Sponsored Conversations Grow Social Revenue

by John Gaffney - Digidaydaily

Social media measurement continues to be separated into paid and earned categories. Following on the heels of Meteor Solutions launch of its influence map on Monday, a new research study says that social media sponsorships have bounced 13.9%.

PQ Media, which bills itself as an alternative media econometrics firm, says the category accounted for $46 million over the past year. PQ claims to be the first to define the category by size and structure. That definition: Social media sponsorships are a “digital word-of-mouth marketing segment in which brands provide material compensation, such as cash, products, points or trips, to social media content creators to promote and/or review their products and services through long-form text or status updates, often with accompanying visuals.” PQ Media gathered input from dozens of key industry opinion leaders – executives, consultants and analysts – at leading operators, agencies, financial companies and trade associations to define, size and structure the social media sponsorships landscape.

The report divided social media sponsorships into two major segments, which include a total of four categories. The first segment is cash-sponsored social media, which accounted for 22.4% of total spending in 2009, or $10.3 million. While social media sponsorships accounted for less than 3% of overall word-of-mouth marketing spending in 2009, this share is expected to continue growing over the next several years, fueled by the controversial sponsored conversations segment.The cash-sponsored segment is driving overall social media sponsorship growth. Non-paid sponsored social media, in which the social media publisher is provided samples of the product or coupons, includes three categories – digital brand ambassador programs, digital seed/viral campaigns and digital marketing agencies. The value of the non-paid sponsored segment reached $35.7 million in 2009, representing an 8.5% gain over 2008.

Key findings include:

The value of paid and non-paid social media sponsorships grew at a compound annual rate of 77.6% from 2004 to 2009, accounting for 2.7% of total word-of-mouth marketing spending in 2009, up from only 0.5% in 2004.
The total value of social media sponsorships will increase 23.6% in 2010 to $56.8 million, driven by a stronger advertising and marketing environment as the economy improves, as well as continued pressure on brands to increase their presence in social media.
Cash-sponsored social media, available through sponsored conversation firms, is the fastest-growing social media sponsorship segment, with spending rising 37.3% in 2009 to $10.3 million, driven by brand requirements to reach specific “influentials” such as young females and working mothers.
“We believe this sector will be among the fastest-growing alternative media in the near future because of the growth of social media, driven by popular mobile and online applications and devices, as well as the FTC’s transparency guidelines, which require social media content creators to disclose when they receive compensation in exchange for editorial coverage,” said Patrick Quinn, CEO of PQ Media.

Quinn says the FTC guidelines have served to bolster the category’s growth over the past year, despite what some industry observers thought would happen – that growth would be hampered. The largest brand categories by spending in 2009 were CPG, food & beverage, health & beauty, and media & entertainment. PQ’s report says sponsored conversations tend to help brands create even more buzz than usual because by paying social media content generators, a brand is assured of receiving editorial coverage on a targeted blog, online video, podcast or other social network.