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Social network sites to see slower ad growth

Advertising-spending growth on social networks is going to take a major hit amid the recession and the sites' continued struggle to develop effective ad models, according to a new report from research firm eMarketer.

The firm plans to release on Wednesday its revised projections for global ad spending on social networks. It forecasts an increase this year of 17%, to an estimated $2.3 billion. While any growth in the otherwise dismal ad market is a bright spot, the projection is just over half the 32% growth rate the research firm previously projected. In the U.S., ad spending on social networks is expected to increase 10.2%, reaching $1.3 billion this year.

Rivals MySpace and Facebook, the two largest social-networking sites by visitors, continue to dominate. The two companies will account for two-thirds of total U.S. social-network ad spending and will hold a smaller share outside the U.S., attracting 40% of world-wide spending in 2009, eMarketer says.

For the past few years, social networks have furiously experimented with new ad formats to translate their massive popularity among consumers to ad dollars. Marketers continue to show interest in tapping into social networks to reach consumers but increasingly are looking outside buying ads. Instead, they are creating new programs, such as building fan communities on the sites.

Advertising might not be the way for social-networking sites to find a revenue stream, eMarketer analyst Debra Aho Williamson says in the report. She highlights the success of subscriber-based revenue streams on sites such as Mixi in Japan and Cyworld in Korea."Social network sites must have multiple revenue streams to stay viable in the global economic crisis," she says.

Источник: Total Telecom

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