MySpace, Facebook Capture Local Ad Revenue

Grab more than half of ad revenue

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Almost 20 percent of advertising on social networks comes from local businesses and marketers, according to a new report from Borrell Associates.

Borrell says that going into the research the firm assumed that ads on social networks were almost all national.  The amount of local advertising forecast to be spent in 2009 comes to $641 million out of $3.26 billion across 118 social networking sites.

"In the scheme of things, it’s still a drop in the bucket. The total is less than 3% of all locally spent online advertising," Borrell says in a blog post.

"If we estimated it for individual local markets (we usually don’t do that until an advertising segment reaches $1 billion), it would equate to a few hundred thousand dollars or less in most markets."

Social Network Ad Spending By Percentage

A key finding is that the majority of this local ad spending is going to two social networking sites, MySpace and Facebook. Between them they captured $363 million, or 57 percent of local social network advertising. They are the only two sites generating more than $100 million from local advertising.

"The relatively small amount may not seem like much, but the swift growth of these networks appears to be causing a corresponding upswing in local ad placement," Borrell said.

"Keep an eye on Facebook. It is the biggest share-getter. In fact, 74% of its ad revenues are from local businesses."


MySpace, Facebook Capture Local Ad Revenue
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