Social media has grown like a weed on the consumer usage front but when it comes to revenue, social media hasn’t yet found enough friends in the form of advertisers to cement its place as a digital marketing staple.

According to Forrester Research, however, that will all change by 2014. As our own Meghan Keane detailed, spending on social media marketing will grow to over $3bn by then, up from an estimated $716m this year, Forrester predicts.

While that’s impressive growth, Forrester’s predictions also demonstrate why the anticipated growth in spending on social media is a red herring: by 2014, 59% of the total online ad spend will go to SEO and PPC. That represents $31.5bn of the total online ad spending pie, or more than 10 times the size of the social media slice.

This is an important point that cannot be underestimated by digital marketers, entrepreneurs, executives and investors.

As great as social media is, here’s the problem: while there’s good reason to believe that social media has a bright future and a $3.1bn/year market is nothing to cough at, assuming Forrester’s numbers are not going to be exceeded by a significant amount (say double or triple), social media will represent a limited market.

$3.1bn may sound like a lot of money but in the overall scheme of things, it isn’t. Furthermore, and most importantly, given the structure of the social media market, it’s questionable as to how much of that will be available to smaller players. Already, today’s most prolific social media revenue generators (Facebook and MySpace) already account for the vast majority of social media spend and in fact, if projections of their 2009 revenues are accurate, almost
all of the $716m Forrester sees being spent on social media this year will be attributable to Facebook and MySpace.

Marc Andreessen, who is on the board of Facebook, has gone so far as to state that Facebook could pull in a billion a year in revenue if it pressed monetization. Whether you believe him or not, it’s clear that Facebook alone is currently a primary beneficiary of a significant chunk of the social media spend.

The key take-away from this for those looking for the greatest digital marketing opportunities over the next 5 years is that unless social media finds some business model steroids and there is a sudden fragmentation in a market that is today dominated by a handful of players, the slice of the ad spending pie that belongs to social media has already been saved for someone else.

So while social media is here to stay and there is some opportunity, if you’re looking for the biggest opportunities in digital marketing, chances are you’re going to find them in search. That you can take to the bank.

Photo credit: Sam Pullara via Flickr.