Two reports out this week predict fast growth in social media marketing.
The first, from Forrester, forecasts US social media marketing spending will reach $3bn in 2014, up from around $700m in 2009.
The second, from eMarketer, predicts that, after a small dip this year due to the recession, spending on social media marketing will grow fast, reaching $1.4bn in 2011.
It is taking marketers a while to get their heads around social media, and to overcome their natural aversion to the anarchic nature of the environment. Marketers like to have total control over "the message" and you just can't do that with social media.
But I think that social media marketing could become a major source of revenue for publishers and others who find themselves running sites with significant social elements. That's because there are two aspects of social media that are potentially very attractive for marketers.
First, there's the data. When they interact with social media, users give up a lot more information about themselves than when they consume more traditional online media. They give some information explicitly, through their profiles, their contributions to the network, their list of "friends" etc. And, because they usually spend more time and view more pages per visit on social media than on traditional media, they also provide richer click trails, which can be mined for further information about their background, interests and priorities.
In the words of eMarketer senior analyst Debra Aho Williamson:
"Social network users create a gigantic amount of data about themselves—their friend networks, likes and dislikes, content-sharing activities and more.
“Harnessing this information to deliver advertising not only within social networks, but on other sites a consumer may visit, is a marketer’s dream come true."
Secondly, social media potentially offers much more powerful opportunities for brand marketing. Users are actively engaged with social media, contributing and responding to others. By participating in those interactions, marketers should be able to raise awareness of their brands and influence how people view them much more effectively than through more traditional display advertising. Just think about it - I stand a much better chance of influencing your thinking if I have a conversation with you than if I stick a message up on the wall near you while you are doing something else.
The challenge for social media owners is to construct commercial propositions that enable marketers to take part in these interactions, in a privileged way that goes beyond what they can do as ordinary users, but which does not undermine the experience for other users in the process.