Who's Spending on Social Networks?

MARCH 28, 2008

Big spenders may be in the minority.

While social networks are struggling with how best to monetize their millions of users, some marketers have yet to commit major budget to the channel.

One-third of US marketers and agencies surveyed in an iMedia Connection poll in March said that they planned to spend $300,000 or less this year on social network marketing. The poll was conducted among attendees at the recent iMedia Breakthrough Summit.

"At those amounts, social network spending may still be categorized as experimental for many marketers," said Debra Aho Williamson, senior analyst at eMarketer.

To be clear, the poll was not conducted among a representative sample of marketers. However, it is useful in a directional sense. The 29% of marketers polled by iMedia Connection who plan to spend $2 million or more will help social network ad spending add up.

eMarketer predicts that US online social network ad spending will near $1.6 billion this year. The figure includes all forms of advertising appearing on social network sites, including branded campaigns as well as search, video, local advertising and ads delivered via ad networks.

"As in many other developing advertising markets, much of the spending on social networks is driven by leading-edge marketers who are willing to take risks," Ms. Williamson said.

Estimates of the exact percentage of marketers using social networks vary by source and methodology.

October 2007 studies by CoreMetrics, the IAB, Prospero Technologies and others found that anywhere from one-fifth to nearly one-half of marketers used social networks. Differences hinged on whether or not marketers were already using social networks or intended to use them, and if the marketers considered themselves to be digitally savvy or not.