While display will remain the dominant social media advertising unit, native ad formats (such as Facebook Sponsored Stories and Twitter’s Promoted Tweets) should grow rapidly over the coming years, according to the latest social media ad forecast from BIA/Kelsey. At a 22.9% compound annual growth rate (CAGR) between 2012 and 2017, native ad formats will outpace display’s growth (16.1% CAGR) to represent almost 42% share of social media ad revenues in 2017, up from roughly 35% last year. BIA/Kelsey defines native social advertising as “branded content integrated directly within a social network’s standard user experience (i.e., the Facebook newsfeed or Twitter stream), rather than positioned in reserved advertising real estate.”
Overall, social media ad revenues are expected to grow at a compound annual rate of 18.6%, from $4.63 billion last year to about $11 billion in 2017. During that period, revenues from native ads will almost triple, from $1.63 billion to $4.57 billion.
Also growing quickly will be mobile social ad spend, at an expected annual rate of 29.9%, compared to 16.6% for desktop. By 2017, mobile should represent one-fifth of social ad revenues ($2.2 billion), up from 12.5% this year ($0.6 billion).
Finally, social local ad spend will more than triple from 2012 to 2017, estimated to climb from $1.1 billion to $3.6 billion, for a CAGR of 26.4%. National spending on social media advertising will remain dominant, though, growing from $3.5 billion last year to $7.3 billion in 2017, or roughly two-thirds of revenues (from about three-quarters last year).
About the Data: BIA/Kelsey defines social media advertising as money spent on advertising formats across social networks. Currently the predominant ad format is display, though native advertising formats are emerging as display alternatives. Social advertising is included in BIA/Kelsey’s display revenue forecast, which falls within the online/interactive advertising category. BIA/Kelsey specifically delineates native social advertising, which the firm defines as branded content integrated directly within a social network experience (i.e., the newsfeed or content stream). These integrated, advertorial qualities differentiate native ads from traditional display. BIA/Kelsey’s definition of social advertising does not include revenues derived from virtual currency; social marketing/measurement platforms and services; or social commerce.
BIA/Kelsey’s Annual U.S. Local Media Forecast (2012-2017) draws from multiple sources. These include proprietary data – company, industry and country information in the public domain – as well as discussions with clients and non-clients about the direction and pace of development in the local media marketplace. The forecast is issued annually each spring and updated in the fall.