More NewsMarketers to Cut U.S. Social Network Ad Spend in ’09

Marketers to Cut U.S. Social Network Ad Spend in '09

EMarketer predicts major sites will suffer this year, but report doesn't measure many forms of spending. MySpace will enjoy more than double Facebook's ad revenue this year.

EMarketer has sharply lowered its outlook for ad spending on social networks in this country. A new report from the researcher finds such expenditures will fall 3 percent to $1.1 billion this year as marketers continue their retrenchment in the poor economy.

The report predicts growth will resume in 2010, when spending is expected to rise 13.2 percent to $1.3 billion. In 2011 it may climb another 8.2 percent to $1.4 billion.

The report, titled “Social Network Ad Spending: A Brighter Outlook Next Year,” aggregates data from a number of firms, including Magna, Forrester, and Comscore. Ad spending on several non-standard social media marketing formats is not included, it’s important to note.

Among major social media platforms, eMarketer concludes MySpace still leads Facebook in U.S. ad spending by a considerable margin. However Facebook’s prospects are better both in the U.S. and globally. In the current year News Corp.’s lurching MySpace subsidiary will suffer a 15 percent drop in U.S. ad revenue, to $495 million, while ad spending on Facebook will climb 9 percent, to $230 million. Even with the narrowing gap between the two, eMarketer believes MySpace will enjoy more than double the ad revenue Facebook will this year. eMarketer believes Facebook will surpass its bigger cousin in 2011.

Globally, media planners will allocate a total of $520 million to MySpace this year, down 14 percent from 2008. Worldwide spending on Facebook, by contrast, is anticipated to grow 20 percent to $300 million.

“The expected rebound in spending will come as more companies focus on creating and implementing an overall social marketing strategy,” said eMarketer Senior Analyst Debra Williamson, the report’s author, in a statement. “Regardless of which site is in the lead, 2009 is the year of building social marketing strategy. 2010 and beyond will see increased activity and deployments.”

Facebook and MySpace aside, eMarketer expects slight growth (1.4 percent) in advertising on “other destination social networks.” And spending on “widgets and applications” will almost double, from a meager $40 million in 2008 to a slightly less meager $70 million in 2009.

For the most part, the spending report does not cover social marketing expenditures that don’t occur on destination social media sites and related apps. For instance, white label social network platform Ning offers ad monetization through Google AdSense and affiliate partnerships. Likewise some ad networks and vendors have begun to package user segments based on social data, independently of the major players. For instance, Media6Degrees combines behavioral targeting with information mined from social interactions to create segments of like-minded people. These can be incorporated into ordinary media buys.

Further, marketers are investing more money in building experiences on social media platforms, including Twitter experiments and Facebook pages, that have little to no ad support.

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