Soaring Profits or Wishful Thinking?
A new report from eMarketer published yesterday suggests that advertising spending on social networks will soar over the next four years. Worldwide revenues over $2bn are predicted in 2010. The report suggests that the most mainstream sites, dominated by MySpace, will grab the largest share of this revenue.
It’s not entirely clear why MySpace’s dominance is predicted to remain unchallenged over the period. After all, wasn’t everyone suggesting the network was doomed just a couple of days ago? Like a lot of analysis of internet trends, there’s a certain amount of ‘wave a finger in the air’ here. It’s pretty hard to predict what’s going to happen next week, never mind in four years. Put the numbers in a table and charge $695 for the full report and somehow that makes it true.
There’s an interesting comment at the end, suggesting that the winners and losers will depend on who does the best job of profiling and measuring visitors. Social Networks are still often seen as risky and unresponsive by advertisers. Those who are able to prove they’re not will be the ones that will quickly assume dominance. That, to me, would suggest that vertical networks stand a better chance than the generic networks championed by the report.
While many marketers are rushing to experiment with social networks, in order for serious ad dollars to continue, adequate measures of return on investment need to be in place, says Debra Williamson, eMarketer senior analyst and author of the report.
“The longer existing social networks take to develop adequate ROI metrics, the bigger the opening for a next generation of networks that are built from the ground up to accommodate advertising,” Ms. Williamson says.
(via Mashable)