In a just-released forecast, Facebook ad revenues for 2011 are expected to reach $3.8 billion - a modest drop from the $4.05 billion expected at the start of the year. Ad revenue is still on track to hit $7 billion in 2013.
Two factors are difficult to assess looking forward.
Competition
First, is the impact of competition from Twitter and LinkedIn (which should be modest as they are not direct competitors) and Google + (which is).
As of September 20, Google + has been opened up to anyone over the age of 18 to join. Google has rolled out this introduction in stages to work out the kinks. In the next stage, teens 13 and older will be able to have a Google + account. During that 90 days since G+ was launched, Facebook has made 71 changes to its site - a sign that it is not going to permit its chief rival much headway.
Behavior
Second, is the most significant factor of all - adoption by users and advertisers. That social media as a promotional platform is eating into the revenue of conventional - as well as other online - media, is a given. What no one really knows for certain is the extent to which users will respond to online ads in their social media spaces. This, in return, will determine the rate at which advertisers shift their media spend to social networks.
Chicken-and-egg
Will increased advertising accelerate consumer change, or will consumer response drive the change in advertising habits? Advertisers are beginning to do some bold and creative experiments on social networks to see just what catches on, and if it can be repeated. Users will vote with their mouse-clicks.
As this economy shows sign of only slow recovery, 2012 could be a year in which a few agencies double-down on social network campaigns, and find some things that really work.
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