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Forecast: Social Net Ad Spending To Drop In ’09; MySpace To Suffer, But Not Facebook

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imageTotal social network ad spending in the U.S. will drop 3 percent to $1.1 billion in 2009, from $1.2 billion last year, according to projections from eMarketer. This is a major reversal: spending grew an estimated 33 percent in 2008 and 129 percent in 2007. The news shows that while social nets continue to attract millions of users, the ad dollars don’t seem to be following in kind.

Blame it on MySpace: The falloff in social net spending is largely pinned on the faltering of MySpace. The Fox Interactive social net accounts for nearly half of all U.S. ad spend in the space. Back in December, eMarketer expected $630 million in ad spending on MySpace in the U.S. this year. Now eMarketer projects that US ad spending on MySpace will reach just $495 million this year, down 15 percent from the estimated $585 million it produced last year. To be sure, MySpace and Facebook began looking at expanding their overseas advertising last year, as the U.S. market was already heading into a tailspin. But observers are keenly watching as to whether MySpace’s new CEO — and former Facebook exec — Owen Van Natta can begin to turn things around in the U.S.

More Facebook widgets and a chart, after the jump

Facebook, widgets not affected: MySpace’s troubles appear to be unique to itself, though eMarketer analyst Debra Aho Williamson does say that spending across social nets is diminishing. But Facebook still has a reason to smile, as eMarketer expects it to grow its U.S. ad revenues 9 percent in 2009, to $230 million, though it’s less than half of what its rival will take in. Ad spending on widgets and apps are also having very healthy growth, with projected spending to hit $70 million in ’09, up 75 percent from the year before, albeit when spending was next to nothing. In general U.S. ad spend on all other social network sites combined is expected to rise an anemic 1 percent to $345 million.


3 Responses to “Forecast: Social Net Ad Spending To Drop In ’09; MySpace To Suffer, But Not Facebook”

  1. I can see why Facebook's ad revenue is growing so fast – they have an excellent ad product where you only have to pay for click throughs and more importantly you can be very granular with who you are looking to target.

    The amount of information that Facebook collect from its users (and have driving considerable flack for) certainly comes in useful in provising useful ad campaigns, particularly when tied to a good social media campaign.