Social Media Spending to Hit $757M in 2010

The total marketing spend on social media is forecast to grow at a compound annual rate of 106.1% from 2005 to 2010, reaching $757.0 million in 2010, according to a research report that will be available on April 11 from PQ Media. By comparison, other non-traditional forms of marketing, including branded entertainment, mobile marketing and video-on-demand, will dwarf spending on social media. This group is projected to grow at a compound annual rate of 14.8% to $253.7 billion in 2010.

Combined spending on blog, podcast and RSS advertising grew 198.4% to $20.4 million in 2005 and is expected to grow another 144.9% to $49.8 million this year. The study also says that podcast advertising is expected to become a larger market than blog ads by 2010. Some additional stats from PQ Media ...

* Blog advertising accounted for a whopping 81.4%, or $16.6 million, of total 2005 spending on blog, podcast and RSS advertising (which they call user-generated online media - a phrase some don't like). This  segment will comprise 39.7%, or $300.4 million, of the overall marketing spend on social media  in 2010

* Podcast advertising, meanwhile, reached $3.1 million in 2005, and is projected to grow at a compound annual rate of 154.4% to $327.0 million in 2010

* RSS advertising, non-existent until mid-2005, generated a paltry $650,000 in 2005. This seems outrageously low to me.

*  Unsurprisingly technology, auto and media brands are the most active in advertising in social media, accounting for more than half of the total spending in 2005. Food & beverage and apparel categories rounding out the top five. The technology, auto and media categories will continue to generate more than half of all advertising in 2010, according to PQ Media. This is natural in my view because so much of the conversation flows around these subjects.

On the whole, what I conclude here is that the social media ad market is slow to take off, however, this report does not appear to account for the oodles of money that's flowing into MySpace programs. I don't buy a lot of these projections. Marketers can be fickle. If their competitors experiment and succeed with programs in these arenas, then the dollar flow can increase rapidly. Let's not also forget the consumers here. They will not want to be marketed to, but with. The other forms of alternative marketing do not always build dialogue. Last but not least, some of these tools will be integrated into other marketing disciplines, skewing the spend.

Comments

[Niall Cook]

Correct me if I'm wrong, but isn't all this actually social media advertising spending?

Social media is more than just another channel to ram your advertising messages down.

[Mario]

I agree with Steve, I don't buy these projections at all. These projections seem quite low when one considers the growth of user-generated content. Forrester is predicting that regular podcast downloading will grow from 700,000 households to 12.3 million in the same period. While the Washington Post mentions the 528% growth of Blogger.com, much of that growth happened in that last six months. If the WP had included YouTube in their calculations, they would have been looking at a growth rate passing the 10,000% mark over a 6 month period (See this chart).

[Frank Mash]

I second Steve and Mario in that the projections are way off (less).

Social media is the next thing and its destined to grow by leaps and bounds.

[Jake]

Hmm... seems odd that podcast advertising is only projected at $3 million. Come on, seriously? That'd basically saying that there was, what, 10 podcast advertising programs of any size in all of 2005? I find that number incredibly low. And is that advertising or total spend on a particular podcast. For instance if a company creates a podcast but doesn't put "ads" in it, does that count?

[Simon McDermott]

A quick question on the projections, is this the World or the US we are talking about?

Regards,
Simon

[Brian Massey]

When the content IS the advertisement, the cost of production is the advertising rate. We charge our customers to produce podcasts which are advertising tools, but because we don't sell advertising in our clients' podcasts the spend may not be recorded as advertising.