US social media ad spending will reach $9.2 billion in 2016,Â forecasts BIA/Kelsey in its US Local Social Media Forecast for 2012-2016, released November 2012. That figure is up from an estimated $4.6 billion in spending this year, and represents a compound annual growth rate (CAGR) of 19.2%. Still, the forecast is a downgrade from one released in May, which saw social media ad spending hitting $9.8 billion in 2016.
This latest forecast again sees the local segment of social media ad revenues growing faster than the national segment. Specifically, local social spending will grow from $1.1 billion in 2012 to $2.95 billion in 2016 for a CAGR of 28%. National spending will grow from $3.47 billion to $6.26 billion. So, while roughly three-quarters of social media spend this year is estimated to be national, that share is predicted to drop to about 68% by 2016.
Display’s Majority Share Will Narrow
Social display advertising will account for a higher percentage of revenue through 2016 than native social ads (e.g., branded content in newsfeeds and content streams). But the gap will narrow significantly over the next few years. Social display will rise at a CAGR of 15.2% through 2016, while social native spending will grow at a 26% yearly clip. As of 2012, display spending is nearly twice that on native formats ($3 billion vs. $1.53 billion), but will be only about 40% higher in 2016 ($5.4 billion vs. $3.85 billion). Social display’s strength in 2012 is owed largely to Facebook’s Marketplace Ads and YouTube’s multiple display units (e.g., video and traditional banners).
Desktop Will Hold Majority Over Mobile
Desktop ad spending will grow at a slower rate than social mobile ads through 2016 (CAGR of 17.7% vs. 28.5%), but will continue to account for the lion’s share of spending, finishing at $7.7 billion in 2016 versus $1.47 billion for mobile spend. Among the forces driving mobile social growth will be rapid adoption by consumers, active experimentation by vendors, and deepening integration of native ad units on the mobile platform.
About The Data: For the purposes of the study, BIA/Kelsey defines the local media advertising marketplace as media that provide local audiences with all types of advertising. BIA/Kelsey analysts gathered proprietary and secondary information available by segment; generated preliminary forecasts by segment; incorporated third-party and public company reports; and utilized long-standing industry expertise and knowledge to adjust drivers and key assumptions.