Social Networking Ad Revenue to Climb to $1.8 Billion by 2010, Study Says

NEW YORK — Led by MySpace, the social networking phenomenon has reached fever pitch and spawned an unprecedented opportunity for viral marketing. According to a new study by eMarketer, a market research firm, advertising on social networking sites is expected to top $1.8 billion by 2010, up from $280 million this year.

“There are banner ads and profile pages that marketers set up on MySpace,” eMarketing senior analyst Debra Aho Williamson said. “We project MySpace’s ad revenue will hit $180 million this year. They will take the biggest chunk of ad revenue of all the social networking sites.”

Social network Internet ad spending will account for only 1.7 percent of the $16.7 billion spent on U.S. online advertising in 2006, rising to 6.3 percent in 2010, Williamson said.

MySpace.com, the current social networking juggernaut has proven to have staying power in the cultural zeitgeist of teens and 20-somethings. According to a recent report from Hitwise, MySpace.com is the most visited domain on the Internet for U.S. Internet users.

According to Business Week, MySpace has more than 75 million users, 15 million daily unique logins and is growing by 240,000 new users per day. The site is generating close to 30 billion monthly page views, which translates into 10,593 page views per second.

There also is room for MySpace’s revenue to grow apart from sponsored ads.

News Corp., MySpace’s parent company, has engaged in talks with Google, Microsoft, Ask.com and Yahoo! about partnering to provide advanced paid search capabilities, according to The Hollywood Reporter.

“We have no interest in partnering with Google or anyone else on either advertising in general or ecommerce. Those are things we are going to do ourselves,” News Corp. President and CEO Peter Chernin said. “The only thing we are talking about is whether we partner with somebody on search, and mostly on the sponsored links side of search. “The trade-off is whether we can get such a good deal with someone like Google or Microsoft that we get the majority of the economic benefits.”

Last month, MySpace was second only to Yahoo Mail in capturing 17 percent of online display ad impressions, according to Nielsen//NetRatings AdRelevance.

“If you can create just a little bit of structure without interfering with the unique features of MySpace, there are lots of new possibilities,” Fox Interactive Media President Ross Levinsohn said. “So for the most part we have left it alone and given them bigger canvasses and more tools. Our job is continue to be on the leading edge of how advertisers market and how consumers participate.”

MySpace.com also has taken some heat from advertisers whose ads have appeared on the pages of famous pornstars, Tera Patrick and Jenna Jameson. Ads for Weight Watchers and T-Mobile appeared on Patrick’s and Jameson’s pages, respectively, and have since been pulled.

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