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US Social Network Ad Spending Is On the Decline

May 15, 2009

eMarketer’s latest research predicts that US social network ad spending will fall 3% to $1.14 billion in 2009, from $1.18 billion in 2008.

Problems at MySpace are the main reason for the revision. eMarketer earlier estimated that marketers would spend $630 million to advertise on MySpace in 2009. However, the prediction has now been reduced  to $495 million in 2009, a 15% drop on 2008. While other social networks are forecasted to increase their ad revenues this year, this won’t be enough to compensate the industry losses related to MySpace. US spending on all other social networks is expected to rise 1.5% to $345 million.

Perhaps not surprisingly, in contrast to challenges that MySpace has faced, Facebook continues to gain momentum. Ad spending on Facebook is projected to increase by 9% to $230 million. International spending on Facebook is also expected to jump, reaching $70 million, for a worldwide total of $300 million in 2009.

Given the current economic conditions and the tight marketing budgets, the forecast doesn’t seem so discouraging and even a smaller growth is a good sign. Despite the decline in ad expenditures, companies and marketers are still willing to invest into social networks for other purposes different from advertising, such as public relations and customer relationship management. In a Forrester Research survey, 53% of marketers said they would increase their investment in social media in 2009.


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