Forecast Gartner: Worldwide Social Media Revenue to hit 14.9 Billion in 2012

According to researchfirm Gartner in a recent forecast, the worldwide social media revenues are on pace to total $10.3 billion in 2011 and grow to $14.9 Billion in 2012. The market is projected to reach $29.1 billion in 2015 (also take a look at this forecast done by eMarketer regarding social media ad revenues). Advertising revenue is, and will remain according to Gartner, the largest contributor to overall social media revenue. Social media advertising revenue is forecast to total $5.5 billion in 2011, and grow to $8.2 billion in 2012. Advertising revenue includes display advertising and digital video commercials on any device including PCs, mobile and media tablets.

Neha Gupta, senior research analyst at Gartner:

“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.â€

Method
To calculate social media revenue, Gartner analysts defined “social media” as including websites where: (1) content is created, consumed, promoted, distributed, discovered or shared for purposes which are primarily related to communities and social activities, rather than functional, task-oriented objectives; (2) content usually takes the form of words, pictures or videos; (3) the website may be a closed or an open platform; and (4) the flow of expression can be unidirectional or multidirectional.

Social gaming
Social gaming revenue is on pace to reach $3.2 billion in 2011 and grow to $4.5 billion in 2012. Social gaming includes revenue that social networking sites earn directly from users who play games that are developed in-house, and the revenue earned by allowing game developers/publishers to use their sites as a platform to let users play with friends on the network. It includes revenue earned from “virtual wallets” within games (such as when users spend virtual money on in-game items like swords or tanks, or to create virtual armies). Gartner’s Neha Gupta:

“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.â€

Maturing markets?
Ms. Gupta notes about the developments in the market: “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.â€