The global social Customer Relationship Management (CRM) market is forecast to achieve $1 billion in revenues by end-2012, up from approximately $625 million in 2010, according to IT research and advisory firm Gartner.
Worldwide social CRM is projected to total $820 million in 2011, it said.
However, analysts said spending by buyers on social software for marketing, customer service and sales increased by 40% in 2010, but social CRM remained less than 5% of the total CRM application market.
More than 100 vendors have social CRM offerings. Most are not profitable and generate annual revenues of less than $1 million.
"Use by consumers accounts for over 90% of spending on social CRM, but spending on business-to-business (B2B) use is growing faster and will account for 30% of total social CRM spending by 2015," said Gartner Research Director Adam Sarner.
"The market will continue its rapid consolidation throughout 2011. Previously, social vendors acquired each other. Now, business application vendors and outsourcers have started to add capabilities through acquisitions," Sarner added.
Most vendors remain relatively small and unprofitable, though many grew by 50-100% in 2010. In order to thrive in the future, analysts said that social CRM vendors would need to provide clear benefits for companies and communities, demonstrating multiple use cases for sales, marketing and customer service processes.