Posted by: Patrick | May 21, 2009

eMarketer Revises US Social Network Ad Spend Estimate

eMarketer Revises US Social Network Ad Spend Estimate

MAY 13, 2009

Spending predicted to fall 3% in 2009

NEW YORK (May 13, 2009)—Social networks continue to draw in millions of users, but advertising has not kept pace. eMarketer forecasts that total social network ad spending in the US will fall 3% to $1.1 billion in 2009, from $1.2 billion in 2008. This is a significant turnaround from previous years, when spending grew an estimated 33% in 2008 and 129% in 2007.The primary reason for the change is a projected falloff in ad spending on MySpace, which accounts for nearly one-half of US social network ad spending. In December 2008, eMarketer estimated that marketers would spend $630 million to advertise on MySpace in the US in 2009. Now eMarketer projects that US ad spending on MySpace will reach just $495 million this year, down 15% from the estimated $585 million MySpace generated in 2008.

News Corp. executives said in a May 6 conference call with financial analysts that ad revenues fell 16% at Fox Interactive Media (FIM) in the January-March 2009 quarter, compared with the previous year. MySpace makes up the bulk of FIM’s revenues.

“MySpace is still the largest single social networking site when it comes to ad spending, but its fortunes have changed dramatically over the past few months,” said eMarketer senior analyst Debra Aho Williamson. MySpace’s CEO Chris DeWolfe stepped down in April as new CEO Owen Van Natta, a former Facebook executive, joined the company.

The challenges facing MySpace do not necessarily mean that other companies operating in the social network space will face similar problems. Facebook, for example, is expected to increase its US ad revenues 9% in 2009, to $230 million, while US ad spending on widgets and applications is projected to reach $70 million, up 75% from 2008 (albeit from a very small base). US spending on all other social network sites combined is expected to rise 1% to $345 million.

“Although ad spending on social networks is diminishing, marketers are still very focused on using social networks for other purposes, such as public relations or customer relationship management,” said Ms. Williamson.

Simultaneous with the revised US estimates for 2009, eMarketer is issuing—for the first time—estimates for ad spending on MySpace and Facebook outside of the US.

Overall, marketers worldwide are expected to spend $520 million to advertise on MySpace in 2009, with $495 million coming from the US and $25 million from other markets. International spending on Facebook is expected to reach $70 million this year, for a total of $300 million in 2009.

Although MySpace got a head start over Facebook in selling advertising outside of the US, its international operations have struggled lately. Meanwhile, Facebook’s international user base has grown rapidly and it has been ramping up ad sales operations in several countries.

eMarketer will issue its next full forecast of US social network ad spending through 2013 in June.

For more information on social networks, or to speak with Ms. Williamson, contact Samson Adepoju.

Note: Ad spending estimate includes Websites where social networking is the primary activity (e.g., MySpace, Facebook); social networks linked to portals such as Google or Yahoo!; and niche social networks devoted to a specific hobby or interest. Does not include virtual worlds, YouTube or marketer-created social networks. In all cases, the figures include spending on display, video, search and other forms of advertising appearing within social network environments; fees marketers pay to social network sites for profile pages, promotions, etc.; and fees paid to develop, distribute or sponsor widgets and applications appearing within social network sites. Excludes other sources of revenue, such as e-commerce.

About eMarketer
eMarketer is “The First Place to Look” for research and analysis on digital marketing and media. eMarketer aggregates and analyzes research from over 3,000 sources, and brings it together in analyst reports, daily articles and the most comprehensive database of online marketing statistics in the world.

Media Contact:
Samson Adepoju
Public Relations Specialist, eMarketer
Tel. 212-763-6044


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