Social Network Ad Space: Sorry, Sold Out!

• Posted: Monday, November 06, 2006
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• Author: pradhana
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• Filed under: Internet Advertising, Market Survey, Merger-Acquisition

Ad agencies are abuzz, inventory is tight…

For many marketers who were sitting on the sidelines of social networking as recently as four months ago, advertising on social networks has become a top priority.

In a recent interview with eMarketer, Michael Barrett, chief revenue officer at Fox Interactive Media (FIM), said, "The conversation with marketers has shifted in recent months from 'Why MySpace?' to 'How can I use MySpace?'"

"At this point, many of the dollars are still experimental, but in certain categories such as movies, TV and music, marketers are actively budgeting funds to social networking campaigns," says Debra Aho Williamson, eMarketer senior analyst and the author of the new Social Network Marketing: Ad Spending Update report. "Much like in the early days of Web marketing, there is a fear of being left behind: If a competitor is there, then I need to be there, too."

In fact, the pace of events since August (including Google's $900 million deal with MySpace and the trickle-down effects of this deal) has led eMarketer to revise its expectations for social network ad spending upward.

eMarketer now expects that US marketers will spend $350 million placing ads on social network sites in 2006 (up from our previous estimate of $280 million).

US spending on social network advertising is now expected to rise to $865 million in 2007 and to reach $2.15 billion in 2010.

"MySpace will continue to dominate, accounting for 60% of US online social network ad spending in 2007," says Ms. Williamson. "Networks including Facebook, Bebo and Piczo will make up the next largest chunk of revenue, followed by social networks offered by portal sites. Vertical, or 'niche,' networks are likely to generate $45 million in ad revenue in 2007."

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