Adverts to drive mobile social network revenues

Ad funded social networks are set to drive revenues in the mobile user generated content (UGC) space by 2013, according to research released this week.

Industry analyst Juniper Research said Tuesday that the total value of the UGC market, which comprises social networking, dating and personal content delivery (PCD) services, is forecast to rise from nearly $1.1bn in 2008 to more than $7.3bn in 2013.

Advertising, long proclaimed as the great hope for future revenue growth, is estimated to account for nearly one third of total revenues in the UGC space by the end of 2013, and more than half of mobile social networking revenues, according to Juniper.

The analyst forecasts the number of active users of mobile social networking sites is expected to rise from 54 million in 2008 to nearly 730 million in 2013, driven by growth in the Far East & China region.

Juniper analyst Windsor Holden, said, “We have seen an industry wide shift regarding the implementation of business models in this area.

“Whereas initially there was a perception that users would pay a small mobility premium to access social networks on their handsets, it rapidly became clear that to achieve truly mass adoption, it would be necessary to offer free membership and then to augment that with advertising and the sale of premium content.”

Downloads of this content from PCD sites are expected to top more than 9 billion by 2013, of which 32 per cent will be ad supported, according to Juniper.

Holden also notes that while the iPhone has substantially increased public awareness of mobile content services, there is significant scope for improvement within the industry as a whole. The Apple device has benefited from a walled garden content delivery system which encourages consumption of content and while similar systems are available for rival platform, they are not nearly so well renowned.

The analyst also stressed the need for operators to reduce data costs outside of bundles to encourage more casual use of social networking and dating services, noting that mobile dating services will become the largest revenue generating segment by 2009, driven by adoption on the Indian sub continent.