Social Sites Expect Slow Ad Growth this Year
Social networking sites are expected to have slower growth this year as the global financial crisis continues to haunt the international economy, according to a forecast prediction of market research firm eMarketer.
Earlier prediction said the ad growth in social site will increase by 32 percent, meanwhile, the research firm trimmed down its forecast to 17 percent, or $2.3 billion this year. In December 2008, eMarketer reduced its prediction to only 10.2 percent growth rate as advertising spending plummets to record-low as financial crisis started to creep in to the economy.
According to experts and analysts, the new forecast is not surprising as the global economy is experiencing massive slowdown as financial crisis continues to weaken the online market.
The United States, which accounts nearly half of the global advertising on social network platforms, will spend approximately $1.3 billion for ads, or more than 10 percent growth rate for this year.
Meanwhile, eMarketer said that some social sites, especially those targeting niche markets, will struggle this year as advertising companies are expected to reduce its spending in line with its cost-cutting measure amidst crisis.
Earlier reports said Facebook and MySpace continue to dominate as the world’s two biggest social networks. Meanwhile, eMarketer said that these two online communities account to nearly two-thirds of the total ad spending in the US.
Because of the unprecedented popularity of social platforms, companies have long been using these online properties to generate profit from advertising. But according to the recent study, nearly half of users ignore advertisement and commercials which forced sites to change its strategy by building fan groups.
To remain profitable despite the ongoing crisis, eMarketer said that social sites should have more revenue sources instead of only relying to advertisers to keep its finances afloat.
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