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According to BIA/Kelsey’s newly released U.S. Local Media Forecast (2011-2016), social media advertising revenues will flourish from $3.8 billion in 2011 to $9.8 billion in 2016, representing a compound annual growth rate of 21%. The local segment of this marketing approach will see revenues increase from $840 million in 2011 to $3.1 billion in 2016 (CAGR @ 29.8%).

The use of various formats and the addition of innovative elements, such as video, enhance the look and, therefore, effectiveness of advertisement in social media sites. It can work particularly well for local businesses. Therefore, as more small and medium sized businesses understand social media and the advertising potential, and as social sites such as Facebook and Twitter improve access to these new advertising avenues, the development of local businesses using this type of marketing will be fast-tracked.

BIA/Kelsey defines social media advertising as money spent on advertising formats across social networks. The principal format for social ads continues to be display. According to BIA/Kelsey’s forecast, spending on display advertisements will increase from $3.6 billion in 2011 to $9.2 billion in 2016 (CAGR @ 20.6%); it is anticipated that the social non-display segment will grow from $140 million in 2010 to $630 million in 2016 (CAGR @ 35.2%).

All this raises the question: Who is spending all this money to use Twitter’s self-serve platform and Facebook API Ads? The answer: Your business competitors! Be sure that your business’s marketing plan includes this increasingly important bandwagon.

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