Data analytics key to social revenue

  • Technology
  • Tuesday, 07 Aug 2012

CHANGING PLATFORMS: The corporate logo of Zynga. Big social developers such as Zynga have moved to an open-platform strategy, enhancing user convenience and choice.

PETALING JAYA: The deployment of data analytics techniques by social media networks will be key in tapping social media’s explosive revenue growth.

Research firm Gartner Inc is forecasting global social media revenue to reach US$16.9bil (RM53.3bil) this year, up 43.1% from a 2011 revenue of US$11.8bil (RM37.2bil).

Neha Gupta, senior research analyst at Gartner said the biggest impact of revenue growth in social media is on the advertisers and that the onus is on social media sites to deploy data analytic techniques “that interrogate social networks to give marketers a more accurate picture of trends about consumers’ needs and preferences.”

“New revenue opportunities will exist in social media, but no new services will be able to bring significant fresh revenue to social media by 2016,” said Neha Gupta, senior research analyst at Gartner.

According to the research firm, online social media usage has matured, with more than one billion people worldwide using social networks this year.

“Although the number of social media users is large, and in some cases increasingly mature in their usage patterns, the market is still in its early stages from a revenue perspective,” Gupta said.

Advertising continues to be the largest contributor to overall revenue, projected to total US$8.8bil (RM27.7bil) this year.

Gartner expects rising competition among social media players, each vying for consumers’ leisure time and attention, will lead to the rise of new forms of social media which are Web-based and mobile.

New revenue opportunities for social media will also arise as both mobile and TV platforms integrate with social networking as a core service.

The growth in users paying for professional networking accounts will also continue to grow however Gartner noted that apart from a few exceptions, there will be limited success with premium subscription models.

“This is corroborated by the fact that many of the professional sites including LinkedIn and Xing that charge for premium services observed a decline in the subscriptions revenue ratio,” said Gupta.

She added that social sites are also moving toward lower subscription fees and shifting focus to other sources of revenue, such as advertisement-based sales.

Game for money

Social gaming revenue more than doubled between 2010 and 2011 and is expected to reach US$6.2bil (RM18.6bil) this year, while revenue from subscriptions is expected to total US$278mil (RM877.2bil) this year.

Gartner analysts added that social media sites would continue to incorporate gaming techniques on their networks, driven by the monetisation opportunities that it presents, with the sale of virtual goods remaining the primary source of revenue.

Major console gaming publishers have recently entered the social gaming arena and are adding momentum to the social gaming industry by utilising their intellectual properties.

Gartner expects this trend to have a favourable impact on social gaming revenue as consumers are likely to be attracted to familiar gaming titles.

Some big social developers such as Zynga, GREE and DeNA have moved to an open-platform strategy, enhancing user convenience and choice.

In addition to advertising and social gaming, the sale of virtual goods is also big revenue earner.

The trend to sell high-value advisory services such as public relations and reputation management to brands so that they can better manage their presence on social networks is on the rise and is expected to continue.

Payments on social media sites is also expected to increase, providing more revenue opportunities to social media sites to serve as a payment platform for transactions of digital content to pay for applications or to make a person-to-person (P2P) payment to another user of the network site.

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