The State of Social Media Advertising Heading into 2017

October 3, 2016

Pins on a Map Representing Social Media Networks

Just ten years ago, your company’s social media advertising budget was approximately zero pounds. In fact, the amount of money spent on social media advertising worldwide was only…

Well, nothing. None whatsoever. Facebook had just started accepting members who were not in college. Twitter was a month old with no business model. LinkedIn had a few select corporate sponsors and achieved profitability (we were always ahead of the curve), but no advertising offerings.

It’s amazing what a difference a decade makes. Social network ad spending reached nearly £18.1 billion in 2015, and is likely to exceed £26.5 billion in 2017.

There are two reasons for this massive increase in spending. The first is that social media usage continues to grow—last year saw a 10% increase in social media users worldwide. In the UK alone, there are 38 million active social media users, over half of the population. That’s enough to make any advertiser sit up and take notice.

It took time for social media advertising to take off. After a slow start in the mid-aughts, the landscape is evolving and expanding at a rapid clip, with no ceiling in sight.

As we finish out the last quarter of 2016, let’s take a brief pause to see what has happened in social media this year and what these developments mean for marketers in the coming year.

Facebook

The big blue social media network saw a 50% growth in advertisers from 2015-2016, reaching a milestone 3 million advertisers in March of this year.

Mobile traffic continues to be a big driver of revenue for Facebook. Seventy-nine percent of the platform’s revenue comes from mobile ads, while an estimated 57% of Facebook advertising budgets are dedicated to mobile.

All told, 75% of brands on Facebook pay to promote posts—a number that has been rising steadily as the platform tweaks their algorithm to reduce organic reach.

Developments that will Influence Marketing in 2017

Facebook continued to tinker with the News Feed this year, ultimately landing on changes that promoted posts from friends and family over posts from brands users follow. New controls also allow users to respond to the ads they see, opting out of less relevant ones.

At the same time, Facebook announced new ad options for marketers, including mid-roll ads on live videos and the ability to create and display slideshows as ads.

All told, Facebook is doubling down on creating a better experience for its users, sometimes at the expense of marketers. Reaching a given audience size is likely to require more investment next year than this.

Twitter

Everyone’s favourite “microblogging platform” (remember when it was officially called that?) has enjoyed a good year so far, with 3 million new users and an estimated £456 million in revenue. The company remained a mobile champion, with 86% of that revenue coming from mobile ad impressions.

That said, Twitter remains a mostly American phenomenon, with just 35% of its ad revenue coming from outside the United States.

Compared to Facebook, the number of advertisers on Twitter is low—just 130,000—but that represents a 90% growth year-over-year.

Developments that will Influence Marketing in 2017

Twitter continues to court marketers with new types of promoted content. Their new product, the Promoted Tweet Carousel, lets marketers bundle tweets into a mobile-friendly slideshow. They also announced sponsored “stickers,” their proprietary version of emoji.

As newer platforms like Instagram and Snapchat threaten to erode Twitter’s market share, look for the platform to focus on helping advertisers deliver content in a way that users find compelling, not intrusive.

Instagram

The photo-heavy social platform spent the year refreshing its image, with a funky new logo and new features designed to appeal to Snapchat users. Their efforts seem to be paying off, as the company is on track to reach £2.13 billion in revenue worldwide in 2017. With the power of parent company Facebook behind them, Instagram has had no trouble staying relevant.

Interestingly, Instagram has the opposite geographic distribution of Twitter. Twenty-five percent of Instagram users are U.S.-based, while 75% of the user base is outside the US.

Instagram is perhaps the most branded social media platform—90% of the top 100 global brands are on the platform, and fully 70% of the most used hashtags are branded. 

Developments that will Influence Marketing in 2017

Instagram has doubled down on video. There are more video ads being served on Instagram than anywhere else, and they’re getting more frequent and longer. The average length of a video ad increased from 10 seconds to 25—an indicator of the platform’s user tolerance for branded content.

Instagram recently introduced a Snapchat-esque “Stories” functionality, that lets users create content that disappears after 24 hours. Look for sponsored Stories in 2017.

Snapchat

The young upstart of the social media world, Snapchat has captured the younger demographic, with nearly half of its user base between 13 and 24 years of age. Though Snapchat is still in its infancy, and arrived late to the advertising table, the company is set to rake in between £378 and £757 million in 2017.

Whereas most social media platforms earn their revenue a few dollars at a time, Snapchat has some extremely pricey options for its biggest sponsors. A single Sponsored Selfie Filter—the facial-recognition-based widgets that, for example, give the user cat ears and a tail—can cost up to £530,000 per day.

Developments that will Influence Marketing in 2017

Snapchat had a rough launch of its Discover feature, which boosted viewers but lowered its already-low engagement rates.

Despite the platform’s dominance in a coveted demographic, marketers have been slow to warm to Snapchat, partly because measurement and targeting options have been limited. But the platform is currently working with top measurement firms to make the platform more useful for marketers.

LinkedIn

The world’s largest professional network crossed the 450 million member mark in 2016. The platform saw 30% growth in its marketing revenue in 2015, and shows continued growth in Q1-3 of 2016.

LinkedIn attracts more high-salary users than other networks, with 44% boasting incomes over $75,000 and 75% over $50,000. The user base is evenly distributed across demographics, with 20-30% of members in each 11-year age bracket from 18 to 65 and over.

Developments that will Influence Marketing in 2017

LinkedIn Marketing Solutions continues to develop innovative ways to help marketers reach their most relevant audience. The launch of programmatic buying offers high quality advertising inventory at scale. And the recently announced native conversion tracking makes it easier for marketers to measure and improve their Sponsored Content and Text Ads campaigns.

LinkedIn will remain a go-to source for B2B—80% of B2B leads generated come from LinkedIn—but as LinkedIn Marketing Solutions continues to evolve as a platform, expect more B2C involvement as well.

Compared to centuries-old tactics like content marketing and print advertising, social media advertising is still in its infancy. Yet it has become a major way for brands to connect with an audience, and vice versa.

Let the statistics above inspire you to get a jump on your strategy for 2017. As much as social media has changed in the past year, one thing remains constant: Great content targeted to the right audience with the right amplification can achieve amazing results.

To learn more about marketing on LinkedIn, download the LinkedIn Content Marketing Tactical Plan.

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