Social Media Spending to Hit $757M in 2010

    April 6, 2006

The total marketing spend on social media is forecast to grow at a compound annual rate of 106.1% from 2005 to 2010, reaching $757.0 million in 2010, according to a research report that will be available on April 11 from PQ Media.

By comparison, other non-traditional forms of marketing, including branded entertainment, mobile marketing and video-on-demand, will dwarf spending on social media. This group is projected to grow at a compound annual rate of 14.8% to $253.7 billion in 2010.

Combined spending on blog, podcast and RSS advertising grew 198.4% to $20.4 million in 2005 and is expected to grow another 144.9% to $49.8 million this year. The study also says that podcast advertising is expected to become a larger market than blog ads by 2010. Some additional stats from PQ Media …

* Blog advertising accounted for a whopping 81.4%, or $16.6 million, of total 2005 spending on blog, podcast and RSS advertising (which they call user-generated online media – a phrase some don’t like). This segment will comprise 39.7%, or $300.4 million, of the overall marketing spend on social media in 2010

* Podcast advertising, meanwhile, reached $3.1 million in 2005, and is projected to grow at a compound annual rate of 154.4% to $327.0 million in 2010

* RSS advertising, non-existent until mid-2005, generated a paltry $650,000 in 2005. This seems outrageously low to me.

* Unsurprisingly technology, auto and media brands are the most active in advertising in social media, accounting for more than half of the total spending in 2005. Food & beverage and apparel categories rounding out the top five. The technology, auto and media categories will continue to generate more than half of all advertising in 2010, according to PQ Media. This is natural in my view because so much of the conversation flows around these subjects.

On the whole, what I conclude here is that the social media ad market is slow to take off, however, this report does not appear to account for the oodles of money that’s flowing into MySpace programs. I don’t buy a lot of these projections. Marketers can be fickle. If their competitors experiment and succeed with programs in these arenas, then the dollar flow can increase rapidly. Let’s not also forget the consumers here. They will not want to be marketed to, but with. The other forms of alternative marketing do not always build dialogue. Last but not least, some of these tools will be integrated into other marketing disciplines, skewing the spend.

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Steve Rubel is a PR strategist with nearly 16 years of public relations, marketing, journalism and communications experience. He currently serves as a Senior Vice President with Edelman, the largest independent global PR firm.

He authors the Micro Persuasion weblog, which tracks how blogs and participatory journalism are changing the public relations practice.