Online and Social Network Ad Spend

eMarketer predicts online ad spending to double in the next 4 years, from $21.4B in 2007 to $42B in 2011. Forecasted breakdown below. They obviously think "rich media and video" to be a large market opportunity. I think for both this category and "display ads", the key will be increased targeting. All marketers are interested in more and better targeting.

In a separate report, eMarketer forecasts phenomenal growth for social networking ad spend. Their research shows that 37% of the US adult population and 70% of teens use social networks. They predict almost 4x growth in the next 4 years, from $1.2B in 2007 to $4.1B in 2011.

Funny thing about social network advertising -- users' social network profiles contain so much explicit interest information yet the eCPM for most social networks is $.20 - $.40.  Does this represent inefficiencies in the online ad market, or is this simply because (as Alexander surmises) the harder advertisers try, the more they are ignored -- it's just the nature of social interaction.

I think it's a little of both, and outside of my general belief that explicit interest data is much less valuable to advertisers than implicit interest data (need to blog about this someday) I agree with what Scott says:

Social profiles have economic value, but as remote targeting data, not as local targeting data. The information they contain is useful for ad targeting but on pages/sites other than the social profiles/networks themselves.

Comments

[Jack Payne]

I think you're dead-on right about the social networks. Everything, from what I see, seems to be going in this direction. Throw in RSS and eMarketing gurus should have a field day.

[Dave Schappell]

Thanks for the post/stats & observations, Jordan -- I had starred this in my Google Reader for a few days, and just worked several pieces of this into one of our presentations!

Here's to a great 2008,

Dave