I just updated my US social network ad spending estimates for 2009, and thanks to a particularly dismal January-March quarter at Fox Interactive Media (ad revenues at MySpace’s parent were down 16% year over year) I now expect the social networking category as a whole to fall 3% this year, to $1.1 billion, from $1.2 billion last year.
If it ends up as I expect, it will be a significant turnaround from the past couple of years, when social network ad spending was growing at double and triple digits.
The biggest reason for the falloff is MySpace, which I expect will make $495 million in the US this year — down from $585 million in the US last year — much of it coming from a deal FIM has with Google for search. Once that deal runs out in the middle of next year, things may end up even worse for MySpace unless its new management can turn the ship around.
I’m expecting Facebook to up its US ad revenues by 9% this year. Depending on your outlook, that’s either glass half full or half empty. To increase ad revenues nearly double digits in a recession is certainly a positive, but the way Facebook is burning through money to fund its growth, I’m not sure 9% is enough. If the company launches its rumored ad network, however — and if it’s successful, which isn’t a guarantee — that could change the outlook.
The bigger story — one that I hope to spend more time measuring and quantifying in the future — is how marketers are using social networks for reasons other than advertising. This, I believe, is where the true potential lies.
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