Social Media Industry Revenue Is Expected To Touch $14.9 Billion By 2012 [Study]

Worldwide social media is riding on bull, their revenue is increasing by an exponential rate year-on-year. Recently, social media giant Facebook has recorded $1.8 billion as revenue in first half of the year, which is expected to grow to $4.64 billion by year-end. Where as micro-blogging site Twitter has reported to expect revenue of $139.5 million by the end of this fiscal.

In 2010  Facebook managed to secure $2 billion as revenue which is expected to be more than double this year. However, Micro – blogging site Twitter’s revenue is expected to make a bullish jump of 210% compare to last year, which was $45 million only.

Recent study by Gartner suggests that in 2010 social media industry’s overall revenue will settle down around $10.3 billion compare to $7.3 billion in previous year – 41.4 % bullish appreciation in the revenue. Company has also forecasted that, in 2012, the revenue of worldwide social media will touch $14.9 billion, and if the worldwide social media market will surge in similar fashion then revenue will reach whooping $29.1 billion by 2015.

Study also reveals that the major source of revenue for worldwide social media will be advertisements. It will play a key role and will act as the largest contributor for social media companies’ revenue.

It’s been forecasted that Social media advertising revenue will touch $5.5 billion in 2011 and will grow to $8.2 billion by the end of 2012. Advertising revenue includes display advertising and digital video commercials on any device including PCs, mobile as well as media tablets. It’s an interesting facts to know that in third quarter marketers have spent more than 25% of their time on Facebook and company has registered a jump of 54% in cost per click as compared to second one.

“Marketers will begin to transition from ‘onetime placement and click of ads’ toward ‘ongoing engagement’ with the Internet user and will therefore allocate a higher percentage of their advertising budget to social networking sites”. “This is mainly because social networking sites, with the help of social analytics firms, are able to unlock the interconnected data structures of users — mapping lists of friends, their comments and messages, photos and all their social connections, contact information and associated media,” said Neha Gupta, senior research analyst at Gartner.

There are various tools and measurements which have been used to calculate social media revenue. Social Media is defined as the websites where:

1. One can create a content which can be consumed, promoted, distributed, discovered or shared amongst the users in the form of communities and social activities;
2. Content may be in the form of words, pictures as well as videos.
3. The website may be a closed or an open one, it depends on the creator whether he wants to do open access or limited access.
4. It can be uni-directional or multi-directional depending upon the users’ choice.

Study also enlightens the facts that in 2011 social gaming industry revenue will touch $3.2 billion and the pace will continue in next year – expected to reach $4.5 billion. Social gaming industry comprises  revenue which social networking sites earn directly from users who play games developed in-house. It also allows  game developers/publishers to use the pages of social networking site as a platform to promote their games to users. Revenue is also earned by the means of “virtual wallets” with in the games (like when users spend their virtual money for buying in-game items like swords or tanks, or to create virtual armies.)

“We have seen social networks take a platform-oriented approach to game monetization. That is, the social networks have evolved into platforms for social gaming by publishing APIs that help build an ecosystem of developers and publishers”. “The dominant monetization models for social games are ad-led and ‘freemium’ models. The free-to-play games are funded either through advertising (wall advertisements and in-game branding) or through in-game monetary transactions that enable users to ‘level up’ or buy virtual goods,” as said by Neha Gupta.

It has been concluded from the study that in 2011 worldwide social media subscription revenue might reach $236 million and may touch $313 million in 2012. Also, there are few social networking sites, like LinkedIn, Xing in Germany and Vladeo in France, which charge their users for subscription, mainly for addon premium services. They charge users only if they want their profile view to be expanded.

“From a revenue perspective, the social media market is still in its early stages, even though it has a large number of users who, in some cases, are exhibiting increasingly mature usage patterns”. “Market participants need to build new business models to tap into this increased usage and users’ increased level of engagement,” as said by Neha Gupta

Now let’s see how much the revenue of social media increases worldwide. Hope it touch the margin as provided in the study.Readers what’s your views.