Billions up for grabs from social media

13 Oct 2011

There’s a lot of mixed messages surrounding social media this week, with Gartner predictions of a ten billion dollar industry being offset by reports of a 60% drop in users of Google+.

Gartner tips social media revenues to hit $10.3 billion in 2011 and grow a further $4.6 billion in 2012. Advertising sales are predicted to generate the bulk of income ($5.5 billion in 2011), followed by gaming revenue ($3.2 billion) and subscriptions ($236 million).

However, much of Gartner’s forecasting appears to be based on the key assumption there will be no significant drop in the number of people using social networking sites.

Concerns of growing social media fatigue resurfaced this week in reports Google’s new social network – Google+ - has suffered a sharp drop in users now the dust surrounding its launch late June has settled. The best description of the media circus comes from GigaOm, which explains the 60% drop in traffic figure came from an ad-tracking service, and that any decline in users is likely within normal post-launch bounds.

Either way, the headlines come just a few months after billboards were dominated by news of a slowdown in Facebook user growth, and signs of social networking fatigue among older subscribers.

Any drop in user numbers is a big blow for social networking firms, econophysicists at the Swiss Federal Institute of Technology believe, because the number of people logging on is the key metric by which success is measured.

Peter Cauwels and Didier Sornette claim subscriber projections show Facebook is massively overvalued, with even their most bullish prediction pricing the firm at $33 billion, the Massachusetts Institute of Technology’s Technology Review reports. The figure compares to reports the firm is worth at least $70 billion.

The debate over valuations, revenues and user numbers is turning attention to analytics. Reports this week state Google has either hired Andrey Petrov – founder of social analytics firm SocialGrapple -, or bought his company.

Meanwhile, Nokia Siemens revealed it is working with predictive analytics technology firm Xtract to develop a social analysis tool for mobile operators.

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