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U.S. Social Media Ad Revenues Projected to Hit $15B by 2018

BIA/Kelsey says that accounts for 3.6% of total online ad revenue

Market research firm BIA/Kelsey predicts social media advertising revenue will grow from $5.1 billion in 2013 to $15 billion in 2018, representing a compound annual growth rate of 24%.

This year represents the greatest year-over-year jump in social media ad revenues, growing to $8.4 billion in 2014, largely due to increases in mobile and native advertising. That’s according to BIA/Kelsey’s U.S. Local Media Forecast (2013–2018), which defines social media advertising as money spent on advertising formats across social networks. The company defines native social advertising as branded content integrated directly within a social network’s user experience such as a newsfeed or content stream.

According to the forecast, social display ad revenues will grow from $3.3 billion in 2013 to $5.6 billion in 2018, representing a compound annual growth rate of 11.3%. During the same period, native social advertising, spurred primarily by Facebook’s news feed ads and Twitter’s promoted tweets, will grow to $9.4 billion in 2018, up from $1.8 billion in 2013, representing a compound annual growth rate of 38.6%.

In 2015, BIA/Kelsey predicts native social advertising will eclipse social display for the first time.

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. U.S. social mobile ad revenues will reach $7.6 billion by 2018, surpassing social desktop for the first time.

“We were initially skeptical about the social-mobile market’s ability to capture optimal wallet share because of mobile’s limitations, such as smaller screen size, limited ad inventory and static creative,” said BIA/Kelsey VP Consulting Jed Williams. “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. We expect this growth to continue throughout the forecast period.”

BIA/Kelsey forecasts locally targeted social advertising in the U.S. to grow at a 31.6% compound annual growth rate, from $1.3 billion in 2013 to $5.2 billion in 2018.

“While social networks are enhancing the geo-targeting 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.”

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