Social Media Ad Spending to Reach $9.8 Billion

Social media advertising revenues in the United States will grow from $3.8 billion in 2011 to $9.8 billion in 2016, according to BIA/Kelsey’s U.S. Local Media Forecast (2011-2016). The leap would represent a compound annual growth rate of 21 percent. The measurement firm expects the local segment of social advertising to grow from $840 million in 2011 to $3.1 billion in 2016, representing a CAGR of 29.8 percent.

The report forecast a $4.8 billion social media ad spend in 2012.

BIA/Kelsey defines social media advertising as money spent on advertising formats across social networks, including native formats such as Facebook’s Sponsored Stories and Twitter’s Promoted Tweets.

The lion’s share of that will come from national advertising spends, according to the research firm; however, local’s share will increase from approximately 22 percent in 2011 to more than 32 percent in 2016.

That growth is to a great extent thanks to better geotargeting capabilities from social networks, notably Facebook and Twitter. At the same time, the report said, “Smaller businesses will learn how to better leverage multi- and micro-targeting to optimize results, while national brands will drive more traffic to individual store locations and target consumers with more personalized offers.”

Better performance, richer media and wider creative options such as video also will drive this market growth, according to the report, released today. Display remains the dominant social ad unit.