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Social Networks to Connect With $4B in Ads

2007.12.15

 

 

Maybe that $15 billion Facebook valuation is not so insane after all.

Social-networking sites are forecast to haul in billions of advertising dollars in the next few years, according to a report from eMarketer on Friday.

“By 2011, one-half of all online adults and 84 percent of online teens in the U.S. will use social networking each month,” eMarketer analyst Debra Aho said in the report. “There is little to suggest that this activity will go away.”

Those eyeballs mean potential big bucks for advertisers. eMarketer projects that worldwide online social network ad spending will grow from $1.2 billion in 2007 to $2.2 billion in 2008, an 82 percent increase. In the United States, 2008 spending will rise to $1.6 million.

Worldwide spending is expected to top $4 billion by 2011, according to the market research firm.

“Unless teens stop social networking as they become adults ... the continued growth of social networking seems assured,” wrote Ms. Williamson.

According to eMarketer, 70 percent of U.S. teens visit social-networking sites at least once a month compared with 37 percent of adults in 2007. The report expects that adult participation will rise to 49 percent in 2011.

There is already a strong showing among adults who flock to professional networking site LinkedIn. That has forced MySpace and Facebook to consider the inevitable audience maturation to a more button-down aspect of networking, one that features fewer drunken party shots and more clothing. The social-networking giants plan to allow members to segment professional and personal contacts, making it seem unlikely that the millennials will drop out of online social networks as adults.

MySpace and Facebook, the top two social networks, respectively, take in more than 70 percent of all U.S. social network ad spending, the report said.

Along with the ad revenue these social network giants stand to gain from profile pages, search, and display ads, third-party widget developers have an increasing opportunity to rake in advertising dollars across multiple networks.

Ms. Williamson predicted that “if social network marketing delivers on its promise of peer recommendations the flow of advertising dollars will turn into a flood.”

 

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