We just did an assessment of advertising placed on social networking sites and were surprised to find that nearly 20% of all ad spending is by local businesses. Our assumption going into this research was that commercials on social networks were almost purely national. We’re estimating that local advertisers will account for about $641 million of nearly $3.3 billion this year trying to reach consumers via these sites.
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.
Before you rush to create a networking site for Oklahoma City pet lovers or Duluth skydivers, consider this: 57% of all that local social-networking advertising is going to two sites, Facebook and MySpace. They are the only two sites generating more than $100 million from local advertising placement. We’re seeing quite a few local ads placed either through Google or Yahoo’s contextual placement program – probably through an intermediary and not by the advertiser directly.
We’ll be studying the full list of social networking sites and their local ad dollars over the next several days and offering more insights. The relatively small amount may not seem like much, but the swift growth of these networks appears to be causing a corresponding upswing in local ad placement. Keep an eye on Facebook. It is the biggest share-getter. In fact, 74% of its ad revenues are from local businesses.
Download a detail of Social Network ad spending.
Tags: Facebook, local advertising, local online advertising, Media, MySpace, social networks
I missed your post before having ESP this morning. Social net targeting strategies are starting to leak out into the Open Web. This trend may too.
http://blog.lookery.com/2009/07/13/random-to-me-manga-image-via-wikipedialocal-advertising/
i thought it was “tweeted”
Interesting post.
I am sure that local ads on social netwerks will surely rise in the furture. Where else is it possible to target the ads so specifically to “interests” + “locations”, while also reaching a remarkable number of users….
We have been recommending our clients use the social networks for local ads. It’s good to cover every avenue as much as possible.
You can have a very successful ad campaign on Social Sites if done correctly. The key is building relationships. Here is a video interview with Giovanni Gallucci who is rated #1 on Google when you type in Social Media expert.
http://yates11.wordpress.com/2009/07/09/social-media-works-but-dont-sell/
Keep up the great research and analysis. I recently read your SEM June 2009 report. It was extremely informative.
The fact that we’re seeing local advertisers on social nets at this $ is really interesting. It is an early sign that ppc on soc nets might be as important as ppc on SEs some day. At HubSpot, we advertise nationally on facebook for our keywords. A big reason is because we were able to try it self-serve and measure that we got a solid return, not to mention all of the free brand advertising that comes with a lower cpc. I can imagine that self-serve brings a lot of local advertisers into the fray, just like it did initially for SEM/PPC. Do you think? Also, the targeting to geography is obviously critical.
I wonder how many of the local advertisers on these sites are also using the free capabilities of the site to attract traffic too?
Were you able to measure soc networking ads through services like SocialMedia.com?
OK – I “get” that local businesses are buying Web 1.0 banner ads on Web 2.0 social sites. And hey, if it works, why not?
But soon the advertising will be the network, not just a banner. The word-of-mouth that occurs in actual relationships will be harnessed to benefit not only trusted businesses, but consumers and their communities as well.
Further to Tim Tracey’s post, about advertising becoming the network – take a look at RepairPal.com.
Did you see any regional differences for local advertising on Social Media?
Good for you
) I did it with my company and this moving in social networks really work, we make like 30 % local ads and we have a veri big progress 
Excellent site,Thanks for this great post – I will be sure to check out your blog more often.Just subscriped to your RSS feed..
How do You explain Twitter number? You know, they have no advertising at all in their web site. How do You calculate 288 mil $ revenue for 2009? Thanks
So, Facebook is getting 74% of its advertising from local advertisers. I wonder if this is because they have a self-service system like Google Adwords. The local advertisers aren’t forced to call a sales rep who would rather be talking to a national account.
We’ve advertised on Facebook for some of our clients. We expected click through rates would be extremely low compared to search and they were even lower than we expected. At this point, we haven’t found it to be effective in marketing local service based businesses.
We have experimented with Facebook ads and had little success. Facebook seems like a good option if you are trying to target a very specific demographic because of all the data they collect from each person. We got a lot of impressions but very few clicks.