Worldwide social media revenue will reach $16.9bn in 2012, up 43.1% from 2011 revenue of $11.8bn, according to Gartner.

In a new set of forecasts, the analyst firm revealed advertising remains to be the largest contributor to overall social media revenue and is projected to total $8.8bn in 2012.

Social gaming revenue, which more than doubled between 2010 and 2011, is expected to reach $6.2bn in 2012, while revenue from subscriptions is expected to total $278m this year.

Neha Gupta, senior research analyst at Gartner, said: “Usage of online social media has matured, and more than one billion people worldwide will use social networks this year. Although the number of social media users is large, and in some cases increasingly mature in their usage patterns, the market is still in its early stages from a revenue perspective.”

The number of social media users will also continued to increase, said the firm, whilst new forms of media and entertainment will keep users engaged.

Meanwhile, the research found that marketers are allocating a higher percentage of their advertising budget to social networking sites. Gartner attributed this to the fact that these sites offer a large pool of engaged users who spend considerable time on these sites — this increases the potential click-through rates (CTRs).

Gupta added: “Social media sites are becoming more innovative in their ad products to attract marketers. Social networking sites should deploy data analytic technologies that interrogate social networks to give marketers a more accurate picture of trends in accordance with consumers' needs and preferences.”

“In the short and medium terms, social media sites should deploy data analytic techniques that interrogate social networks to give marketers a more accurate picture of trends about consumers' needs and preferences on a customized basis. In the meantime, however, they should also continue to exploit other channels of revenue like mobile advertising and social commerce.”