Technology | Media | Telecommunications

Saturday, January 22, 2011

Legacy Marketers Provide a Windfall for Facebook


The media-buyer mentality is still pervasive with most marketers. Given what we know about the typical ROI results from advertising, when compared to quality editorial content publication, why do marketers spend their budgets on under-performing ads? It's easier to buy advertising placements than create meaningful new content that appeals to your customers and prospects.

Moreover, instead of adapting to the interactive engagement model of social networks, most legacy marketers would much rather purchase display advertising than invest the time to participate online. Their apathy has created a windfall for Facebook, and other social networks, as advertising budgets merely shift from traditional media to social media platforms.

U.S. marketers will spend $3.08 billion to advertise on social networking sites this year, according to the latest market study by eMarketer.

Spending will be up 55 percent over the $1.99 billion advertisers devoted to social networks in 2010 and will rise by a further 27.7 percent next year to reach nearly $4 billion.

This dramatic growth in spending this year will bring social media advertising dollars to 10.8 percent of the total spent online in the U.S. market. Worldwide, where social network ad spending will rise 71.6 percent to $5.97 billion, that proportion will be somewhat lower, at 8.7 percent.

Upside Opportunity for the Progressive Innovators

The 2011 forecast for U.S. spending is $1 billion higher than eMarketer's last estimate of U.S. social network ad spending -- made in August 2010. The primary driver of the change in projected spending is greater ad spending on Facebook, by far the biggest player in the space.

"2010 was the year that Facebook firmly established itself as a major force not only in social network advertising but all of online advertising," said eMarketer principal analyst Debra Aho Williamson.

eMarketer predicts ad spending on the world's top social network will reach $2.19 billion in the U.S. this year and just over $4 billion worldwide -- both more than double last year's figure.

"If Facebook can continue to increase its global user base and boost the amount of revenue it generates per user, it could even surpass these forecasts," Williamson said. "Facebook must continue to innovate its user experience and its ad platform."

In contrast, the herd of lazy marketers that spend their budget on Facebook display advertising clearly won't attempt to innovate, nor change their old-school behaviors.

Therefore, the few who choose to invest the time and effort in creative content marketing, and to actively engage online with their stakeholders, will continue to gain a significant competitive advantage.