult to track, since dollars spent on social network marketing initiatives often come from a variety of budgets—including public relations, cause marketing and research, according to the Jack Myers Media Business Report. The researcher estimated marketers spent $800 million in 2009 on social network, word-of-mouth and conversational marketing, up more than 23% over the previous year. Further growth of 35% is expected for 2010 to more than $1 billion.

US Online Social Network, Word-of-Mouth and Conversational Marketing Spending, 2007-2012 (millions and % change)

That growth is substantially higher than what is predicted for paid social network advertising. eMarketer estimates that marketers spent $1.2 billion on paid social network advertising in the US in 2009, rising 7.1% to $1.3 billion in 2010.

US Online Social Network Advertising Spending, 2008-2011 (millions and % change)

“In 2010 and beyond, a substantial portion of marketers’ expenses will go toward creating and maintaining a fan page, managing promotions or public relations outreach within a social network, and measuring the impact of a social network presence on brand health and sales,” wrote eMarketer senior analyst Debra Aho Williamson in the report, “Social Network Ad Spending: 2010 Outlook.” “Paid advertising will not be the primary focus, but it will serve to drive traffic and engagement with the larger social network presence.”
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Check out today’s other article, “The Shifting Always-On Device Market.”