BIA/Kelsey: Local Social Spend to Increase 270% by 2016

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Local social advertising spend is set to nearly quadruple (3.7x) over the next five years, according to a new study by BIA/Kelsey. The report projects that local spending on social networks will jump from $840 million in 2011 to $1.2 billion in 2012, reaching $3.1 billion in 2016.

With a 29.8% annual growth rate, local social spend is on path to outstrip local online/interactive/digital advertising revenues — which includes social — by more than 130% over the next five years, according to a separate study released by BIA/Kelsey in March. Social is set to account for around 8% of all local online revenues by 2016 — more than double its share in 2011.

The research firm is also accelerating projections for overall (national & local) social spend in 2012 and 2013 due to a few key drivers, according to Jed Williams, analyst and program director at BIA/Kelsey — namely, “overall market awareness and adoption of social ads; gradually improving ad performance; and increased prevalence of social video (spurred largely by YouTube).” While growth in geo-targeting display will help to accelerate local revenues, Williams says that the bulk of social spend from both national brands and small and medium-sized businesses (SMB) will likely center on interest-based products like “likes” and keyword searches.

The report comes as Facebook continues to ramp up its advertising business ahead of its highly anticipated IPO on Friday. The social networking giant has made a big push in recent months to promote self-serve among small and medium-sized businesses through a new offers platform released last week, and an Ads API which, should help the company penetrate the growing number of 360 degree marketing interfaces available for merchants.

“The net effect is making SMBs more comfortable with the platform across the board, which builds trust to experiment with and extend message reach through ads,” said Williams about the impact of Facebook’s IPO on local social spend. “If ads adoption by the small business market intensifies, it could have a marked effect on the forecast in future waves.”

The projections are bit more modest than the numbers released by Borrell Associates in January, which saw social local social spend increasing from $1.1 billion to $7.8 billion over the same period. However, the takeaway remains the same: with social spend from local business increasing and the big networks appearing uninterested in local sales forces, there is a massive opportunity for sales teams and technology plays to take these products to market.

Steven Jacobs is an associate editor at Street Fight.


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