Social media drives US ad revenue

Warc, 19 May 2014

WASHINGTON DC: Native social ad revenue in the US is expected to grow massively this year, more than doubling from $1.8bn in 2013 to $4bn this year, according to the latest industry projections.

Media consultants BIA/Kelsey forecast native's growth will continue into 2015, when it will reach $5.4bn, and with an estimated compound annual growth rate (CAGR) of 38.6% it is expected to increase to $9.4bn in 2018, Marketing Charts reported.

This means native social ads, such as Facebook's newsfeed and Twitter's promoted tweets, will account for more than 60% of total social ad revenue of $15bn.

Furthermore, the format is expected to overtake social display ads in terms of revenue next year as social display is projected to generate $4.7bn in revenue in 2015.

Social mobile ad revenue in the US will also record an impressive growth rate over the next four years, BIA/Kelsey predicted.

As mobile devices drive up social networking consumption, social mobile ad revenue is forecast to grow at 38.2% CAGR through to 2018, or more than double the 15.3% CAGR expected for desktop social ad revenue.

Social ad revenue is expected to be worth $3.7bn in 2014, rising to $7.6bn in 2018, by when desktop social ad revenue will be worth $7.4bn, the report said.

Jed Williams, vp consulting at BIA/Kelsey said the company was initially sceptical about social mobile's revenue capacity because of certain limitations, such as small screen size and static creative.

However, he said Facebook, Twitter and other networks have generated "dramatic" revenue growth over the past year through mobile ad acceleration and natively integrated mobile ad formats, and he expected this growth to continue.

"As social usage further migrates to mobile platforms, the need for locally targeted messages and offers that leverage mobile's unique capabilities will expand," he said.

He went on to predict that social local adspend will increase as national brands drive more traffic to individual stores and provide more personalised offers for target consumers.

Data sourced from BIA/Kelsey, Marketing Charts; additional content by Warc staff