Buoyed by emerging "native" ad formats, US social media advertising* revenues are forecast to reach $9.2 billion in 2016, up from an estimated $4.6 billion in 2012, a compound annual growth rate (CAGR) of 19.2% over the five-year forecast period, according to BIA/Kelsey's US Local Media Forecast.

Social "native" ads are expected to grow faster than display over the forecast period (26.0% vs. 15.2% CAGR), reaching an estimated $3.85 billion in spending in 2016 (roughly a 41.6% share of total social ad spend), from $1.53 billion in 2012 (33.8% of social ad spend). 

"Native" social ads are defined in the report as social advertising as branded content integrated within a social network experience (e.g., the newsfeed or content stream).

Below, other projections issued by BIA/Kelsey.

The local segment** of US social media advertising revenues is expected to grow from $1.1 billion in 2012, to $3 billion in 2016, a 28% CAGR over the forecast period.

Mobile is also a growth area for social media.

Social-mobile ad revenues are forecast to rise from an estimated $500 million in 2012, to $1.5 billion in 2016, a 28.5% CAGR over the forecast period.

A variety of forces are expected to influence that growth, including rapid social-mobile consumer adoption growth, active experimentation by vendors, and deep integration of "native" ad units via the platform, according to BIA/Kelsey.

"The year 2012 can be viewed as social advertising's 'coming of age,'" said Jed Williams, program director, Social Local Media, BIA/Kelsey.

"The continued development of native ads, such as Facebook's Sponsored Stories and Twitter's Promoted Tweets, and the acceleration of mobile monetization will be the primary drivers of social advertising growth through 2016."

Other key findings:

  • Total local advertising is forecast to grow at a 2.1% CAGR over the forecast period, from an estimated 134.6 billion in 2012, to $147.1 billion in 2016.
  • Local online revenues (including mobile) are forecast to reach $38.1 billion in 2016, up from an estimated $23.7 billion in 2012, a 12.4% CAGR

Additional findings from the social local media forecast will be highlighted at BIA/Kelsey’s upcoming conference, Interactive Local Media West (ILM West), which takes place Dec. 4-6, in Los Angeles.

*Social media advertising is defined as money spent on advertising formats across social networks.

**The local media advertising marketplace is defined as those media that provide local audiences to all types of advertisers.

About the data: The US Local Media Forecast is based on proprietary and secondary information as available by segment, as well as additional research from BIA/Kelsey. The forecast is issued annually each spring and updated in the fall.

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US Social Media Ad Spend to Reach $9.2B in 2016

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