Nielsen: Social Ad Spending Up Sharply

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Time spent on social networking sites nearly tripled in the past year, and ad spending on those sites very nearly kept pace, according to new data from The Nielsen Company.

Consumer activity on social networking and blogging sites accounted for 17 percent of all time on the Internet in August 2009, up from 6 percent a year ago, Nielsen estimates. At the same time, it believes ad spending on social networking and blogging sites grew 119 percent, from an estimated $49 million in August 2008 to $108 million last month. Expressed as a percentage of total U.S. online ad spend, ad expenditures on social networking sites climbed from 7 percent in August 2008 to 15 percent last month.

While they may be directionally accurate, Nielsen's precise spending figures should be taken with a grain of salt. Media value estimated by Nielsen and other firms is based on rate card pricing and does not necessarily reflect true media costs.

Jon Gibs, VP of media analytics at Nielsen Online, said, "Outside of maybe video, these sites have been some of the core drivers of Internet growth and so there's been a natural tendency for dollars to flow in that direction."

Few will be surprised to learn Facebook has been the main beneficiary of the spikes in user activity and ad spending. A recent blog post from Facebook Founder and CEO Mark Zuckerberg noted the site now has 300 million users worldwide, up from about 100 million last September. The company does not break out active U.S. users, but according to Nielsen, Facebook had 38.2 million users in August 2008 and 103.8 million in the U.S. one year later.

It's not just the number of Facebook users that's growing. Gibs said the average person now spends five hours and 46 minutes per month on the site, up from one hour and 40 minutes in August 2008.

As a result, Facebook has seen significant growth in ad impressions, accounting for 14.7 percent share of U.S. display ad views last month, up from 1.8 percent in January.

According to Nielsen, while several industries decreased their overall online ad spend year-over-year in August -- including travel, business-to-business, automotive, software, financial services, and telecommunications -- spending on the top social network sites increased across the board.

The entertainment industry led in growing its online ad dollars, increasing ad spending on social networking sites by 812 percent. Travel advertisers increased their ad spend on those sites by 364 percent.

Gibs noted that advertisers have historically had concerns about social media advertising but these numbers indicate they have since overcome their fears.