Just want to throw this out there a few hours ahead of Google’s ($GOOG) earnings report tonight to give you some perspective…
What a lot of media and even Wall Street people don’t understand about online ad spending is that there is a very big difference between how Facebook and perhaps other social media firms will sell ads versus Google. With Google, there is much more focus on ROI – actual metrics over mere cachet.
With Facebook, however, the game is about being there – placement. As big ad buyers come to Facebook, the company is wisely selling ads the way Yankee Stadium does: There’s no way that Budweiser can tell how many incremental beers were sold based on their having a giant billboard in center field, they just know that they have to be seen there.
Every single large corporation now has a line item on their ad budgets for social media and it is said to be double what the number was for last year according to my peeps in the business. With the disappearance of MySpace from these budgets, Facebook basically has this game on smash right now.
This does not mean that social networks won’t be judged on efficacy…but for right now, they have a much looser leash than tradition web portals and search engines as far as cpms and clicks and whatnot. Remember that I told you this heading into the Google call tonight and the Social IPO Explosion in general this year.
Meanwhile, here’s some interesting intel on 2011 social media ad spending from eMarketer via InformationWeek:
Marketers worldwide will spend $4.05 billion on Facebook advertising this year, a new report by eMarketer predicts.
Facebook is expected to represent 7.8% of the U.S. online ad market this year compared with its 4.7% share in 2010, eMarketer said.
Other social media sites will see gains, however. After all, total U.S. ad spending on social media sites is expected to grow 55% compared with 2010, to over $3 billion, rising an additional 27.7% in 2012 to reach almost $4 billion, eMarketer said. In the United States, social media ad dollars will represent 10.8% of total online spending; worldwide, it will represent 8.7% of spending, the study said.
This is what a stampede looks like. If you don’t believe in this stuff, you’re better off sliding into a door frame and watching than trying to stand defiantly in the middle of the street.