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Social Media Ad Spend on the Rise




Dollars FloatingThe headline alone should not be a surprise to anyone who is in the marketing, and particularly the Internet marketing, space because despite the economy social media is on the rise. The number of users and the amount of time spent on various social media sites has seen the ‘hockey stick’ kind of growth that most only dream of. So in our wonderful modern world, where there are people there will be ad spend. Nielsen tells us that this trend is taking hold as reported by ClickZ

Consumer activity on social networking and blogging sites accounted for 17 percent of all time on the Internet in August 2009, up from 6 percent a year ago, Nielsen estimates. At the same time, it believes ad spending on social networking and blogging sites grew 119 percent, from an estimated $49 million in August 2008 to $108 million last month. Expressed as a percentage of total U.S. online ad spend, ad expenditures on social networking sites climbed from 7 percent in August 2008 to 15 percent last month.

Impressive to say the least. So will this continue? Better yet, just how accurate is the data? ClickZ warns appropriately

Nielsen’s precise spending figures should be taken with a grain of salt. Media value estimated by Nielsen and other firms is based on rate card pricing and does not necessarily reflect true media costs.

So the big winner thus far has been Facebook. While they do not give specific US user numbers Nielsen pegs their US user base at 103 million in August of 2009 which is a marked increase over the estimated 38 million in August of 2008. Of course, in order to meet the aggressive revenue numbers that Facebook has floated this year (jumping from an estimated $240 million at the start of the year to $550 million just a few months later) there needs to be this kind of growth.

All of this comes as some good news in a year that has seen things from bad to worse while making people wonder is there any end in sight?

According to Nielsen, while several industries decreased their overall online ad spend year-over-year in August — including travel, business-to-business, automotive, software, financial services, and telecommunications — spending on the top social network sites increased across the board.

The entertainment industry led in growing its online ad dollars, increasing ad spending on social networking sites by 812 percent. Travel advertisers increased their ad spend on those sites by 364 percent.

Jon Gibs, VP of media analytics at Nielsen Online feels that while advertisers have been skittish about social media for their spending they have overcome that fear. I have to wonder if they are not just going to where the people are which doesn’t make this kind of ad spend mentality much different than the TV spending of the past. Of course, with social media advertising being relatively cheap compared to the other options that doesn’t hurt either. However, just because a lot of people use social media it doesn’t tell anything about how they respond to advertising within the space. Are advertisers just acting like sheep who happen to find some comfort in a shepherd like social media when all else in their world seems to well ……. suck? Hopefully advertisers are still approaching this medium with a healthy dose of skepticism as to performance since that’s where the rubber truly meets the road for any advertising, right?

So what are your thoughts on this one? Just because the people are there does it automatically imply that advertising success (you know those pesky sales, revenue and conversion thingies) is going to occur? Is social media the panacea that advertisers so desperately need right now or is it just another advertising fad that will black hole large budgets just long enough for people to see that maybe there are places where people just want to meet and not be sold something? I don’t have any answers but I suspect that there are some readers that believe they do so let’s hear’em.

  • http://www.JoeMescher.com Joe Mescher

    Caveat Emptor

    Let the Buyer Beware. Social Media is on the rise, and with it, the number of people claiming to be experts and offering services for hire.

    This is not a bad thing.

    What is a bad thing is treating Social Media like free advertising instead of realizing it is a solution to the limitations of building communities and talking directly with customers. Yes, it often leads to business opportunities, but that cannot be the sole motivation for your SocMed campaign.

    Bottom Line: Get Social, but don’t Drink the ‘Social Media Expert’ Kool-Aid.
    .-= Joe Mescher´s last blog ..Social Media is NOT a Pyramid Scheme =-.

  • Pingback: » Advertising Spending on the rise for Social Media Be Seen. Be Heard. Get Noticed.

  • http://www.twitter.com/jgoldsborough Justin Goldsborough

    Social media usage increases so advertisers immediately draw the conclusion they should increase their spend in this space. And they’re right, companies should increase their spend in social networks…but not to invest in more old-school online advertising,

    Listening and engaging customers in conversations about your brand, answering consumer questions, resolving issues and working together with your consumers to improve your product, reputation…that’s advertising in today’s social media world. Traditional online advertising is a big waste of money.

    Just one guy’s opinion…
    .-= Justin Goldsborough´s last blog ..JGoldsborough: @RochelleVeturis Hey. Web site, social media presence where I can read more abt cause, maybe donate? #CameronSiemers =-.

  • http://mlacsamana.com Micah

    I couldn’t agree more… Social Media is indeed a trend nowadays. Anyway, I can see that you have put hard work through your contents. I’m sure I’d come here more often. By the way, you might be interested in some FREE Marketer Tools. You might wanna check it out. Thanks!

  • http://www.jaankanellis.com Jaan Kanellis

    Spending is on the rise but is the ROI following it for most?
    .-= Jaan Kanellis´s last blog ..Customers Are Searching the Web; Are They Finding Your Business? Marketing Event: September 29th, 2009 =-.