Social Network advertisement model yet to pick

A few months back most analysts were of the opinion that the social network based advertisement market was going to be the next big campaign target. The pace at which new social network sites were being formed and the accelerated growth in their subscription base seemed to defend this theory. However, the latest reports by Nielsen Online shows a different picture altogether.

Internet based Ad spending still too low
The overall Internet based ad spending has increased only by less than 10% compared to last year – the gain being a loss for Newspaper advertisements alone. However, it is unfortunate that newer channels such as Social Networks have not picked the momentum as against the hype in terms of ad targeting and spending.

US Ad spending by Medium - February 2008 report

Social Network ad-spending projection
To make things worse eMarketer has come up with their downward projection on US social network ad spending – they now say that 2008 figure stands at $1.4 billion as against the previous projection of $1.6 billion! This number contributes to roughly 5 percent of the total ad spending on the Internet. The YoY growth projection in this segment is not very interesting either and so is the case with long term projection whereby it will still have ONLY 5 to 5.5% share of the overall Internet spending – which translates to $2.5 billion out of $50 billion by 2011.

Probably, the prolonged US recession and forthcoming government change is affecting new investments in this area as well?

Social networks & blogs still growing…
What is good to see, though, is that there is no slowing down in terms of the target audience for this particular ad channel. The latest (April ’08) reports show that LinkedIn grew by a whopping 361% year-on-year where as WordPress and Blogger grew by 160% and 40% respectively in terms of unique audience. The number one position in the social network space is still safe with MySpace, followed by the number 2 Facebook. Top blog site in terms of unique visitors is still Blogger, followed by WordPress and TypePad (Source:

I strongly feel that there is still a lot scope for channel advertising with social networks if innovative methods are brought in. It will then be a money making opportunity for all of us for sure. I also feel that it is too early to predict the ad spending for long term in this segment as the technology shifts are taking place at a very rapid pace.


  1. Just wait till facebook starts flexing its muscles. With the kind of content and the semantic of the content they have got, they are sitting on a gold mine. Also the internet ad spending is small as the cost of putting an ad online is relatively lower than putting it on any other media. Also the nature of ads on the internet are very different from the nature of ads on other medium. They can be very interactive, they can have context. It is just now that we are experiencing very bad ads. But it doesn’t have to be that bad. For example, I see ads about SimplyMarry and some meta ads from Bidvertisers like “place your ad for free here”. They are pretty useless. And in most cases I dont even see ads. But i do see the peel off ad. Although I haven’t clicked on it yet. I actually might.

  2. Agree with you Vagmi on your views. In fact, the classic style content and text links need to give way to more interactive and intuitive media ads – that’s where I said there’s scope for innovation. However, as it stands, the text link ads somehow work 🙂

    I totally buy the facebook case. Facebook as a social network and wordpress as the blogging platform will see immense growth in the coming years, I think.



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