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Report: Social Media revenue to touch $16.9 billion in 2012
Report: Social Media revenue to touch $16.9 billion in 2012
By: iMedia News Bureau

Social media revenue worldwide is expected to reach $16.9 billion in 2012, a whopping increase of 43.1 percent from the previous year, according to research firm Gartner. The social media revenue stood at $ 11.8 billion in 2011.

The study noted that advertising will continue to be the largest contributor to overall social media revenue and is projected to touch $8.8 billion in 2012, as more enterprises are getting upbeat about this platform.

Marketers are increasing their advertising budgets on social networking sites because many of these sites offer mass amounts of users who spend significant time on the sites. Marketers see this as an opportunity to increase click-through rates (CTRs).

Advertising is, and will continue to be, the largest contributor to overall social media revenue and is projected to total $8.8 billion in 2012. Social gaming revenue more than doubled between 2010 and 2011 and is expected to reach $6.2 billion in 2012, while revenue from subscriptions is expected to total $278 million this year.

"Usage of online social media has matured, and more than one billion people worldwide will use social networks this year," said Neha Gupta, Senior Research Analyst at Gartner. "Although the number of social media users is large, and in some cases increasingly mature in their usage patterns, the market is still in its early stages from a revenue perspective."

Speaking about the trends, Gupta said that social media sites will keep users engaged with newer forms of information and entertainment. Rising competition among social media players, each vying for consumers time and attention, will also lead to the rise of new forms of social media that includes both web based and mobile.

The growth in users paying for professional networking accounts will continue to grow. However, social sites are moving toward lower subscription fees and shifting focus to other sources of revenue, such as advertisement-based sales. This is corroborated by the fact that many of the professional sites (including LinkedIn and Xing) that charge for premium services observed a decline in the subscriptions revenue ratio. Apart from a few exceptions, Gartner continues to see limited success with the premium subscription models.

Gartner analysts say that social gaming on social media sites will continue to be incorporated due to its monetization opportunities. Payments on social media sites are also predicted to increase as the sites can serve as a payment platform for transactions and increase revenue opportunities.

"New revenue opportunities will exist in social media, but no new services will be able to bring significant fresh revenue to social media by 2016," said Gupta."The biggest impact of growth in social media is on the advertisers. In the short and medium terms, social media sites should deploy data analytic techniques that interrogate social networks to give marketers a more accurate picture of trends about consumers' needs," Gupta concluded.