SOURCE: eMarketer

November 01, 2006 09:00 ET

Ad Spending on Social Networks to Reach $2 Billion by 2010

eMarketer's New Report Says MySpace Will Continue to Dominate

NEW YORK, NY -- (MARKET WIRE) -- November 1, 2006 --Just four months ago, marketers were sitting on the sidelines of social networks and watching the traffic surge. Now, advertising on social networks has become a top priority. In 2007, ad spending on US social networking sites is expected to spike to $865 million from $350 million in 2006, according to eMarketer's new report, Social Network Marketing: Ad Spending Update. By 2010, eMarketer estimates, spending will hit $2.15 billion.

MySpace will continue to dominate social networks, accounting for 60% of total US online social network ad spending in 2007. eMarketer estimates MySpace will generate $525 million in 2007, up from $180 million in 2006. Competitors such as Facebook, Bebo and Piczo will make up the second-largest chunk of revenue, followed by social networks offered by portals and "niche" networks.

International expansion remains a key area for audience growth and will shift into high gear in 2007. eMarketer estimates that worldwide social network ad spending will reach $1.1 billion in 2007, up from $445 million in 2006. By 2010, spending is expected to rise to $2.8 billion.

While many marketers are rushing to experiment with social networks, in order for serious ad dollars to continue, adequate measures of return on investment need to be in place, says Debra Williamson, eMarketer senior analyst and author of the report.

"The longer existing social networks take to develop adequate ROI metrics, the bigger the opening for a next generation of networks that are built from the ground up to accommodate advertising," Ms. Williamson says.

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