For many marketers who were sitting on the sidelines of social networking as recently as four months ago, advertising on social networks has become a top priority.

In a recent interview with eMarketer, Michael Barrett, chief revenue officer at Fox Interactive Media (FIM), said, "The conversation with marketers has shifted in recent months from ‘Why MySpace?’ to ‘How can I use MySpace?’"

"At this point, many of the dollars are still experimental, but in certain categories such as movies, TV and music, marketers are actively budgeting funds to social networking campaigns," says Debra Aho Williamson, eMarketer senior analyst and the author of the new Social Network Marketing: Ad Spending Update report. "Much like in the early days of Web marketing, there is a fear of being left behind: If a competitor is there, then I need to be there, too."

In fact, the pace of events since August (including Google’s $900 million deal with MySpace and the trickle-down effects of this deal) has led eMarketer to revise its expectations for social network ad spending upward.

eMarketer now expects that US marketers will spend $350 million placing ads on social network sites in 2006 (up from our previous estimate of $280 million).

US spending on social network advertising is now expected to rise to $865 million in 2007 and to reach $2.15 billion in 2010.

"MySpace will continue to dominate, accounting for 60% of US online social network ad spending in 2007," says Ms. Williamson. "Networks including Facebook, Bebo and Piczo will make up the next largest chunk of revenue, followed by social networks offered by portal sites. Vertical, or ‘niche,’ networks are likely to generate $45 million in ad revenue in 2007."

Social network ad spending will account for 2.2% of the $15.9 billion spent on US online advertising in 2006 and 4.7% of the estimated $18.3 billion spent in 2007, according to eMarketer. By 2010, it will account for 8.5% of the estimated $25.2 billion US online advertising market.

Social network spending will by no means be limited to the US.

"eMarketer estimates that worldwide social network ad spending will be $1.1 billion in 2007, up from $445 million in 2006," says Ms Williamson. "Spending is expected to rise to $2.8 billion in 2010."

"The numbers speak for themselves," says Ms Williamson. "Projected growth in ad spending on social networking sites of 147% in 2007 shows that marketers are enthusiastic about the space. The race is on to capture their ad dollars."

More here.