Social media advertising revenues will grow from $3.8 billion in 2011 to $9.8 billion in 2016, representing a compound annual growth rate of 21 percent, according to BIA/Kelsey's U.S. Local Media Forecast (2011-2016). BIA/Kelsey, adviser to companies in the local media space, expects the local segment of U.S. social media advertising revenues to grow from $840 million in 2011 to $3.1 billion in 2016 (CAGR: 29.8 percent).

"Better performance, coupled with richer formats and creative elements, like video, will be the principal social ad market growth drivers," said Jed Williams, analyst and program director, Social Local Media, BIA/Kelsey. "Social advertising's local business penetration will steadily increase as SMBs' understanding of social media deepens, and as the networks continually improve the ease of onboarding and campaign management. Facebook opening its Ads API to more partners, including those that work with SMBs, and Twitter's self-serve platform will help to 'democratize' social ads, which will ultimately lead to more local growth."

BIA/Kelsey defines social media advertising as money spent on advertising formats across social networks. The predominant social ad format continues to be display, spending on which will increase from $3.6 billion in 2011 to $9.2 billion in 2016 (CAGR: 20.6 percent), according to the forecast. BIA/Kelsey expects the social non-display segment to grow from $140 million in 2010 to $630 million in 2016 (CAGR: 35.2 percent).