BIA/Kelsey: US social media ad revenues to reach $15B by 2018
In its latest U.S. Social Local Media Forecast (2013-2018), BIA/Kelsey projects total U.S. social media ad revenues will grow from $5.1 billion in 2013 to $15 billion in 2018, representing CAGR of 24%. This year represents the greatest YOY jump in social media ad revenues, growing to $8.4 billion in 2014, largely due to increases in mobile and native advertising.
BIA/Kelsey says it was initially skeptical about the social-mobile market’s ability to capture optimal wallet share because of mobile’s limitations. These included smaller screen size, limited ad inventory and static creative. Over the past year, however, Facebook, Twitter and other networks have generated dramatic revenue growth, primarily as a function of mobile ad acceleration and largely through natively-integrated mobile ad formats. They expect this growth to continue over the duration of the forecast.
According to the forecast, U.S. social display ad revenues will grow from $3.3 billion in 2013 to $5.6 billion in 2018 (CAGR: 11.3%). During the same period, U.S. native social advertising, spurred primarily by Facebook’s News Feed ads and Twitter’s Promoted Tweets, will surge to $9.4 billion in 2018, up from $1.8 billion in 2013 (CAGR: 38.6%). In 2015, BIA/Kelsey expects native social advertising will eclipse social display for the first time.
Driven by Facebook and Twitter, U.S. social mobile ad revenues will reach $7.6 billion by 2018 – a 38.3% CAGR. In 2018, social mobile ad revenues will surpass desktop for the first time. Native social advertising’s 38.6% CAGR surpasses the 24.0% CAGR for the overall U.S. social advertising market and more than triples the 11.3% CAGR for social display.
The forecast also presents social advertising revenues by platform: desktop and mobile. Driven by Facebook and Twitter, U.S. social mobile ad revenues eclipsed $1.5 billion in 2013.
BIA/Kelsey forecasts locally targeted social advertising in the U.S. to grow at a 31.6% CAGR, from $1.3 billion in 2013 to $5.2 billion in 2018.
“While social networks are enhancing the geotargeting capabilities of their ad platforms, local targeting is still an emerging capability,” said Williams. “As social usage further migrates to mobile platforms, the need for locally targeted messages and offers that leverage mobile’s unique capabilities will expand. We expect social local ad spend to increase steadily through 2018, as SMBs better leverage multi- and micro-targeting to optimize campaigns, and national brands drive more traffic to individual store locations and target consumers with more personalized offers.”
BIA/Kelsey defines social media advertising as money spent on ad formats across social networks. Currently the predominant ad format is display, though native advertising formats are quickly emerging as display alternatives that can generate higher engagement and command premium rates.
Native social ad growth will be driven by the higher premiums that these units command, especially on mobile platforms, where native has become the primary format. In Facebook’s case, BIA/Kelsey projects that News Feed ads will comprise nearly 63% of total revenues in 2014 and will exceed 82% by 2018.
Social-mobile advertising will accelerate due to two predominant forces:
–Rapid social-mobile consumer usage growth
–Deep integration of native ads units on the platform (native is already the primary ad unit for top U.S. social networks)