Ad Spending Forecasts for Social Networks

It’s a form of the modern day gold rush. Recent data released by research firm eMarketer says that ad spending on social networks will reach $350 Million this year. Thats a pretty good number, but tiny compared to the $2.2 Billion forecast for 2010. Unfortunately these numbers will probably fuel the creation of even more poorly thought out social networks.

For social networks to really make big bank, I think they need to provide methods beyond the standard banner ad. Users on social networks are engaged entirely in the content of the network. If companies can find a way to engage the user in the same manner, a pretty hefty premium could be charged. The first implementation of this is sponsored groups on sites such as Facebook.

Social Network’s will also need to leverage their user data for ad targeting. Most social networks know at the very minimum a persons age and location. But add in the capability to target based on the person’s interests they have in their profile, and you have a much more effective (and therefore expensive) advertising platform.

[tags]Social Network, Social Networking, Ad Spending, Social Media, Facebook, eMarketer, Brian Balfour[/tags]