Social networks are now an integral part of the cultural fabric of the Internet, and their rapidly growing and demographically appealing audience has attracted the attention of advertisers. According to eMarketer’s latest forecasts, marketers will pony up an estimated $280 million in the US to advertise on MySpace and its competitors in 2006. By 2010, that online advertising spend will grow to $1.8 billion, estimates Debra Aho Williamson, senior analyst and author of eMarketer’s new report, "Social Network Marketing: Carving Out Some MySpace".
How big a chunk of that total spend will go to MySpace? Since parent company, News Corp. lumps its Internet investments into an "other" category of revenue, there are few hard facts available, notes Ms. Williamson. Based on quarterly revenue in that category and other factors, eMarketer estimates the company will generate $180 million in US ad revenue this year.
Despite the rapid growth of this area, social network ad spending will account for only 1.7% of the $16.7 billion spent on US online advertising in 2006, rising to 6.3% in 2010. Although this is a small percentage of the online advertising pie, advertising on social networks will teach marketers important ways to reach newly-empowered consumers. Social networks will have an incalculable influence on all advertising, both online and offline, Ms. Williamson says.
"If companies can go even deeper to develop marketing efforts that fully embrace the "one-to-one-to-many nature of social networks, ad revenues will soar," she says. "And, this way of advertising will spill over into other channels. The underlying concept will influence the way advertising is done in all media, not just online."
