The worldwide social media revenue will reach $10.3 billion in 2011, a 41.4 per cent increase from 2010 revenue of $7.3 billion, according to research firm Gartner. The total revenue is projected to reach $14.9 billion in 2012 and go up to $29.1 billion in 2015.
According to Gartner, 'social media' includes websites in which:
Content is created, consumed, promoted, distributed, discovered or shared for purposes which are primarily related to communities and social activities, rather than functional, task-oriented objectives
Content usually takes the form of words, pictures or videos
The flow of expression is unidirectional or multidirectional
The website may be a closed or an open platform
"From a revenue perspective, the social media market is still in its early stages, even though it has a large number of users who, in some cases, are exhibiting increasingly mature usage patterns. Market participants need to build new business models to tap into this increased usage and users' increased level of engagement," said Neha Gupta, senior research analyst at Gartner.
As of now, advertising revenue (which includes display advertising and digital video commercials on any device including PCs, mobile and media tablets) is the largest contributor to the overall social media revenue and it will continue to remain so in the future. The social media advertising revenue can reach $5.5 billion in 2011 and grow to $8.2 billion in 2012.
Also, marketers will begin to transition from 'onetime placement and click of ads' toward 'ongoing engagement' with the Internet user and will therefore allocate a higher percentage of their advertising budget to social networking sites.
On the other hand, revenues from social media subscription can reach $236 million in 2011 and go up to $313 million in 2012. As of now, there are a handful of social like LnkedIn, Xing (Germany) and Vladeo (France) among others that sites that charge subscription revenue (mostly for premium services).
Independently, the social gaming revenue can touch the $3.2 billion mark in 2011 and grow to $4.5 billion in 2012. It includes revenue that social networking sites earn directly from users who play games that are developed in-house and the revenue earned by allowing game developers/publishers to use their sites as a platform to let users play with friends on the network.
"We have seen social networks take a platform-oriented approach to game monetization. That is, the social networks have evolved into platforms for social gaming by publishing APIs that help build an ecosystem of developers and publishers. The dominant monetization models for social games as of now are ad-led and 'freemium' models," added Neha.