The recipients and origin of advertisement spending constantly change in response to consumer behavior. As more people join social networks, these intermediaries offer additional news and entertainment sources for consumers and, therefore, are a growing recipient of global advertising. Most online ad revenues are still captured by search engine providers like Google, Yahoo!, and Microsoft and online retailers like Amazon, Walmart, and Best Buy. However, social networks like Facebook, Twitter, Yelp, TripAdvisor, and LinkedIn are increasingly tailoring ads based on users’ interests and seeing rapid ad revenue growth.
Data from eMarketer reveals total social network ad spending from 2008 to 2014 with projections through 2017. These data illustrate increased spending on ads displayed on social media. From 2008 to 2014, the amount of ad dollars in social media increased nearly 15-fold; eMarketer expects further growth as people around the globe gain Internet access. For young people especially, social media serves as a partial replacement for traditional media like television and radio.
Money from advertisers makes much of online and traditional media inexpensive or free for consumers. As consumers divert more attention to online platforms and to social media in particular, advertiser dollars are shifting to reflect changing consumer behavior. As advertising dollars ebb and flow in various industries, existing business models will be upended and new ones will develop. Regulators should maintain their hands-off approach to this dynamic market, and they should not favor certain Internet platforms or business models over others. Market dominance in social media is typically short-lived—ask Friendster and Myspace—and the threat of entrants provides a powerful incentive for social media companies to compete for users’ loyalty. In this competitive process, social networks develop new, useful services—like messaging, photo archives, and payment systems—or perish.