“Dramatic global growth in social networking and blogging has developed social media into a new content format, thus driving a shift in overall media consumption.”
- Citigroup Global Markets Pan-Europe Research: “Social Media, E-Payments & The New Digital Market”
This 120 page Citigroup report on the state and future of the digital landscape in Europe covers everything from near field communications (the technology punctuated to drive mass adoption of mobile payments) to the types of devices being used to consume media. The overall conclusion drawn by these analysts: the digital future will be shaped and driven by an increased monetization of social media.
We compiled takeaways from the 120 page report around three topics of particular interest to our customers: media consumption, the online advertising landscape and, of course, Facebook’s impact on both.
The report begins by putting forth that the average consumer spends over 7 hours a day on media and communications — second only to sleeping as our most frequented daily activity. Most of this media consumption and communication occurs, of course, over the Internet. According to the Citigroup analysts, the greatest shifts in internet time share over the past four years has come from instant messaging (10% share loss) and social networks and blogs (13.3% share growth):
Looking across various media and to the future, the analysts predict that television will continue to enjoy high penetration rates, print and radio consumption will continue to spiral downward, and the time spent on social networking will continue to grow.
One of the most interesting charts in the report displays the time it took various media and technologies to reach mainstream adoption. While mobile phones took 15 years to reach 50% penetration, social media took just 4 years to reach 50% penetration rates. This compares to 15 years for mobile phones, 12 years for radio, 10 years for color TV, 7 years for broadband, and 6 years for DVDs:
The Evolving Online Ad Landscape
The combined online advertising market, including both search and display, today is worth well over $70bn worldwide. Roughly half of this, $35bn worth, is from online display. From an online advertising perspective, the report suggests that the rise of social media — Facebook in particular — has and will continue to “drive an explosion in the level of online ad inventory.” This, in turn, results in both price deflation on traditional display sites as well as new opportunities for advertisers.
As for social advertising, the report illustrates how time spent on social networks lags the media spend on these properties — denoting the opportunity:
When it comes to social’s impact on the digital future, the most significant point underscored by the report: Facebook’s dominance of the social network landscape. Facebook continues to grow both in the number of users and the time these users spend on the social network. These two graphics in the report illustrate the points precisely:
It this social network usage coupled with the wealth of personal data shared there that is monetized. As a fraction of total online ad spend, social network ad spend has grown from 4.3% globally in 2009 to 10.8% in 2011, expected to draw even more spend in 2012. The majority of this spend — approximately 70% worth — is on Facebook. Facebook is projected to control over 20% of online display advertising this year, and 24% in 2012:
Implications for the Digital Future
The above highlights are just a small portion of the information offered in the full Citigroup report. Overall, the analysts suggest there will be four distinct and widespread structural changes to the global media landscape in the near future:
- Media consumption will continue to shift online
- Traditional print media consumption will decline
- Online ad spend, particularly on social, will continue to rise
- An explosion of online ad inventory will create price deflation
Here at Nanigans, we’re excited to be catalyzing this digital future with social ad technology.