BizReport : Social Marketing : July 15, 2009
When it comes to the social marketplace, local businesses appear to be jumping in quickly. According to a new report from Borrell Associates, local businesses account for about 20% of the ad spend in the social marketplace.
by Kristina Knight
The report predicts that local businesses will spend more than $640 million in the social network marketplace, which is expected to bring in about $3.26 billion in ad revenue by the end of 2009.

“In the scheme of things, it’s still a drop in the bucket. The total is less than 3% of all locally spent online advertising. If we estimated it for individual local markets (we usually don’t do that until an advertising segment reaches $1 billion), it would equate to a few hundred thousand dollars or less in most markets,” writes Gordon Borrell, CEO of Borrell Associates, on the Borrell Associates blog.

Much of the social spending is being aimed at Facebook and MySpace, with good reason. The two social networking giants tower over other, niche social networks and continue to attract more consumers each month.

The real question, however, is will social networks work for marketers as an ad medium?

According to metrics firm Hitwise, less than 5% of retail traffic is pushed from social networks. Comparatively, search engines push 23% of traffic to the retail space. Still, the lure of the social marketplace is the ever-increasing number of consumers logging on. Sure, consumers may not be jumping from their social network to ecommerce hubs, but they are listening to peers who review or recommend certain products. So, while consumers may not be heading to a retail site from a social network, they are considering the products and perhaps making purchases at a later date.