It's a Smocial Ad World

Northern, WI 5/15/12 (StreetBeat) -- Figures released by BIA/Kelsey this morning shows that social media advertising revenues are expected to rise from $3.8 billion in 2011 to $9.8 billion in 2016, for a 21% compound annual growth rate.

The local social story is even better: there, BIA/Kelsey predicts that advertising revenues will grow from $840 million in 2011 to $3.1 billion in 2016, for a CAGR of 29.8%.

Such numbers go far in explaining how it is that Groupon (Nasdaq: GRPN) managed to overcome dashed investor expectations and suspicious prodding by regulatory authorities with its pretty amazing quarterly earnings report and why companies such as Google (Nasdaq: GOOG), Amazon (Nasdaq: AMZN) and American Express (NYSE: AXP), just to name three, are trying to horn in on the market that is widely believed to be oversaturated. The numbers also explain why local merchants keep coming back to the daily deal model, despite its numerous drawbacks (for them at least). Simply put, there are few other digital ad channels that not only can so effectively reach a local community and also wear well when translated into the mobile and social formats.

Social Commerce’s Slow Crawl

Social media commerce, meanwhile, is still a statistical blip on the radar. According to the IBM (NYSE: IBM) retail economic indicator, shoppers referred from social networks generated 1.1% of all online traffic over Q1 2012, identical to the 1.1% seen in 2011.

More promising is IBM’s finding that shoppers referred to retailer sites from social networks generated 2.4% of all online sales, over Q1 2012, an increase from the 1.7% seen over this period last year.

That jump is statistically significant, says Jay Henderson, strategy director of IBM Digital Marketing, but it is still a relatively small increase.

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