Omdia has released its inaugural report focusing specifically on social media advertising. The report forecasts that social media advertising revenue will grow at a compound annual growth rate (CAGR) of 12% over the next five years, reaching a scale of $640 billion by the end of 2030. During the same period, the share of social media advertising in the overall online advertising market is expected to increase by 10 percentage points, rising from 33% to 44%, positioning it as one of the fastest-growing advertising segments alongside retail media. Key factors supporting the sustained performance of social media platforms include increased user engagement, growing advertiser preference for omnichannel solutions, and a rise in self-service platforms. Video formats such as Reels, TikTok, Shorts, and Stories are playing an increasingly significant role in driving social media advertising revenue. In 2025, video advertising accounted for 60% of total social media advertising revenue. Major platforms are not only expanding their own video advertising revenue but are also capturing advertising budgets that previously flowed to other digital channels, including online media traffic and digital resources from broadcasting organizations. In the long term, increased inventory of high-value video ads, optimization of e-commerce capabilities, and clearer distinctions between performance-based advertising and premium ad formats will provide further growth momentum for social platforms. A key characteristic is that six applications dominate the global social media advertising revenue, capturing 90% of the market, including Facebook, Instagram, Douyin, YouTube, TikTok, and WeChat, reflecting a highly concentrated market structure. Meta holds a de facto dominant position with its two major applications, Facebook and Instagram. Together, these two applications accounted for 54% of social media advertising revenue in 2025; excluding the Chinese market, their share approaches 70%. An analyst stated: "AI-driven targeting and recommendation algorithms are further amplifying the advantages of leading players. These capabilities favor closed ecosystem platforms with vast user data and robust computing infrastructure, squeezing the development space for small and medium-sized players and continuing to concentrate advertising budgets towards the top." However, to maintain this dominant position, companies need to adopt a balanced strategy between monetization and user experience. Excessive ads in news feeds can provoke user dissatisfaction and harm long-term user engagement. For the industry to achieve sustainable growth, a balance must be struck between AI-driven advertising optimization and maintaining a positive user experience.
Comments