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Is Social Network Advertising Ready for Primetime?

Mapping the social graph.

Let’s get the bad news out of the way.

As a result of the poor economy and various difficulties at MySpace, paid advertising on online social networks in the US is expected to fall 3% in 2009.

But the drop will be short-lived.

eMarketer projects that US marketers will increase their social network ad spending 13.2% in 2010, to $1.3 billion.

“The expected rebound in spending will come as more companies focus on creating and implementing an overall social marketing strategy,” says Debra Aho Williamson, eMarketer senior analyst and author of the new report, Social Network Ad Spending: A Brighter Outlook Next Year. “And it is a clear indication that the experimental phase of social network marketing is finally drawing to an end.”

2009 is turning into a year of major shifts in the social network business.

“Facebook, once a distant second to MySpace, has outperformed its rival in nearly every measure of usage—and is on track to surpass MySpace in ad spending by 2011,” says Ms. Williamson.

US spending at MySpace is expected to fall 15% in 2009, to $495 million, while US spending at Facebook is projected to rise 9%, to $230 million. Consequently, MySpace’s share of US spending is projected to fall to 43.4% in 2009, while Facebook and other social network venues will increase their share.

While the US accounts for the majority of ad spending on MySpace and Facebook, non-US spending is growing rapidly at Facebook. eMarketer estimates that marketers will spend a total of $520 million to advertise on MySpace worldwide in 2009, down 14% from 2008. Worldwide spending on Facebook, by contrast, is expected to grow 20%, to $300 million, in 2009.

“Regardless of which site is in the lead, 2009 is the year of building social marketing strategy,” says Ms. Williamson. “2010 and beyond will see increased activity and deployments.”

Social network users create a gigantic amount of data about themselves—their friend networks, likes and dislikes, content-sharing activities and more.

“Harnessing this information to deliver advertising not only within social networks, but on other sites a consumer may visit, is a marketer’s dream come true,” says Ms. Williamson.

See why this may be the year that social network marketing shifts from experimental to mainstream, check out the new eMarketer report, Social Network Ad Spending: A Brighter Outlook Next Year.

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