Gartner: Social media biz to rake in $10.3bn in 2011

Once-mocked sites scoop billions from ads and games

Beancounters at Gartner reckon that the social media sector is on track to make $10.3bn (£6.5bn) in 2011, a 41.4 per cent increase from 2010, and to keep climbing after that.

Worldwide revenues for the sector are forecast to grow to $14.9bn (£9.5bn) next year and $29.1bn (£18.6bn) in 2015 as the advertising dosh for display commercials and videos on PCs, mobiles and fondleslabs keeps rolling in.

"Advertising revenue is, and will remain, the largest contributor to overall social media revenue," Gartner said in its canned statement. The analysis firm forecast that social media's cash from ads would total $5.5bn in 2011, and grow to $8.2bn in 2012.

“Marketers will begin to transition from ‘onetime placement and click of ads’ toward ‘ongoing engagement’ with the internet user and will therefore allocate a higher percentage of their advertising budget to social networking sites,” said Neha Gupta, senior research analyst at Gartner.

“This is mainly because social networking sites, with the help of social analytics firms, are able to unlock the interconnected data structures of users – mapping lists of friends, their comments and messages, photos and all their social connections, contact information and associated media.”

But ads aren't the only way that the sector is turning clicks into cash; money from social gaming is also on the up. As well as getting paid for games developed in-house and for letting other developers use the network, social media pushers are also making funds from users spending virtual money within the games – for example to get that brand-new tank or sword they desperately need.

“The dominant monetisation models for social games are ad-led and ‘freemium’ models. The free-to-play games are funded either through advertising (wall advertisements and in-game branding) or through in-game monetary transactions that enable users to ‘level up’ or buy virtual goods,” Gupta said.

Social media businesses will make $3.2bn this year from gaming and rack up $4.5bn next year, the analysts said.

There are also a few sites charging for using their networks, though not very many. Most of the sites, such as LinkedIn or Viadeo, only charge users to "upgrade" the service they are receiving.

Nevertheless, charges made for use of their networks will still bring in $236m for social media companies this year, and that's going to grow to $313m in 2012.

Gupta said the industry was in still in its infancy and folks in the market should be building new business models to "tap into increased usage and users' increased level of engagement". ®

Sponsored: How to determine if cloud backup is right for your servers