A Gartner report estimates that social media revenue will be up by 43% from 2011 revenue of $11.8bn.
The largest source of social media revenue is currently advertising and is predicted to continue being the largest contributor. Social media advertising revenues are estimated to reach $8.8bn in 2012.
Social gaming revenue is also a large contributor and doubled between 2010 and 2011. The social gaming market is expected to reach $6.2bn in 2012 with revenue from subscriptions reaching $278m.
"Usage of online social media has matured, and more than one billion people worldwide will use social networks this year," says Neha Gupta, senior research analyst at Gartner. "Although the number of social media users is large, and in some cases increasingly mature in their usage patterns, the market is still in its early stages from a revenue perspective."
Analysts predict that social media will continue to grow at a moderate pace with new forms of media and entertaining features attracting new users. The rise of web based and mobile social media will also help keep social media revenues to increase.
Marketers are increasing their advertising budgets on social networking sites because many of these sites offer mass amounts of users who spend significant time on the sites. Marketers see this as an opportunity to increase click-through rates (CTRs).
"Social media sites are becoming more innovative in their ad products to attract marketers," says Gupta. "Social networking sites should deploy data analytic technologies that interrogate social networks to give marketers a more accurate picture of trends in accordance with consumers’ needs and preferences."
Gartner analysts say that social gaming on social media sites will continue to be incorporated due to its monetization opportunities. Payments on social media sites are also predicted to increase as the sites can serve as a payment platform for transactions and increase revenue opportunities.
"New revenue opportunities will exist in social media, but no new services will be able to bring significant fresh revenue to social media by 2016," says Gupta. "The biggest impact of growth in social media is on the advertisers. In the short and medium terms, social media sites should deploy data analytic techniques that interrogate social networks to give marketers a more accurate picture of trends about consumers’ needs and preferences on a customized basis. In the meantime, however, they should also continue to exploit other channels of revenue like mobile advertising and social commerce."
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