GigaOM

If there was ever any doubt that competition is a good thing, witness the case of MySpace. The social networking site has been on a tear recently, signing partnerships with the likes of Skype and AOL, and expanding into new avenues such as OpenSocial and, more recently, “quarterlife.” As a result, its traffic — despite stiff competition from babe-of-the-moment, Facebook — has kept on going up, at least in the U.S.

According to comScore, MySpace added 3.5 million unique visitors in October, a roughly 5 percent increase, bringing its total to 72 million. Facebook saw the number of visitors rise by 8 percent, putting its total at about 33 million. This battle between the two social networking giants isn’t over yet!

This being the week of ad:tech, news of online advertising has dominated the conversation: from MySpace’s hyper- targeted ads to Facebook’s new ad system to broadband advertising systems introduced by companies such as AnchorFree. The advertising, of course, is becoming social, mobile, and behavioral.

If you take all this into account, and juxtapose it against the recent eMarketer’s forecast — U.S. online advertising nearly doubling from $21.4 billion in 2007 to $42 billion in 2011, representing about 13 percent of the total ad-spend — what you get is a pretty decent context for the ongoing battle amongst Google (GOOG), Microsoft (MSFT), Yahoo (YHOO), phone & cable companies, wireless carriers, Facebook, MySpace (NWS) and countless other startups.

Of course, it also means that advertising (or marketing messages) are going to be in-your-face, every time you turn around. What is the theoretical limit to our ability to absorb these messages? I just wonder, when, as people-being-marketed-to will we say: Enough! Stop! Or will we?

Mark Zuckerberg & Co. stood up in front of the advertising community in New York today and unveiled Facebook Ads, an ad system that allows companies to use the Facebook social graph and to develop highly targeted ads. Large brands such as Coca-Cola (KO), Sony Pictures (SNE) and Verizon (VZ) have signed on for this effort. Part of the engine powering this new ad system is called Beacon, which takes data from 44 web destinations and mashes it up with Facebook’s internal information to help build more focused advertising messages.

While it seems to be a clever idea, a quick review reveals that Beacon might turn out to be a privacy hairball for the company.

The 44 sites that have partnered with Facebook include everyone from Kongregate, LiveJournal, NYTimes (NYT), Sony Online, Blockbuster (BBI), Bluefly.com, STA Travel, The Knot, TripAdvisor, Travel Ticker, TypePad, viagogo, Vox, Yelp, WeddingChannel.com and Zappos.com.

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Microsoft (MSFT) has invested $240 million in Facebook at a valuation of $15 billion and gets the rights to sell third-party ads on the Facebook network. That’s about 2 percent stake. Not as crazy as the $900 million that MySpace (NWS) pried out of Google (GOOG), but still pretty steep. I thought the deal was for $500 million, so I am guessing there is another shoe to drop here. (Looks like Microsoft is going to be to Facebook what Yahoo was for Google…transition strategy!)

Today Facebook also launched an application for BlackBerry, and got RIM and T-Mobile USA on stage with Facebook co-founder Dustin Moskowitz to announce it today. Facebook already has an iPhone app that early adopters everywhere love to brag about. Moskowitz also announced the Facebook platform was expanding to all web-enabled phones, with apps appearing on mobile Facebook profiles and getting access to SMS to communicate with users.

Press call live blogging below the fold:
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First it was music, then web video, and now it is time for MySpace to turn the attention of its 100-million plus members to casual games. The company has signed a deal with Oberon Media, and two companies will create a new casual gaming channel on MySpace. MySpace Games will launch in January 2008.

MySpacers will be able to play games with friends, and they will also be able to embed game widgets on their profile pages. Social networks and games have been on a collision course, and we have written about this trend previously. Start-ups such as King.com, Boonty and Kongregate have been slowly turning their casual game portals into quas-social networks. MySpace is coming from the opposite direction. Games, like Scrabulous are quite popular on MySpace rival, Facebook.