April 12, 2013, 12:03 PM

Social media ad spending will reach $11 billion by 2017

That’s more than twice last year’s spending.

Zak Stambor

Managing Editor

Lead Photo

Social media advertising revenue will grow about 134% in 2017 to nearly $11 billion, up from $4.7 billion in 2012, according to a new report from BIA/Kelsey, a media research and consulting firm. That translates to an 18.6% annual growth rate.

Key to that growth are improvements to the targeting tools that Facebook and other social networks offer to a range of advertisers, including local businesses, the report says.

BIA/Kelsey defines social media spending as money spent on advertising formats across social networks. While last year display ads, such as Facebook’s Marketplace ads, accounted for $3 billion, or roughly 65% of social media advertising, that percentage will decrease as social networks roll out other ad formats, according to the report. An example of a non-display ad format is Twitter’s Promoted Accounts that enable marketers to pay to show up in the social network’s “Who to Follow” box. By 2017, the percentage of display ads will dip to 58% of total social media ad spending, the report says.

Part of the reason behind that shift is that, while Facebook offers marketers a slew of mobile ad formats, it does not show display ads on mobile devices.

The report says that U.S. social mobile ad revenues were nearly $600 million in 2012. It expects that revenue to reach $2.2 billion by 2017.

“Social networks are evolving their ad products and features to improve performance,” says Jed Williams, director of consulting and senior analyst, BIA/Kelsey. “Social formats, including video, and mobile-social advertising, will be the principal market growth drivers.”

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