social networks revenues reach $4 Billion in 2010, user value trending to $4

Posted on January 29, 2011


by now you may have realised my obsession with the revenue per user of different types of digital plays.  why, you may ask? the critical issue in many digital environments is understanding what the key levers of your business are and where the true margins are and could be coming from. revenue per user comparissons are really quiet helpfull in understanding the comparative value extraction of different types of revenue models.

the deloitte media and technology report analysis pasted below is very interesting because it highlights one component that is growing, in network/in game transactions. this isnt a new thing, just follow tencent or look at where app revenues are coming from and it is quiet clear that while there is a lot of value in the attention economy (i.e. interruption based advertising) there is significant value in the intention economy (i.e. activity of  people actually buying something). The advertising market will continue growing for quiet a while as new advertisers (SMBs), are allowed to advertise easily for the first time (yes, this really is an advertising revolution). The ecommerce market is just starting to really find its feet. Digital goods are just starting to gain acceptance and this is a significant cultural shift that shouldnt be underestimated. online payments are still only used by a very small fraction – not to mention the sleeping giant of mobile payments.  The power of social networks as referrers for goods is just starting and there are quiet a few sites that seem to be skipping the advertising model and going straight for ecommerce ( or are interesting examples).

however, at the moment in network transaction appear to account for around 15% of total revenues, and that is a stat i am interested in tracking.

SocNet ARPU to Hit $4

deloitte-socnet-arpu-jan-2011.JPGThe average revenue per user (ARPU) of social networks should reach $4 this year, according to a new white paper from Deloitte. “Technology, Media & Telecommunications Predictions 2011″ forecasts social network advertising ARPU will approach $3.50.

These figures are an improvement from estimates of more than $3.50 total ARPU and $3 advertising ARPU for 2010, as well as hard figures of a little more than $3 total ARPU and about $2.50 advertising ARPU for 2009.

SocNet Users to Reach 1B

Deloitte estimates worldwide social network membership will reach about 1 billion this year, meaning total social network ARPU should equal around $4 billion. In addition, social networks may deliver more than 2 trillion ads this year. Yet Deloitte expects social networks to only produce less than 1% of global ad spend during 2011.

Ads Represent Majority of SocNet Revenues

deloitte-socnet-global-revenues-jan-20111.JPGAds have represented and are expected to continue to represent the vast majority of social network revenues. In 2009, global social network revenues reached about $3 billion, with social gaming virtual goods revenues (the other primary social network revenue stream) representing only about $500 million (Editor’s Note: MarketingCharts providing numerical estimates based on visual analysis of this chart).

In 2010, Deloitte estimates total global social network revenues were about $4 billion, with social gaming virtual goods producing $500 million to $750 million of that total. During 2011, Deloitte estimates total global social network revenues of about $5 billion, with social gaming virtual goods producing about $1 billion.

Social Media Drives Mobile Brand Engagement, Lead Gen

Social media, as a post-click campaign action, represented 26% of the mobile campaign actions in October 2010, according to Millennial Media. The top advertisers on the Millennial network from the finance, automotive, entertainment and retail verticals leveraged the social media platform to drive further brand engagement, as well as lead generation.