Video Drives $28 Billion in Ad Spending on Social Media
Ad spending on social media sites is projected to increase to a quarter of all the sites' 2018 ad revenues according to a research note from eMarketer.
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Love ’em or hate ’em, video ads on popular social media sites are forecast to increase site revenues by 30% this year to a total of $27.82 billion. That represents a record-high 25% of all U.S. digital advertising dollars in 2018.
The data were reported Tuesday by research firm eMarketer. The big winner, with nearly a quarter of all video ad spending, is Facebook Inc. (NASDAQ: FB). Facebook (including Instagram) is projected to rake in $6.81 billion this year, easily the largest share of spending (nearly 87%) on video among the top U.S. social media sites.
eMarketer’s principal analyst, Debra Aho Williamson, said:
In-feed video has been a successful ad format for both Facebook and Instagram. Marketers rely on in-feed video ads to capture users’ attention and build brand awareness. A newer video ad format, in-stream advertising in Facebook Watch shows, is still relatively new, but we think advertisers will increase their usage of it because it is similar to linear TV advertising.
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Twitter Inc. (NYSE: TWTR) is projected to receive half its total ad revenue from video, a year-over-year increase of 12% to $633.3 million. Twitter’s share of total U.S. social media ad dollars amounts to 8.1%, and a 2.3% share of all video ad spending. eMarketer expects Twitter’s share of video spending to continue dropping slightly through 2020.
Snap Inc. (NYSE: SNAP) is expected to see an increase 19% year over year in video revenues for a 5.1% share of social media ad spending. Snapchat’s total video revenues are forecast to reach $397.3 million this year and to account for 60% of the social media site’s advertising business.
Alphabet Inc.’s (NASDAQ: GOOGL) YouTube is not in eMarketer’s social media sector, but the researchers noted that it is too big to ignore. In 2018, YouTube is expected to garner $3.36 billion in U.S. video ad revenue, up 17.1% year over year. Nearly three-quarters (73.1%) of YouTube’s U.S. ad revenues are generated by video ads. Overall, YouTube contributes 11% of Google’s net U.S. ad revenues. YouTube’s high traffic and content acquisition costs make comparisons less accurate with the other social media sites.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
